Making Public Investment More Efficient in the Philippines

Posted by Jonathan L. Uy, Roderick M. Planta, and Sailendra Pattanayak[1]

In August 2018, the National Economic Development Authority (NEDA) of the Philippines invited a team from the IMF’s Fiscal Affairs Department to carry out a review of the country’s public investment practices and related institutions, using the IMF’s Public Investment Management Assessment (PIMA) framework[2] which has been employed in more than 50 countries around the world. The PIMA report—which was welcomed by NEDA—has now been published by the IMF. In a letter to the IMF in February 2019, the Secretary of NEDA noted that the report's findings are fair and acceptable and “while the Government of the Philippines has an existing effective management mechanism, there is room for improvement for better public investment management.”

Infrastructure is a key driver to achieve economic growth and development in the Philippines. Accelerating infrastructure development is one of the foundations for sustainable development as outlined in the Philippine Development Plan (PDP) 2017–22. According to the PDP, strategic infrastructure will be developed, guided by the National Spatial Strategy, in key sectors, including transport, water resources, energy, information and communications technology, and social infrastructure (housing, education, health, and solid waste management facilities). To achieve the infrastructure goals, the government’s Build, Build, Build agenda targets infrastructure spending to reach PhP8.4 trillion (US$158.31 billion) or 7.3 percent of GDP by 2022, from 5.4 percent of GDP in 2017. This agenda is the country's most ambitious infrastructure program in history.

Strengthening public investment management would help maximize the return from the infrastructure investment in the coming years. Overall, the Philippines has better institutional framework than the average of emerging market economies, including emerging Asia, in the areas of national and sectoral planning, budget comprehensiveness and unity, budgeting for investment, availability of funding, and monitoring of assets in terms of both institutional design and effectiveness. However, there is scope to improve performance in several areas.

To strengthen the public investment management framework in the Philippines, the PIMA report makes several recommendations, which the government is in the process of addressing. These include strengthening ex-ante fiscal assessment of infrastructure projects, focusing on long-term fiscal sustainability and fiscal risks; broadening the framework for private participation in infrastructure by specifying standard principles and criteria, applicable to all types of private participation; expanding medium-term budgeting to establish indicative ceilings for both ongoing and new infrastructure projects; making project appraisal and selection more comprehensive to avoid project delays and cost overruns due to incomplete project preparation; improving infrastructure maintenance by developing and systematically applying standard methodologies for maintenance planning and costing; fostering effective competition in infrastructure procurement; improving regulations to ensure that cost adjustments are not used to address inadequacies in project planning and design; and strengthening central monitoring of implementation of major projects.

The Government of the Philippines recognizes that there is much room for strengthening public investment practices in the country. Going forward, the government envisages several measures in response to the PIMA Action Plan.


[1] Mr. Jonathan L. Uy is Undersecretary and Mr. Roderick M. Planta is Assistant Secretary in the National Economic Development Authority (NEDA) of the Philippines; Mr. Sailendra Pattanayak is a Deputy Division Chief in the Fiscal Affairs Department of the IMF.

[2] and Making Public Investment More Efficient (IMF, 2015).

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