FINANCE Secretary Benjamin E. Diokno said the government will consider tapping the Group of Seven’s (G7) Partnership for Global Infrastructure and Investment (PGII) program to support the Philippines’ building efforts.
To continue the momentum of the previous administration’s Build, Build, Build program, “we are considering all possible sources of funding” to meet a target for infrastructure spending of 5-6% of gross domestic product (GDP), Mr. Diokno said after the Development Budget Coordination Committee’s (DBCC) meeting on Friday.
Aimed at supporting the infrastructure needs of low- and middle-income countries, the PGII hopes to mobilize $600 billion over the next five years, of which $200 billion will consist of grants. It is intended to leverage private sector investment, according to US President Joe Biden.
The G7 is composed of Canada, France, Germany, Italy, Japan, the UK, and the US.
Mr. Diokno said however that the government intends to reduce its foreign exchange risks, which would make minimizing foreign borrowing a consideration.
“The financing mix, if I remember right, is 75%-25% (in favor of domestic borrowing) and for the longer term we will try to increase this to 80-20. We will borrow domestically at 80% and 20% from foreign sources,” he said.
“The way we borrow is that we try to be opportunistic. There are many sources of borrowing in terms of foreign debt, so we will choose the least cost as far as we’re concerned and the one that will offer the best terms. For example, (if) it’s 40 years to pay, we would tend to borrow from those sources,” he added.
Regarding public-private partnerships, Mr. Diokno reiterated that mode of financing projects can help the Philippines expand its fiscal space for infrastructure.
“For example, there are some airports. We can actually offer them for unsolicited or solicited proposals (for the) private sector to operate,” he said.
“An example will be in Bohol. We have constructed the Bohol international airport… I think it will significantly improve the operations and management of that airport if the private sector runs it, and we might consider giving it to the private sector,” Mr. Diokno added.
The amended Public Service Act now allows foreign direct investors to own and manage a wide range of infrastructure like airports, seaports, telecommunications companies, railroads, subways, skyways and tollways.
“Disbursements for 2022 to 2023 will be maintained above 20% of GDP at P4.955 trillion and P5.086 trillion, respectively, to ensure continuous 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 projected to be above 20%, as indicated in the DBCC’s revised macroeconomic targets released on Friday.
The target of 5-6% infrastructure spending relative to GDP was extended to 2028, the last year of President Ferdinand R. Marcos, Jr.’s term. — Diego Gabriel C. Robles