The government will tap its own budget to fund most infrastructure projects under the 2017-2022 Public Investment Program, National Economic and Development Authority Undersecretary Rolando Tungpalan said Tuesday.
“Of the $168 billion [P8.44 trillion] total infrastructure investment requirement under the 2017-2022 Public Investment Program, which translates the Philippine Development Plan into these programs and projects, the bulk of the projects will be implemented through local financing or GAA [General Appropriations Act] at roughly 66 percent,” Tungpalan said during the Management Association of the Philippines’ general membership meeting in Makati City.
“The remaining projects will be carried out through PPP [public-private partnership] at 18 percent and ODA [official development assistance loans] at 15 percent,” Tungpalan said.
Tungpalan said in accelerating infrastructure development, the government would increase spending on public infrastructure from 5.32 percent of gross domestic product in 2017 to around 7.45 percent of GDP by 2022, or an average of 6.8 percent of GDP in the six-year period.
Infrastructure spending averaged only 2.9 percent of GDP from 2010 to 2016.
The projects will include new roads, bridges, railways, airports, seaports and even subway to lessen traffic congestion in Metro Manila.
Neda director-general and Economic Planning Secretary Ernesto Pernia earlier said the implementation of these projects would usher in the “golden age of infrastructure” under the Duterte administration
“Our economy is projected to grow between 6.5 percent and 7.5 percent in 2017, and between 7 percent to 8 percent from 2018 to 2022. This GDP growth translates to larger economy, expanding from about $290 billion in 2016 to $510 billion by 2022,” Tungpalan said.
Tungpalan cited the merits of financing infrastructure projects through ODA, including longer-term maturity and favorable concessional financing terms.
“As we all know, many large infrastructure projects will require long-term financing, especially if these have long gestation period. ODA accessed by government has favorable financing terms that match the needs of such infrastructure projects better than commercial sources of our grants,” Tungpalan said.
Tungpalan said Japanese untied loans had a standard interest rate of 0.65 percent to 1.4 percent, with a maturity period of 30 to 40 years, inclusive of a 10-year grace period.