Angelo Taningco
Economist, Treasury Group

The Philippine government’s disbursements for infrastructure and other capital outlay projects increased by only 6% year-on-year (yoy) in September-a slowdown from its August’s 18% yoy growth-and leveled off at P53.6 billion, the biggest monthly tally for the year.

According to the Department of Budget and Management (DBM), public infrastructure and other capital spending in September emanated from the Department of Public Works and Highways’ road, flood control, and dike improvement projects as well as the Department of Interior and Local Government’s construction of fire stations. Its single-digit yoy growth for the month was brought about by a high base arising from the government’s one-time principal payment (P7 billion) to Philippine International Air Terminals Company as just compensation in September of last year; stripping out this payment, the yoy growth rate would be much higher at 23%.

The September total led the third-quarter (Q3) public infrastructure and other capital spending amount to reach P142.1 billion, which exceeds the government’s program of P137.8 billion for the quarter and is 15% higher on a yoy basis. This is the third-straight quarter that actual spending exceeded the quarterly target. As a share of projected gross domestic product (GDP), we estimate this Q3 spending to be at 3.6%.

For the first three quarters of the year, government disbursements for infrastructure and other capital outlays stood at P391.2 billion, which we estimate to be at 3.5% of projected GDP, matching the government’s full-year 2017 target. This cumulative total is P16.8 billion bigger than the combined Q1-Q3 targets.

We believe the government is on track to meet its programmed infrastructure and other capital spending of P174.9 billion and P549.4 billion for the fourth quarter (Q4) and 2017, respectively. Our view supports DBM’s outlook for government infrastructure and other capital spending to continue to be “upbeat” especially that disbursements tend to be higher during the last quarter of the year.

Figure: Philippine Government’s Infrastructure and Other Capital Spending Q1 2015 – Q3 2017 (P billion)

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