Infrastructure spending rebounds in June

State spending on infrastructure bounced back in June, as disbursements for public works projects resumed after the election ban was lifted in early May, the Department of Budget and Management (DBM) said.

In its latest disbursement report on Thursday, the DBM reported that expenditure on infrastructure and other capital outlays increased by 6.5% to P148.8 billion in June from P139.7 billion in the same month last year.

Month on month, it increased by 20.2% from P123.8 billion.

This came after the month of May saw an annual 9.2% decline.

“This was largely attributed to the recovery of DPWH’s (Department of Public Works and Highways) spending performance following a two-month decline in April and May amid the election ban,” it said.

The Commission on Elections’ 45-day ban on public works spending started on March 28 and ended with the May 12 elections.

In June, the DPWH resumed payments for mobilization fees as well as made progress payments for newly awarded projects. It also settled outstanding obligations from previous years.

However, the DBM noted the pace of infrastructure spending was tempered by base effects from substantial releases for the Department of National Defense’s Revised Armed Forces of the Philippines Modernization Program in June last year.

The Philippines has been ramping up its military capacity under the $35-billion military modernization program since 2012 in response to rising tensions in the South China Sea.

The DBM said big-ticket releases for infrastructure are expected in the second half of the year.

Budget Secretary Amenah F. Pangandaman earlier explained that disbursements are expected to pick up toward the latter part of May to June after the 45-day election ban is lifted.

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said that increased infrastructure spending is crucial for economic growth.

“(This will translate to) more inclusive economic growth and development, as better infrastructure boosts the economy’s productivity, as well as help attract more foreign tourists and more foreign investments/locators,” Mr. Ricafort said in a Viber message on Thursday.

For the first half of 2025, overall infrastructure and capital outlays disbursements inched up by 1.4% to P620.2 billion from P611.8 billion in the same period last year.

This was 0.1% or P800 million below the P621-billion program for the first semester.

“Although infrastructure expenditures posted a notable 20.8% (P45-billion) annual growth in first quarter this year, it contracted by 9.3% (P36.6 billion) in second quarter amid the election-related prohibition on public spending covering the entire month of April up to the first two weeks of May,” the DBM said.

Meanwhile, overall infrastructure disbursements, which include infrastructure components of subsidy or equity to government corporations and transfers to local government units, were flat at P720.3 billion in the January-to-June period from P720.5 billion a year ago.

It also exceeded the overall infrastructure spending program of P718-billion for the first half by 0.3%.

The DBM said growth in infrastructure transfers to local government units, particularly their development fund equivalent to 20% of the National Tax Allotment, was offset by lower National Government-implemented infrastructure activities and reduced subsidies to state agencies like the National Irrigation Administration (NIA).

Subsidies provided to state-run firms stood at P7.45 billion in June, 26.68% down from P10.16 billion a year earlier.

Budgetary support to the NIA plunged by 68.21% in June to P2.39 billion from P7.52 billion in the same period in 2024.

“Nevertheless, the total infrastructure spending for the first semester was registered at 5.3% of GDP (gross domestic product), in line with the 5.3% full-year target for this year,” it added.

Based on the 2026 Budget of Expenditures and Sources, the government set its full-year infrastructure spending program at P1.51 trillion, equivalent to 5.3% of the GDP.

In the following months, the DBM said line agencies are expected to ramp up requests for release of allotments for their programs, activities, and projects in the second semester as implementation activities normalize post-election ban.

“These may also include unutilized cash allocations from the second quarter that line agencies can still request this second semester so they can process payments and make disbursements to suppliers or contractors for completed and delivered goods or rendered services,” it said.

Among the anticipated spending drivers for the succeeding months are progress billings from multiple finished or partially completed road and transport infrastructure projects and releases for defense modernization program.

“Increased infrastructure spending at around 5%-6% of GDP for the coming years, as also seen in recent years, would still lead to sustained growth in infrastructure spending,” Mr. Ricafort said.

Source: Business World

Infrastructure spending declines by 28% in April

Spending on infrastructure slumped in April due to the election ban on disbursements for public works projects, the Department of Budget and Management (DBM) said.

In its latest disbursement report on Tuesday, the DBM reported that spending on infrastructure and other capital outlays declined by 27.8% to P85.8 billion in April from P118.9 billion in the same month last year.

“This was due mostly to the muted infrastructure spending of the Department of Public Works and Highways (DPWH), resulting from election-related prohibition on public spending for specific activities, goods, or services, as well as lower volume of contractor billings,” the DBM said.

Government agencies likely frontloaded and accelerated the implementation of infrastructure projects earlier this year, the DBM said.

The Commission on Elections implemented a 45-day ban on the release, disbursement or expenditures of public funds from March 28 to May 11.

The elections were held on May 12.

The DBM also attributed the decline in infrastructure spending to lower direct payments for foreign-assisted rail projects of the Department of Transportation, as well as the releases for local counterpart funds.

These rail projects include the South Commuter Railway Project and the Metro Manila Subway Project.

For the first four months of the year, infrastructure spending rose by 3.6% to P347.6 billion from P335.7 billion in the same period in 2024.

The DBM attributed the increase in infrastructure spending to the “robust spending performance of the DPWH for the implementation of various infrastructure projects, right-of-way settlements, and payment of progress billings (i.e., partially completed works) and accounts payables.”

