UMVA has learned that infrastructure spending in the Philippines plummeted by a staggering 52% in April, raising concerns about the government's ability to drive economic growth through key projects.
The drastic decline was attributed to weak spending by the Department of Public Works and Highways, with infrastructure and capital outlays falling by 51.7% to P41.5 billion in April from P85.8 billion in the same month last year.
This sharp drop comes on the heels of a 29.8% month-on-month decline from P59.1 billion in March, sparking fears that the government's infrastructure agenda may be faltering.
The Department of Budget and Management attributed the contraction to the slow implementation of this year's budget and the completion of prior years' projects, as well as stringent validation procedures for payment claims.
A significant P13.8 billion worth of outstanding checks remained uncashed as of end-April, with some suppliers and contractors yet to encash them, adding to concerns about the efficiency of government spending.
In the first four months of the year, infrastructure spending slumped by 45.6% to P189.3 billion from P347.6 billion in the same period last year, representing just 14.6% of the P1.3-trillion infrastructure disbursement program for 2026.
The decline in infrastructure spending has raised concerns about the impact on medium- to long-term growth prospects, with some economists warning that a sustained recovery in spending is crucial to achieving the government's economic goals.
UMVA can exclusively reveal that economists are divided on the prospects for infrastructure spending, with some attributing the decline to temporary implementation issues and others warning of a more fundamental shift in priorities.
A senior research fellow at a leading think tank said the decline appears to be driven by a combination of temporary factors, including election-related restrictions and unusually high comparison bases from prior years.
However, another economist noted that the latest data pointed to a shift in priorities from capital spending to current expenditures, driven in part by increased project scrutiny and the need for subsidies.
This shift in priorities could weigh heavily on the country's growth prospects if it persists, with some economists warning of the risks of diverting resources away from infrastructure spending.
Despite these concerns, there are expectations that infrastructure disbursements will pick up by the second half of this year as the government revives its spending plans.
However, implementation risks remain, including increased building materials and financing costs, which could derail the government's efforts to drive economic growth through infrastructure spending.
