FINANCE Secretary Benjamin E. Diokno said the government would consider tapping into the Group of Seven (G7) Global Infrastructure and Investment Partnership (PGII) program to support the Philippines’ construction efforts .
Building on the momentum of the previous administration’s Build, Build, Build program, “we are considering all possible sources of funding” to achieve an infrastructure spending target of 5-6% of gross domestic product (GDP), Diokno said after the Development Budget Coordinating Committee (DBCC) meeting on Friday.
Aimed at supporting the infrastructure needs of low- and middle-income countries, PGII hopes to mobilize $600 billion over the next few years. Iffive years, of which $200 billion will be made up of subsidies. It is intended to leverage private sector investment, according to US President Joe Biden.
The G7 is made up of Canada, France, Germany, Italy, Japan, the United Kingdom and the United States.
Diokno, however, said the government intended to reduce its foreign exchange risks, which would make minimizing foreign borrowing a consideration.
“The funding mix, as I recall, is 75% to 25% (in favor of domestic borrowing) and longer term we will try to increase it to 80-20. We will borrow domestically 80% and 20% to foreign sources,” he said.
“The way we borrow is that we try to be opportunistic. There are many sources of borrowing in terms of external debt, so we will choose the least cost as far as we are concerned and the one thatffuh the best conditions. For example, (if) it takes 40 years to pay off, we would tend to borrow from those sources,” he added.
On public-private partnerships, Mr. Diokno reiterated that the way projects are financed can help the Philippines expand its fiscal space for infrastructure.
“For example, there are airports. We can actually offer them for unsolicited or solicited proposals (for) the private sector to work,” he said.
“An example will be in Bohol. We have built the Bohol International Airport…I think it will greatly improve the operations and management of this airport if the private sector runs it, and we could consider handing it over to the private sector,” Mr. Diokno added.
The amended Civil Service Law now allows foreign direct investors to own and manage a wide range of infrastructure such as airports, seaports, telecommunications companies, railways, metros, airways and toll lanes.
“Disbursements for 2022 to 2023 will be kept above 20% of GDP at 4.955 trillion pesos and 5.086 trillion pesos, respectively, to ensure continued implementation of priority programs on infrastructure and socio-economic development, among others,” the DBCC said on Friday.
Similarly, disbursements for 2024 to 2028 are also expected to be above 20%, as indicated in the DBCC’s revised macroeconomic targets released on Friday.
The 5-6% target for infrastructure spending relative to GDP has been extended through 2028, the last year in office of President Ferdinand R. Marcos, Jr. — Diego Gabriel C.Robles