The Duterte administration overcame one of its biggest challenges in 2019—an economy hobbled by a combination of the delayed congressional approval of the year’s national budget and global trade tensions—through a bold, but carefully crafted catch-up expenditure plan anchored on accelerating state spending on infrastructure and human capital development projects.
This catch-up spending plan, crafted by the interagency Economic Development Cluster (EDC) of the Cabinet, enabled the economy to recover in the third quarter, with a 6.2 percent growth rate, after an anemic performance in the first semester.
Finance Secretary Carlos Dominguez III, who chairs the EDC, said the economy is “ready to soar” after this strong third-quarter gross domestic product (GDP) growth, and is expected to fare even better in the fourth quarter as the government’s main infrastructure agencies deliver on their spending commitments for the remaining October-December 2019 period under this catch-up spending strategy.
Dominguez said the massive rollout of the President’s signature “Build, Build, Build” infrastructure modernization program plus the bold policy and administrative reforms being implemented on Mr. Duterte’s watch, supports this rosy outlook for the economy, which expanded by an average of 6.4 percent in the first 13 quarters of the Duterte administration.
The EDC unveiled this catch-up plan in May, after first quarter GDP growth settled at 5.6 percent, below the government’s 6 to 7 percent target for 2019.
This below-target economic expansion was the result of the government not being able to invest about P1 billion a day owing to the delayed approval of the P3.7 trillion 2019 national budget, which was exacerbated by the 2019 election ban. The effects of the budget delay lingered until the second quarter, when growth was recorded at a slightly lower 5.5 percent.
Congressional action on the 2019 General Appropriations Bill (GAB) stretched to March 2019 with the President being able to sign the budget law only in April.
The delay in the passage of the 2019 GAB forced the government to operate on a reenacted budget for four-and-a-half months, which meant it held off in those months the implementation of all new and some ongoing projects under President Duterte’s accelerated spending agenda.
Under the catch-up spending plan, the government’s goal is to spend P2.996 trillion starting the second quarter of 2019, of which P1 trillion is for infrastructure, to reach its programmed spending of P3.774 trillion for the entire year or about 19.6 percent of GDP.
When the EDC met on Nov. 28 for updates on the catch-up spending plan, it reported that as of end-October 2019, almost a hundred percent of the Fiscal Year 2019 budget allotment program of P3.66 trillion was already released to all implementing agencies of the national government, including infrastructure, education, health and defense, among others. The EDC expected then for such disbursements to further accelerate in the remaining two months of 2019 to support a higher GDP growth rate for the full year.
Total actual disbursements from January to October this year amounted to P2.938 trillion, which represents 78 percent of the 2019 full-year disbursement program of P3.77 trillion. This is 5.1 percent higher than the actual disbursements for the same period in 2018, Dominguez said during the Nov. 28 meeting.
In the first 10 months of the year, for infrastructure and other capital outlays, the total actual disbursements reached P628.5 billion. This is 73 percent of the 2019 full-year disbursement program of P859.5 billion but 5.5 percent lower than the actual disbursements for the same period in 2018.
Dominguez said that based on the updates from the main infrastructure agencies–the Departments of Public Works and Highways (DPWH) and of Transportation (DOTr)—the EDC is confident that the government can hit its spending target for this year.
“The DPWH is optimistic that it can deliver on its P725 billion disbursement target for the full year 2019. For the first 10 months of 2019, it has so far disbursed 69 percent of its total commitment this year, totalling P503.4 billion. Secretary Mark Villar assured us that the remaining P221.6 billion target disbursements for the last two months of this year is attainable,” the EDC’s Nov. 28 statement said.
“Meanwhile, for the period January to Nov. 28 of this year, the DOTr’s actual disbursements reached P46.82 billion. This represents 57 percent of its disbursement commitment for 2019—the highest rate ever achieved by the agency in terms of actual disbursements, according to the report of DOTr Secretary Art Tugade,” the statement added.
The DOTr expects to disburse an additional P30.85 billion in the last month of the year to fulfill 94 percent of its commitment of P82.39 billion for 2019.
At the last Development Budget Coordination Committee (DBCC) meeting held for 2019, the economic managers announced that disbursements are targeted to hit P3.76 trillion in 2019, which is equivalent to 20 percent of GDP.
From an initial 75 flagship projects, the government has expanded its list of “Build, Build, Build” projects to include additional strategic projects with national impact and those undertaken through Public-Private Partnerships (PPPs).
The 100 flagship projects cover five categories, with Transport and Mobility projects as top priorities. The other four are Power, Water, Information and Communications Technology, and Urban Development and Renewal.
Included in the list are the Metro Manila Subway Project, North South Commuter Railway, Clark International Airport Expansion Project, Cebu Monorail System, Panay-Guimaras Negros Bridge, Samal Island-Davao City Connector Bridge, and the Mindanao Rail Project.
Dominguez said that PPP projects under “Build, Build, Build” are welcome, provided that these are able to avoid unwarranted delays and spare taxpayers the heavy burden of contingent liabilities supposed to be shouldered by the government, as had happened in past PPP ventures.
With the two conditions in place, Dominguez said the government is able to ensure that these PPP ventures turn out to be “Public-Private Partnerships for the People (PPPP).”
“We have taken the attitude that PPP is insufficient, it should not only be Public-Private Partnership. It should be PPPP—Public Private Partnership for the People–that infrastructure projects must be delivered quickly for the benefit of all law abiding Filipino citizens. We cannot take too much time negotiating with the private sector on this,” he said.