The Department of Finance (DOF) has underscored that it is funding the legacy projects under the President’s Build Better More program through innovative and sustainable financing strategies that serve the best interests of Filipinos.

“The continuous roll-out of the infrastructure buildup on this scale demands the lifeblood of funding. And it requires an expansionary fiscal posture: a willingness to accept some amount of deficit spending and long-term borrowing. That fiscal posture will have to be supported by a more robust revenue stream,” said DOF Undersecretary for the Corporate Affairs and Strategic Infrastructure Group (CASIG) Rolando G. Tungpalan during the Build Better More Infrastructure Forum on July 12, 2024 at the New Clark City.

Under President Ferdinand R. Marcos, Jr.’s massive infrastructure program, the government is rolling out 185 flagship projects worth PHP 9.5 trillion, with the DOF holding a central role in acquiring much-needed funding for their timely completion.

Of the total, 82 projects are identified for funding through official development assistance (ODA) from development partners, 43 projects for public-private partnerships (PPP), while the rest would be financed by the national government or a combination of the three financing modalities.

To ensure a robust revenue stream for the government to fund the infrastructure projects, Undersecretary Tungpalan said the DOF is focusing on growing more revenues by plugging tax leaks, improving tax administration through digitalization, and maximizing our non-tax revenues.

While no new tax proposals are on the table, refined revenue reforms await congressional approval that would inject additional revenues into the national coffers.

With these, the national government anticipates an average 10.3% annual growth in total revenues, reaching PHP 4.27 trillion pesos in 2024 to PHP 6.25 trillion pesos by 2028.

ODAs from development partners, which provide the most concessional financing option, are being utilized by the government to fast-track the implementation of infrastructure projects without straining its fiscal space.

Since the start of the President’s term, the DOF has secured ODA funding of about USD 7.2 billion, the bulk of which is from Japan through the Japan International Cooperation Agency (JICA).

Notable among these ODA-funded projects are the North-South Commuter Rail that would serve Los Baños – Tutuban – Malolos – Clark, the Metro Manila Subway, the Dalton Pass East Alignment, and the Bataan-Cavite Interlink Bridge.

“ODAs provide the most concessional financing with lower interest rates, longer grace periods, and longer amortization or maturity periods,” Undersecretary Tungpalan stressed.

Moreover, the Undersecretary explained that ODAs give the government the chance to finetune major projects to align with the interests of the Filipinos without making compromises with project proponents and concessionaires.

This financing mechanism not only offers financial support but is also packaged with foreign knowledge and technology, expertise, as well as experience through project preparation facilities, such as the Infrastructure Preparation and Innovation Facility (IPIF) and the Project Development and Monitoring Facility (PDMF).

Undersecretary Tungpalan assured the public that the DOF continues to manage the country’s debt obligations sustainably and prudently, even as the majority or 58% of the flagship infrastructure projects are funded by ODA borrowings.

Debts incurred through ODA only constitute a portion or 14.9% of the country’s outstanding borrowings.

Overall, the national government’s debt-to-GDP ratio has been declining, which is expected to drop further from 60.6% in 2024 to 56% in 2028.

The Undersecretary noted that the government’s prudent debt management has earned the Philippines the top spot in a recent global ranking on debt transparency out of 50 countries surveyed by the Institute of International Finance (IFF).

The government’s determined effort to maintain fiscal discipline has also been closely observed by credit rating agencies, giving the Philippines high credit ratings.

Meanwhile, the recent enactment of the Public-Private Partnership (PPP) Code is expected to encourage the private sector to take on a more proactive role in the Build Better More program.

The PPP Code allows the government to allocate its resources effectively while harnessing private sector expertise to expedite the implementation of infrastructure projects and the delivery of services nationwide.

“The government also continues to refine its list of 185 IFPs to cater to private sector investments that would enjoy streamlined permits and approvals to expedite the implementation of strategic projects to address the country’s growing needs,” Undersecretary Tungpalan said.

Meanwhile, the innovative financing modalities pursued by the government, such as a hybrid of PPPs, ODAs, and General Appropriation, will result in a more cost-effective financing method for the government.

These will allow the government, for instance, to borrow at concessional rates and at the same time benefit from the private sector’s proven capacity to operate infrastructure facilities more efficiently.

“Rest assured, the Department of Finance is working diligently to secure sustainable and uninterrupted funding for our
infrastructure projects so that their economic benefits are felt by
Filipinos at the soonest possible time,” he added.

The Build Better More program is the Marcos, Jr. administration’s most potent instrument for achieving investment-led and inclusive growth.

With their high multiplier effect, infrastructure projects will not only enhance mobility and productivity but also improve the lives of Filipinos through the creation of more jobs and businesses.