Philippines Favors Schools Over Ports to Catch Up on Spending
The Philippines will focus on smaller projects that can be implemented quickly to bolster economic growth after state spending fell short of target in the first half, Budget Secretary Rolando Andaya said.
“The game plan for the remainder of the year will be small, fast-gestating projects that can be completed in three months, like school buildings, farm-to-market roads,” Andaya said in an interview late yesterday. “We may be able to hit our target” for the full year, he said.
The government plans to boost spending by 17 percent to 1.489 trillion pesos ($31 billion) this year as it tries to revive an economy growing at the slowest pace since the 1998 Asian financial crisis. President Gloria Arroyo is set to incur a record budget deficit of 250 billion pesos as outlays increase while revenue from taxes falters.
Spending in the first six months was 699.1 billion pesos, 5 percent lower than target and 47 percent of the full-year budget, government data show. That helped the budget shortfall stay below a 155 billion-peso target, totaling 153.4 billion pesos in the first half of the year, even as revenue missed estimates by 6 percent fast cash payday loans.
“Under-spending brings with it the risk of economic recovery being hampered by the lack of timely injection of stimulus,” Vishnu Varathan, a regional economist at Forecast Singapore Pte., said in a note yesterday.
Illegal occupants on land where a bridge was to be built and failure of a port project to get design approval may have contributed to the delay of such “big-ticket” projects, Andaya said. Agencies also overstated their spending targets and were approved more funds than what they actually spent, he said.
‘Use it or Lose it’
“We have a policy of use it or lose it, which prompted agencies to go sandbagging to make sure they keep their budget,” Andaya said.
Central bank Governor Amando Tetangco said last month the government must make sure that disbursements for state projects are “are actually used” to support economic growth. The central bank cut its key interest rate to a record low of 4 percent this month.