Economic managers eye heavy infra spending

The country’s economic managers have reworked the budget timetable to reflect sustained infrastructure spending after the anticipated budget balance in 2008. While the original plan called for a series of modest budgetary surpluses beginning 2009, it now calls for substantially increased spending while being careful not to revert to deficit state. The heightened spending was seen on Friday to boost the government’s capital expenditures for the period to equal 20 percent of revenues, which is the rule of thumb. This translates to capital expenditures of some P260 billion each year for two years after the expected budget balance in 2008 when revenue flows were seen to hit P1.3 trillion. “We want to expand our capital expenditures and fund our infrastructure development program. We can do this because our debt ratios have gone down significantly,” Finance Undersecretary Gil Beltran said in an interview. There was prior consensus on the need for greater spending for infrastructure and the Development Budget Coordination Committee would formalize the agreement in a meeting set for Monday. Socioeconomic Planning Secretary Romulo Neri earlier pushed for higher capital expenditures to sustain the country’s growth trajectory over the medium term. Neri believed since the fiscal house had been brought to order, it was now time for the government to loosen its purse strings a bit and spend for roads, ports, bridges and the like, it was learned. Finance Secretary Margarito Teves, who is on an overseas trip to seek global support for the multibillion-peso infrastructure program, previously calculated it would require roughly P1.7 trillion to build the infrastructure needed to sustain the program over a five-year stretch. Beltran said sufficient revenue flows and the government’s diminishing debt load should help the economic managers accomplish the feat. The national government’s outstanding debt as of end-2006 totaled P3.851 trillion, or 64.2 percent of local output, or the gross domestic product, from 67.2 percent of GDP three months earlier. Because  the government has also started paying down its IOUs, debt service should also lower significantly going forward, according to Beltran.  --J. Vallecera

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