GOV’T AGENCIES URGED: SPEND TO SPUR GROWTH
Sen. Sonny Angara says government agencies need to catch up on their spending before the year ends for the country to hit its growth target. But a prime impetus for growth, the administration’s ambitious ‘Build, Build, Build’ program, remains ‘illusory’ as projects have yet to be implemented by key departments, according to former Socioeconomic Planning Secretary Cielito Habito.
After the delay in the approval of the 2019 budget held back the start of some infrastructure and social welfare projects, Sen. Sonny Angara on Saturday urged all government agencies to use the last two months of the year to spend their remaining allocations to spur economic growth.
Angara noted the Department of Budget and Management’s report that 96 percent of the P3.67-trillion budget had been released as of the end of September.
Infrastructure spending has reached 92 percent of the fullyear target as of September, while total disbursements have hit 98 percent of the target.
“The agencies have to catch up on their spending so that we can hit our growth target. The reenactment of the budget was regrettable but as the data has shown, the targets set are still attainable so we must sustain the momentum,” Angara, who chairs the Senate’s finance committee, said in a statement.
There is still time to catch up on spending, which would benefit especially the poor, Angara said.
Not to be shortchanged
“It’s not just infrastructure but also on the delivery of social services that have faced delays,” he said. “We should do everything to make sure our people don’t feel shortchanged by the government.”
The administration’s move to deal with government underspending was encouraging, Angara said.
“But we should always strive to hit our targets, especially when it comes to spending on infrastructure,” he said. “Spending on infrastructure creates jobs and has a cascading effect across various industries, all of which spurs economic growth.”
In the second quarter of the year, economic growth slowed to 5.5 percent because of the delay in the enactment of the 2019 budget. Finance officials hope it would rise to 6 percent in the third quarter.
The delayed approval of the 2019 budget was due to squabbles between the Senate and the House of Representatives over amendments introduced by the House after the ratification of the bicameral measure of the spending bill.
‘Illusory’ infra program
The low budget utilization by key government departments could also undermine the Duterte administration’s ambitious P8.4-trillion “Build, Build, Build” program to construct 75 major infrastructure projects, including railways, roads, bridges and airports in six years.
But the program remains “illusory” because the public works and transportation departments have not implemented many of these projects, according to former Socioeconomic Planning Secretary Cielito Habito.
Briefing three Pampanga business groups on Thursday, Habito said government agencies “continue to have low absorptive capacity,” particularly the Department of Public Works and Highways (DPWH) and Department of Transportation (DOTR), which were below 30 percent as reflected in Commission on Audit reports.
“There’s a big challenge to the implementation of ‘Build, Build, Build’ because public construction has actually declined rather than increased in recent quarters. Even after the [2019] budget passage happened, the decline in public construction actually went deeper than ever before,” he said.
“So this suggests that the budget is no longer the problem but we need an implementation capability or what we call the absorptive capacity that will really need a lot of attention,” said Habito, an economics professor of the Ateneo de Manila University.
The briefing was organized by the Pampanga Chamber of Commerce and Industry, Metro Angeles Chamber of Commerce and Industry, and Clark Investors and Locators Association.
Trimming list
Current Economic Planning Secretary Ernesto Pernia told Reuters news agency the government was “trimming” the list of 75 flagship projects it had promised to deliver or at least start and “substituting with others more economically feasible and doable.”
The Duterte administration has promised to usher in a “golden age of infrastructure” by building and modernizing airports and ports, and spurring the country’s economic growth.
‘Game-changing projects’
But snags, including the delayed approval of this year’s budget, forced economic managers to trim their growth target for this year to 6 percent to 7 percent, from 7 percent to 8 percent
At a separate media briefing on Friday, Pernia said the revised list could even reach 100 projects as they replaced big ones with many smaller but “game-changing projects” like roads, bridges and irrigation systems that will benefit provinces not included in the original list.
Not all of the projects in the revised list, which will be released next week, will be finished during Mr. Dut
erte’s term, but “half of the 100 will be either completed or started, that is for sure,” Pernia said.
The government has planned to finance the projects through its budget, official development assistance, private sector funds and loans.
DOTR must shape up
Habito said the DPWH budget has been increased six times since 2010, but the number of its personnel had been reduced due to streamlining.
The DOTR “needs some shaping up,” he said without elaborating.
“The real now is to try to go back to the PPP [public-private partnership] mode to that extent that we can. If we really want ‘Build, Build, Build’ to move forward as expeditiously as we like, we really have to have a good mix of PPP and government implemented projects,” he said.
The Duterte administration opted to undertake a hybrid form of PPP by making government roll out the projects and then bid out contracts to the private sector for the operation and maintenance of the completed public structures.
It tried to skirt the slow process of the PPP model pursued by the administration of former President Benigno Aquino III that implemented 10 projects in six years.