Finance chief hopes gov’t spending to pick up in second semester

July 6, 2017

Finance Secretary Carlos Dominguez III expressed hope on Thursday government spending could pick up in the second semester of this year as several projects will be started. In a press briefing in Malacanang, Dominguez likened the government to a train, which could not go full speed when it starts to run. "You know, the government is like a train, okay? Before the train gets up to speed, you have to go a little bit of a way first, okay? And, this administration has tried to keep up the momentum of the past administration. You know, in the past administration, they stopped all the projects for the first two years, you remember? In 2010 to 2011," he said. But under the Duterte administration, he said the government has continued what were started by the previous administration. "So we are continuing moving ahead. However, for the new projects, for the new large projects, okay, you have to make the new feasibility studies. You have to negotiate with the funders. So it’s getting a little bit, you know, the momentum hasn’t developed but definitely the projects are already in place," Dominguez said. He said the current government did not inherit a large backlog of projects. "We have to build up our own projects. So the momentum is there. We had not stopped the other projects. And we are in the process of building up the new ones," he said. He noted two bridges will be erected soon across the Pasig River. Within the next two or three months, the government will also start the improvement of the Clark Airport and it is also moving up with the Commuter Railway, he said. Dominguez also cited the Kaliwa Dam and the Cagayan Valley irrigation projects, which are on the final stages of negotiations on the financing . "So these projects take time to get ahead, they are very large. You need project studies and all of that by they are going to be done," he said. Asked when the government expects public spending to pick up, he said, "it will pick up in the second half." Moody's and First Metro Investment Corp. have been cautious about their projections on the Philippine growth this year due to government's lower spending. Dominguez justified why the government has to go slow on public private partnership program and instead resort more on government funds and official development assistance. "Our experience with the PPP when we reviewed it is that it takes three years from the time you have the idea of a PPP to the time you start the project. It’s three years. That’s why the last administration was only able to do four projects, right? Because the --- the PPP process is very long. So, we have decided that we are going to start the project, okay, using our own funds, okay?," Dominguez said. Through this, long negotiations would be avoided, he said, adding the government has a large capacity to borrow. "And our interest rates that we pay is lower than the interest rate that the private sector pays. So, therefore, our project cost will already have an advantage because the financing cost will be lower, number one. It will be faster to get done," he explained. But he added the government could later turn over the projects to private sector. "We can sell the project, and we can use the funds to repay our loan. So that is one way we are planning to do it. We’ll start the project, and most likely, we will use private --- private partnerships, Public Private Partnerships for the O&M (operation and maintenance) portion, because the government is not good at O&M. We realized that," Dominguez said. (Celerina Monte/DMS)