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Economy

December state infra spending falls

Government spending on infrastructure fell for the sixth straight month in December due to budget cuts and construction delays amid a coronavirus pandemic, according to the Budget department.

State infrastructure spending and other capital outlays fell by a quarter to P132.3 billion from a year earlier, based on preliminary data from the agency.

The agency said the sector was on a “gradual recovery” after the December slump softened from steep contractions in November (50.2%) and October (30.6%).

This brought infrastructure spending in the last quarter to P229.6 billion, a third lower year on year but 28.7% higher than the P178.3-billion target for the period.

Infrastructure spending plunged by 23% for the whole year from a year earlier to P681 billion. This was 11.8% higher than the P881.7-billion target.

Construction spending by the Department of Public Works and Highways (DPWH) helped exceed the goal, the Budget department said in a statement.

“The 2021 national budget will help the nation address the pandemic, boost infrastructure development and generate job opportunities, and assist communities in adapting to the post-pandemic life,” it said.

Cid Terosa, a senior economist at University of Asia and the Pacific, traced the lower December spending to a high base.

“Infrastructure spending was within expectations given that the government was cash-strapped and revenue-generating activities were constrained, he said in an e-mail. “Despite the wobbly economic state of affairs last year, the government managed to accelerate infrastructure spending in the last quarter of 2020.”

Mr. Terosa expects infrastructure spending to recover this year as coronavirus restrictions are eased.

“The 2022 presidential elections can stimulate greater infrastructure spending, but magnified and well-managed infrastructure spending is one of the critical economic revival strategies that have to be pursued with or without the elections,” he added.

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