Infrastructure outlays-to-GDP ratio twice the deficit-to-GDP ratio

February 22, 2019

Infrastructure spending as percent of gross domestic product (GDP) is now twice the fiscal deficit-to-GDP ratio, said Budget Secretary Benjamin  Diokno in a press statement Friday.

The deficit, defined as the difference of national government revenues and expenditures, has averaged 2.7 percent of gross domestic product (GDP) in the first two years of the Duterte administration.

Meanwhile, infrastructure outlays are projected to hit 6.3 percent of GDP, easily twice the deficit-to-GDP ratio. 

“The fiscal numbers reflect our seriousness in closing the country’s infrastructure gap,” said Diokno. “Filipinos may really look forward to better roads, comfortable mass transport systems like trains and modern public utility vehicles (PUV), among other infrastructure initiatives. The data support the eye test, with so many construction projects going on around the country,” added Diokno.

Based on historical data, infrastructure spending as percent of GDP was not a priority of previous administrations, the budget department statement said.

It hit 3 percent under President B. Aquino, 1.6 percent under President Gloria Macapagal Arroyo, 1.8 percent under President Joseph Estrada, and 1.7 percent under President Fidel Ramos—all well below the five percent of GDP target for developing countries .

The Duterte administration has turned this around by investing an estimated 6.3 percent of GDP for public infrastructure in 2017 and 2018, the budget department said.

“These numbers are consistent with our desire to spend as much as 7 percent of GDP for public infrastructure by 2022,” said Diokno.

“We are spending above 6 percent of GDP on public infrastructure, while keeping the deficit-to-GDP ratio at less than 3 percent. No administration has done this before,” said Diokno.

In 2019, the Duterte administration has a deficit target of 3.2 percent of GDP. This will go back to 3 percent of GDP from 2020 to 2022.

Meanwhile, infrastructure spending will approach 7 percent of GDP in 2022 in line with theBuild Build Build program. DMS