Business

Economic team increases infra spending for 2022-2024

Oxford Economics: PH will be the 2nd fastest growing new market in 2019-2028President Duterte’s economic team has pulled up the annual public infrastructure programs from 2022 to 2024, even as local government’s larger budget share from next year dampens the government’s overall spending plan.

At its meeting on Monday, the Coordination Committee for the Cabinet Development Budget (DBCC) raised the infrastructure budget for 2022 to P1.29 trillion (or 5.8 percent of gross domestic product). [GDP]) from P1.25 trillion (5.7 percent of GDP) previously.

The programmed infrastructure expenditures for 2023 and 2024 were also raised to P1.28 trillion and P1.35 trillion respectively from P1.26 trillion and P1.32 trillion previously.

This allows the share of infrastructure spending to GDP to average 5.4 percent in 2022 to 2024, DBCC said.

It said the adjusted infrastructure spending targets came on the back of the updated projections for local government national tax allocation (NTA) – former internal revenue allocation (IRA) – and the block grant to Bangsamoro Autonomous Region in Muslim Mindanao.

However, while infrastructure spending will increase, DBCC reduced the overall disbursement programs for 2023 and 2024 due to the larger NTA share of local governments in the national budget.

Expenditure in 2023 was cut down to P5.02 trillion from P5.11 trillion earlier, while for 2024 it was down to P5.3 trillion from P5.4 trillion.

Financial Assistant Secretary Maria Teresa Habitan said local government NTAs in 2023 would be less than 2022 levels due to the fall in tax rates during the recession last year. According to the Mandanas-Garcia decision, NTA 2022 should account for 40 percent of all tax revenue in 2019. The 2023 allocation will be based on 2020 collections.

NTA for 2022 amounts to P959.04 billion. This year, their IRA reached P695.49 billion.

Next year’s implementation of the Supreme Court’s 2018 decision on the petitions from Mandanas-Garcia reduced the government’s fiscal policy space, so that last month Duterte ordered the transfer to local governments’ spending on local infrastructure, agriculture, social welfare, health care and livelihoods.

The DBCC approved the proposal to create a record P5.024 trillion budget for next year, which will be submitted to Congress next week.

“The proposed national budget for 2022 will continue to invest in building the country’s resilience in the midst of the pandemic by prioritizing funding for COVID-19 response measures such as health development and social services, while increasing economic growth through investment in public infrastructure,” said DBCC. . INQ

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