The Department of Finance (DOF) is pushing for innovative and sustainable financing strategies to support the big-ticket projects under the “Build Better More” program.
“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,” DOF Undersecretary for the corporate affairs and strategic infrastructure group (CASIG) Rolando Tungpalan said.
Under President Ferdinand Marcos, Jr.’s massive infrastructure program, the government is rolling out 185 flagship projects worth P9.5 trillion, with the DOF holding a central role in acquiring much-needed funding for their timely completion.
It said 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.
Tungpalan said to ensure a robust revenue stream for the government to fund the infrastructure projects, the DOF is focusing on growing more revenues by plugging tax leaks, improving tax administration through digitalization and maximizing non-tax revenues.
He said while no new tax proposals are on the table, refined revenue reforms await congressional approval that would inject additional revenues into the national coffers.
The national government anticipates an average 10.3-percent annual growth in total revenues, rising from P4.27 trillion in 2024 to P6.25 trillion 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, he said.
Since the start of the President’s term, the DOF has secured ODA funding of about $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 said.
Moreover, Tungpalan said 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 percent of the flagship infrastructure projects are funded by ODA borrowings.
Debts incurred through ODA only constitute a portion or 14.9 percent 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 percent in 2024 to 56 percent in 2028.
