‘Too many’ populist moves, former state economic planner warns

A FORMER state economic planner has cautioned against populist measures that could harm the country’s fiscal health.

“We have too many of those populist but economy- and business-unfriendly policies,” Ateneo de Manila University professor Cielito F. Habito said during the Ateneo Economic Briefing 2018 in Makati city on Thursday last week.

He cited Republic Act No. 10931, or the Universal Access to Quality Tertiary Education, as an example. The new law provides state funds to cover the tuition fees of those enrolled in state and local universities and colleges, as well as technical-vocation education and training programs under the Technical Education and Skills Development Authority.

“Case in point: the free tuition for all. Some friends in the UP (University of the Philippines) administration can’t seem to grapple with the fact that they are now giving free tuition in a campus where the biggest problem of students is the lack of parking space. That is exactly what the surveys in UP say,” Mr. Habito said, who served as former president Fidel V. Ramos’ socioeconomic planning chief from 1992 to 1998.

“Why do you have to give free tuition to everybody when we already have a good law in place that says give free scholarships to promising, needy students? But then again they wanted to have a popular-looking law that everyone gets free college education,” he added.

“That is a tremendous price tag that is impacting government finances.”

The law, which was authored by Senator Paolo Benigno A. Aquino IV, was initially opposed by the country’s economic managers who deemed it “unaffordable,” costing about P50 billion in the first year of implementation.

The fiscal deficit grew 36% to P279.4 billion as of July from P205 billion in 2017’s first seven months, equivalent to 53.35% of the P523.68-billion budget shortfall programmed for this year. The same comparative seven months saw expenditures grow 23% to P1.93 trillion from P1.58 trillion and revenues increase by 21% to P1.65 trillion from P1.37 trillion.

The government has also widened the programmed fiscal deficit to 3.2% of gross domestic product for 2019 from the current three percent, as it seeks to accelerate infrastructure and social spending.

“It’s so easy to come out with political and populist approaches. It looks good but it actually hurts the rest of the Filipino people,” said Mr. Habito.

Malacañang had yet to respond to a request for comment as of Sunday afternoon.

Mr. Habito also cited RA 10969, or the Free Irrigation Service Act, which exempts farmers with up to eight hectares from paying irrigation service fees.

The Development Budget Coordination Committee late last year also flagged fiscal risks posed by the increase in salaries of soldiers and policemen, as well as in Social Security System pension payouts by P1,000 across the board that has cut the fund’s actuarial life by 14-17 years.

To soften the fiscal impact of such policies, Mr. Habito proposed that the government reconsider the primacy of publicprivate partnerships (PPPs) in implementing projects.

“Our government must seriously consider relying more on PPP again because that’s the only way to relieve the fiscal pressures that are really building up,” said Mr. Habito.

“That’s the way to improve the promptness and efficiency of implementation.”

The current administration has opted to using state funds and official development assistance in a bid to speed up disbursements for priority projects while leaving the PPP for the operation and maintenance stage.

At the same time, state economic managers have said that the government will continue to entertain the PPP framework for unsolicited proposals that introduce new technologies and which that do not seek sovereign guarantees. —