MANILA, Dec 17 (Reuters) - The Philippine Congress has approved a 15 percent rise in the national budget next year to boost infrastructure and defence spending that will likely underpin the economy.
The larger spending on defence by the Philippines also comes as China nears completion of its man-made islands in the South China Sea, which has raised tensions in the region.
The 2016 budget, President Benigno Aquino’s last year in office, will boost spending to a record 3 trillion pesos ($63.40 billion) from this year’s 2.6 trillion pesos, said Feliciano Belmonte, speaker of the lower house of Congress.
The approval will pave the way for the signing of the budget bill into law by Aquino before the end of the year.
The budget will fund a 29 percent increase in infrastructure spending to help the economy sustain a 7-8 percent growth trajectory and fast track government spending.
“We are happy to hear of Congress’ ratification of the 3.002 trillion peso 2016 national budget,” Aquino’s budget secretary Florencio Abad said in a statement, adding the spending will create greater inclusive growth.
Manila aims to increase infrastructure outlay to 5 percent of gross domestic product (GDP) next year, from a target of 4 percent in 2015.
The government is under pressure to accelerate spending to prevent the economy from losing momentum. The export-reliant economy grew an annual 6 percent in the third quarter but is likely to pick up pace in the fourth quarter, underpinned by public spending.
Aquino is also spending a record 25 billion pesos ($528.3 million) next year to purchase frigates, surveillance planes and radars to improve its capacity to guard its maritime borders.
Countries bordering the South China Sea have been increasing defence spending this year, said a report from IHS Jane‘s, predicting total regional spending is expected to reach $533 billion annually from $435 billion in 2015.
“Rising tensions in Asia Pacific have seen a long overdue process of military modernisation move up the political agenda in a number of countries,” said Craig Caffrey, principal analyst at IHS.
The Philippines has challenged China’s nine-dash-line claim on the South China Sea in the arbitral court in The Hague and is expecting a favourable decision next year. Brunei, Malaysia, Taiwan and Vietnam also have claims on the sea, where about $5 trillion in seaborne goods passes annually.
$1 = 47.3200 Philippine pesos Reporting By Manuel Mogato; Editing by Jacqueline Wong