Meanwhile, overall infrastructure disbursements inched up by 2.4% to P419.4 billion in the January-to-April period from P409.7 billion a year ago.

This includes infrastructure components of subsidy/equity to government corporations and transfers to local government units.

Analysts said infrastructure spending will likely pick up in the next few months.

“We may expect infrastructure spending to continue ramping up to boost the economy both through higher spending and employment in the construction sector, but also better economic activity comes with better infrastructure,” Oikonomia Advisory & Research, Inc. economist Reinielle Matt M. Erece said.

Budget Secretary Amenah F. Pangandaman earlier said infrastructure-related disbursements would likely increase after the election ban ended.

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said government spending, particularly on infrastructure, would be a major contributor to overall economic growth.

“Infrastructure spending has been prioritized and increased in recent years to 5%-6% of GDP (gross domestic product), much higher vs. below 2% of GDP about 20-30 years ago,” he said in a Viber message.

For this year, the government’s infrastructure program is set at P1.538 trillion, equivalent to 5.4% of total output.

The Development Budget Coordination Committee earlier said infrastructure spending will be sustained at 5-6% of GDP annually.

Source: Business World

Three key economic reforms

Big business groups last week praised lawmakers for passing three key economic reform measures aimed at boosting investments, improving transparency in government transactions, and speeding up key infrastructure projects.

The Makati Business Club (MBC) lauded Congress for approving amendments to the Foreign Investors’ Long-Term Lease Act, and the E-Governance Act, and the Right of Way (ROW) Act, reforms that “aligned with our advocacies for improvements in governance, infrastructure, and transparency, which we see as key drivers to attract more investors and create more jobs.”

 The Filipino Chinese Chambers of Commerce and Industry Inc. (FFCCCII), for its part, noted that the business sector had long been urging the government to enact these reforms to attract more foreign investments and ease bottlenecks in infrastructure development.

The changes to the long-term lease law seek to encourage more foreign capital by extending the allowable lease period to 99 years from 75 years previously, thus bringing the Philippines more in line with regional competitors and address the major issue often cited by prospective foreign investors on their limited ability to secure land for extended periods, which made long-term planning and investment riskier.

The E-Governance Act, meanwhile, seeks to promote transparency and efficiency by expanding digital access to government services. By mandating the digitization of public services and integrating platforms across agencies, the reform aims to reduce red tape and improve the overall ease of doing business needed by investors.

High ROW costs

The most important of the three is the ROW (Right of Way) amendments, which will hopefully put an end to a problem that has nagged previous administrations as far back as the 1970s. The ongoing P448-billion Metro Manila subway project is a case in point.

The administration of the late former president Benigno Aquino III removed the project from its pipeline due to issues such as high ROW costs. It was included in the ambitious “Build, Build, Build” program of former President Rodrigo Duterte in 2017 as the Mega Manila Subway and carried over to the present administration of President Marcos as part of its P9-trillion infrastructure flagship projects list. It was targeted for partial operation before the end of Mr. Marcos’ term in 2028.

It is designed to interconnect with other rail systems — the operating Lines 1 and 2 of the Light Rail Transit system and the Metro Rail Transit Line 3 on Edsa; the MRT Line 7 (another project that has been delayed for years now), and the North-South Commuter Railway Extension at the FTI and Bicutan Stations.

Thorny issue

Based on a plan dated Sept. 27, 2019, construction of a section of the subway was to start in 2019 and operate in 2022. Construction of the remaining sections was to begin in 2022 and operate in 2025. It has become doubtful if partial operation can start by 2028 as ROW problems continue to hound the project.

These same issues have also delayed the completion of a key segment intended to link the North Luzon Expressway–South Luzon Expressway connector road to the Metro Manila Skyway Stage 3 as well as many other important infrastructure projects across the country.

The Accelerated and Reformed Right-Of-Way Act that will amend the current ROW law addresses the thorny issue of compensation, perhaps the most common cause of ROW delays, by updating the standards for assessing the value of property subject to negotiated sale using Republic Act No. 12001, or the Real Property Valuation and Assessment Reform Act, which was signed in January this year.

Ease of doing business

At the end of the day, however, a law becomes truly effective only when it is put into action. As MBC noted, it hopes that the proper implementation of these reforms will achieve the intended goal of enhancing the country’s competitiveness.

For the E-Governance law, its success will depend a lot on whether local government units, which are notorious for bureaucratic red tape, embrace the digitization of public services and for the different departments to integrate their platforms across agencies as mandated by the proposed law.

This will hopefully improve the overall ease of doing business and attract investors, particularly outside the traditional urban centers of Metro Manila, Cebu, and Davao.

For the ROW amendments, the involvement of all concerned agencies will be crucial to successfully implement these reforms, which the FFCCCII describes as essential changes to break a cycle of failure.

“Standardized valuation based on fair market principles, guaranteed funding for land acquisition, and structured resettlement programs address the root causes of delay: arbitrary pricing, fiscal uncertainty, and inadequate planning,” it pointed out.

And as Transportation Secretary Vince Dizon emphasized, solving ROW issues is not just a problem of his agency, but concerns that need “a whole-of-government approach.”

Source: Inquirer