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NEWS UPDATES 16 August  2010

Philippines cuts infrastructure spending

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The Aquino administration has decided to cut back on public spending deficit amid a rising debt stock that would hit the P5-trillion mark next year.

The latest data from the Development Budget Coordinating Committee (DBCC) showed the national government’s capital expendituresfor next year would inch up 1.3 percent to P322.2 billion from this year’s P318.2 billion.

This amount, however, is only 3.6 percent of the country’s total economic output—as measured by the gross domestic product (GDP)—or down from this year’s 3.8 percent.

Based on the government economic team’s assessment, this year’s GDP would grow by at least 5 percent and based on next year’s Budget of Expenditures and Sources of Financing, the economy would expand by at least 5 percent, or the low-end target for the year.

Of the total capital outlays, infrastructure spending for 2011 would move up by barely a percent (0.77 percent) to P249.7 billion from this year’s P247.8 billion.

But next year’s allocation is 2.8 percent of GDP or 0.2 percentage points lower than this year’s 3 percent.

Allocation for local government units, minus the capital outlays, would be P229.6 billion or 6.25 percent higher than this year’s P216.1 billion.

The committee allocated P180 billion for priority projects, which the Agriculture, Transportation and Communications and Public Works and Highways departments would still have to identify.

Abad added that the government would have to work with the adjusted spending program through zero-based budget approach.

The national government has tightened allocation for Magna Carta benefits and allowances for state-owned corporations, which will be reviewed in light of recent reports of “huge allowances” enjoyed by certain government-owned and controlled corporations.

These government-run firms and state universities and colleges were told to consider cash in bank, liquid assets, revenues and payables where their own expenditures are concerned.

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