Angelo Taningco
Economist, Treasury Group

The Philippine government’s disbursements for infrastructure and capital outlays amounted to P48.4 billion in July, up 25% year-on-year (yoy) and eclipsing government’s total spending growth of 11%. The Department of Budget and Management (DBM) has reported that the yoy growth in government’s infrastructure spending for the month of July was driven by road improvement, flood control, and transport infrastructure projects; acquisition of equipment for public health facilities; and purchase of air defense and naval assets. July’s yoy growth rate is higher than June’s 11% yoy and is the second-highest since the start of the year.

Compared to June, the July total is 6.7% lower, but we have already anticipated this since the first (last) month of the quarter tends to incur relatively small (large) government disbursements. Nevertheless, the July tally is the second-biggest total next to June’s since January. Meanwhile, cumulative public infrastructure spending rose 11% yoy to P297.5 billion in January-July, also surpassing the 9% yoy growth in total government expenditures during the same period.

Figure: Public Infrastructure Spending
Jan. 2016 – Jul. 2017
(PHP billion)

 
We think public infrastructure spending will exhibit robust yoy growth this third quarter (Q3). This is in light of the relatively high July reading as well as our expectation of potentially large government disbursements for the implementation of flood control projects and transport infrastructure in the said quarter. The government’s programmed disbursements on infrastructure and capital outlays for Q3 and full-year 2017 are P137.8 billion and P549.4 billion, respectively; these figures were downward revisions that were submitted by the DBM to the Development Budget Coordination Committee (DBCC) a few months ago. Given the latest monthly and cumulative trends, we believe that the government is on track to meet its Q3 and full-year 2017 programmed disbursements.

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