Government infra spending slows down in November

MANILA, Philippines – Despite year-on-year growth, state infrastructure spending is showing signs of monthly deceleration during the final quarter of 2015, but officials and analysts said there is nothing to worry about.

According to data from the Department of Budget and Management, capital outlays totaled P27.2 billion in November, down 21.5 percent from October’s P34.7 billion.

The October figure also represented a decline of 2.1 percent from P35.4 billion in September.

Under capital outlays, infrastructure expenditures also posted dips of 27 percent and 3.2 percent during respective periods.

“These follow seasonal trends” Budget Undersecretary Laura Pascua said in a text message when asked for comment yesterday. She did not elaborate.

The DBM has said it planned to accelerate spending, especially in infrastructure, to support growth before the election ban kicks in on May.

On a yearly basis, capital outlays and infrastructure spending both increased 32.3 percent and 38.1 percent, respectively, in November.

This brought the 11-month tally up 22.3 percent and 22.8 percent, data showed.

Sought for comment, Emilio Neri Jr., lead economist at the Bank of the Philippine Islands, said the monthly declines may be followed by a big pick-up in December.

“I would not really give too much meaning in the month-on-month slowdown because in November, for instance, there was a typhoon,” Neri said in a phone interview.

“That would have probably caused some projects to get delayed. But it’s possible that they are going to make spending lumpier in December,” he added.

Typhoon Lando battered Northern Luzon in the third week of October, killing 46 people and causing damage to around P1.3 billion in infrastructure, government data showed.

Neri said the government has typically “backloaded” infrastructure disbursements during the last month of the year.

As a proportion of gross domestic product (GDP), infrastructure spending accounted for 2.82 percent as of November. The economy expanded 5.8 percent last year on GDP basis.

A higher ratio may be recorded once spending for December is already tabulated and released. The government has set a target of four percent of GDP.

“That is an aspirational target. I won’t be surprised if there will be notable gap between outcome and planned outlays considering the procurement processes and delays,” Neri explained.

“Still, there seems to be a catch up and we will see that more in December,” he added.