NG investments surge to record 5.4% of GDP
Credit to Author: MAYVELIN U. CARABALLO, TMT| Date: Wed, 10 Apr 2019 16:30:20 +0000
Investments made by the national government (NG) surged to P940.4 billion last year, which at 5.4 percent of gross domestic product (GDP) was the highest in the country’s history, the Finance department said on Wednesday.
In an economic bulletin, the department said NG investments had risen by nearly 38 percent on average over the last two years, contributing significantly to economic growth.
“Investment expansion has been the driving force of the economy in recent years — pushing up the country’s competitiveness and making up for previous decades of underinvestment,” it said.
“Stringent public investment evaluation, open and transparent procurement and implementation-ready prioritization have increased the efficiency of projects,” the department added.
NG investments have been “very efficient”, it claimed, with rates of return exceeding borrowing costs — currently at 5.9 percent based on the 25-year T-bond rate — and also returns on private investments.
“NG investment is strongly correlated with GDP growth; the economic rate of return is computed at 29.9 percent for the current quarter’s investment and 17.4 percent for the previous quarter’s investment,” the department said.
Private investments, in comparison, notched a 9.7 percent return for the current quarter and 7.9 percent for the previous quarter.
Factors contributing to the high returns, the Finance department said, include strict vetting by the interagency Investment Coordination Committee that reviews projects costing P2.5 billion or more.
These projects must also be part of the Philippine Development Plan’s Public Investment Program and must satisfy the benchmark of a 15 percent economic rate of return.
Also, project procurement undergoes an open and transparent bidding process, with terms of reference published in the Philippine
Government E-Procurement System, and projects should also be implementation-ready before funds are allotted under the national budget.
“[M]any of these projects should have been implemented years ago. The current congestion in the country’s roads and ports are evidence that the projects, once implemented, will have ready clientele,” the department said.
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