July 19, 2016 at 14:11

Up to 7% of GDP sought for ‘pure’ infra spending

By Vince Alvic A. F. Nonato, Reporter | Posted on July 15, 2016

THE administration of President Rodrigo R. Duterte aims to hike the spending on infrastructure to 7% of the economic output within his term, Budget Secretary Benjamin E. Diokno said on Thursday.

Raising the threshold depends on “how the proposed tax reform program will shape up in the future,” Mr. Diokno said in his first weekly press briefing.

For 2017, the proportion of infrastructure spending is 5.2% of the gross domestic product (GDP). This is equivalent to roughly P890 billion.

The previous administration of Benigno S. C. Aquino III had set aside P760 billion of the total budget for the current year, or about 5% of GDP. But, Mr. Diokno said the past government tended to “fudge” the infrastructure spending data by including capital outlay, or new fixed assets.

“In the past, the DBM has fudged the data on infrastructure. It would include airplanes, police cars… so in this case, in the case of Duterte, the 5.2% will be pure infrastructure,” he said.

Data are still being cleaned up, but Mr. Diokno said: “Their infra-to-GDP ratio would be around 2-3% only, and this is a major jump.”

Asked how the threshold could be raised, he cited the plan to have “non-stop construction” for major projects in urban areas.

“Definitely, we’ll try to shoot for it as soon as we can, depending on as usual absorptive capacity of the agencies,” he said.


Another major change to the spending program will be the removal of the Bottom-Up Budgeting (BuB) program, which allots resources for projects chosen by grassroots communities but is criticized as a form of political patronage.

Mr. Diokno said the BuB program is “really a political tool.” He added that the setup, currently allocated P100 billion, “fritters away important government resources” that could be used for “more effective projects.”

He noted that local government units already get their share of the revenue collection through the automatic grant of Internal Revenue Allotment (IRA). Yet, they barely perform the devolved responsibilities of providing basic health services and social welfare that the national government ends up taking over.

Instead, the BuB will be limited again to fourth, fifth, and sixth-class municipalities, as opposed to the eventual expansion of the program under the previous administration to cover all cities, towns and even barangays.

“I think that’s a no-brainer. It’s a waste of funds,” Mr. Diokno said.

At the same time, the budget would carry over a feature first implemented under the Aquino administration — the use of the Two-Tier Budgeting Approach (2TBA).

2TBA separates the budget preparation into two stages: the first one is dedicated to discussion and deliberation of ongoing projects and programs, and the second is dedicated to new and expanding proposals.

This would “improve the effectiveness and transparency of public spending.”


During the same briefing, Mr. Diokno also said he wanted the budgets under the Duterte administration to be “strictly compliant” with the Supreme Court rulings against the Priority Development Assistance Fund (PDAF), and the Aquino administration’s Disbursement Acceleration Program (DAP).

He also refuted news reports that the unconstitutional “pork barrel” is being revived somehow by allowing legislators to identify projects in their respective districts.

Mr. Diokno stressed that what the Supreme Court declared unconstitutional is the act of allocating funds “after” the enactment of the General Appropriations Act.

But pre-enactment, lawmakers may name projects as the budget goes through the motions. “We consider that during the budget preparations,” he said.

“They have the right to identify projects they see the people need,” Mr. Diokno said. “Do you favor a system where absolutely wala silang pakialam (they don’t care)?”

He said that it could not be considered a form of pork barrel, because the funds are released to the projects’ implementing agencies, and not the legislators themselves.

But at the same time, Mr. Diokno said a proposed Budget Reform Act is being drawn up so budgetary practices will go beyond the Duterte administration.

In it, he said the definition of “savings” and “discontinued projects” will be more attuned to the Supreme Court rulings instead of “circumventing” it like in the past.


The proposed P3.35-trillion budget reflects an 11.6% increase from the current year’s P3.002 trillion. It’s also equivalent to a slightly larger share of economic output — 20.4% of the GDP, compared to the current 20.1%.

The proposed 2017 budget continues to be threshed out, but figures for the general and automatic appropriations are already out.

Proposed general appropriations amount to P2.48 trillion, or 74.04% of the total budget. Most of the amount are programmed appropriations, which already have definite or identified funding by the time the budget is prepared.

The proposed budget for the Pantawid Pamilyang Pilipino Program (4Ps) slightly shrank. P54.9 billion is earmarked for 4.4 million households, compared to P62.7 billion for 4.6 million households this year.

Meanwhile, P17.9 billion will be allocated for 2.8 million elderly indigents under the Social Pension for Indigent Senior Filipino Citizens.

The DBM will propose the allocation of P118 billion for the construction of school buildings, 44% higher than earmarked in this year’s budget.

Unprogrammed appropriations — basically standby priorities to be funded by excess revenue or new loans — increased by 29.63% to P87.5 billion, from P67.5 billion.

The P20-billion increase is mainly slated for payment of just compensation to Philippine International Air Terminals Co., Inc., for the expropriation of the Ninoy Aquino Internal Airport International Passenger Terminal 3. The Supreme Court settled with finality the proper amount in April.

Proposed automatic appropriations amount to around P957 billion, with the P486.9 billion for the IRA and P358.7 billion for interest payments on national government debts accounting for much of the figure.

Other automatic appropriations are: P26.5 billion for net lending; P37.9 billion for retirement and life insurance premiums (RLIP); P21.6 billion for special accounts; P25.5 billion for tax expenditure; and P331 million for the pensions of former presidents and their spouses.

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