3-year blueprint pegs infrastructure spending at P3 trillion

by Cai Ordinario – April 19, 2016, http://www.businessmirror.com.ph/3-year-blueprint-pegs-infrastructure-spending-at-p3-trillion/

The government is targeting to spend as much as P3 trillion for infrastructure projects, from 2017 to 2019, in keeping with its goal of hiking public-infrastructure spending to at least 5 percent of GDP.

Documents obtained by the BusinessMirror showed that infrastructure spending under the Three-Year Rolling Infrastructure Program (Trip), which covers projects not included in the public-private partnership (PPP) pipeline, could reach as high as P1.07 trillion in 2019.

The details of the Trip were discussed and recommended for approval by the interagency Infrastructure Committee (Infracom) Technical Board on Monday. The Infracom advises the National Economic and Development Authority (Neda) Board—chaired by the President—on infrastructure policies.

“The Trip is the government’s tool to strengthen the link between programming and budgeting. This will ensure that the right types or the needed projects are included in the pipeline and accordingly funded,” the documents read. “[It is also a tool to] attain public infrastructure-spending targets. Estimates show that we need to invest an amount of at least 5.1 percent of GDP. The Trip will help in driving and monitoring the attainment of this goal,” it added.

To meet the target infrastructure spending of 5.1 percent of GDP, the allocation for public projects should at least reach P839.29 billion in 2017. Allocation in 2018 and 2019 should hit a minimum of P927.78 billion and P1 trillion, respectively. These infrastructure-spending estimates are based on the government’s assumptions that GDP will reach P16.46 trillion to P16.84 trillion in 2017; P18.19 trillion to P18.81 trillion in 2018; and P20.09 trillion to P20.98 trillion in 2019.

The Trip will include all projects that cost P1 billion or more and are not being implemented under the PPP scheme. Documents showed that the plan could cover 2,442 projects and programs that will be funded through the General Appropriations Act.

To maximize government resources, the pipeline list of Trip projects will include Tier 1 and Tier 2 projects. Tier 1 will be composed of ongoing projects that need to have continuous funding in the next three years, while Tier 2 includes “new” projects.

The composition of how much of the Trip will be allocated to Tier 1 and Tier 2 projects is still being discussed, but initial estimates placed the allocation for ongoing projects at 75 percent.

Documents showed that actual infrastructure spending as a percentage of GDP was lower than what the government had programmed in the past two years.

Programmed national spending for public projects was at P442.31 billion, or 3.5 percent of GDP, in 2014 and P595.77 billion, or 4.48 percent of GDP. Actual spending reached P346.24 billion, or 2.74 percent of GDP, in 2014 and P435.3 billion, or 3.28 percent of GDP, in 2015.

“While programmed public spending on infrastructure has increased in the last five years, actual spending, on average, has been only at 2.5 percent of GDP. This shows that we still have a long way [to go] before we actually reach our targets,” the documents read.

Last week the Infracom said it has approved the reinstitution of the Trip in the national budget to meet the government’s investment targets for public infrastructure.

Through the Trip, the Neda said the government will be able to fill the gaps in the infrastructure sector, including pending projects from previous years—4,710 kilometers of national roads that need to be paved, construction of 366,014 units of socialized housing and irrigation for 1.2 million hectares of farmlands.