Reforms needed to sustain economic growth – EIU
The Duterte administration cannot just simply “build, build, build” infrastructure without reforms that will help both national and local governments to spend funds efficiently, the Economist Intelligence Unit (EIU) said.
“Despite meaning well, the government will need to undertake other administrative reforms if it is to find success in ramping up its efforts,” EIU analysts Miguel Chanco and Roxana Slavcheva said in a report.
While the government needs to fill a huge infrastructure gap, the EIU warned the challenge lies more in “reforming flaws in disbursing agencies” that haunted the previous government’s similar program.
Local governments should also be prioritized, the report said, noting that they also tend to have “weak procurement capacity and arduous permitting procedures.”
The article, titled “Decongesting the Philippines,” was released Oct. 24, a few days before the government unveiled its infrastructure program that brought together five agencies to pursue road, rail and port projects and even “green” cities.
Separately, Budget Secretary Benjamin Diokno said last Thursday the government is aware of the underspending problem and that reforms have been started.
“The challenge is how to translate the budget authorization into goods and services that benefit our people. In short, the ultimate challenge is execution,” Diokno said.
Dubbed “Build, Build, Build,” President Duterte’s infrastructure program promised to bring some P8 trillion worth of projects into the construction stage in two years and finished in four years.
The National Economic and Development Authority had even cited the
nine projects approved in Duterte’s first four months from an existing pipeline left by the Aquino government.
But EIU’s Chanco and Slavcheva said project approval is one thing, while spending for them is another.
“Successful implementation of bureaucratic reforms will be crucial in ensuring this expanded budget is spent,” they said.
They urged the government to continue reforms already put in place by its predecessor such as dedicating delivery units to address spending blockages, while implementing Republic Act 10752 or the Right-of-Way Act.
Citing Indonesia’s experience, the researchers said projects usually get “stalled” as a result of land acquisition delays even after they were already awarded.
Down the line, local governments should also be trained to better spend their funds, they added.
“The administration will need to oversee detailed adjustments to local governments... More generally, a tendering process vulnerable to failure frequently is in need of an overhaul,” Chanco and Slavcheva said.
Diokno, for his part, said implementing rules of procurement laws had been amended to avoid delays, while the budget would continue to act as a release document that once approved, would allow agencies to enter into contracts or disburse funds altogether.
Project monitoring will also be strengthened. “I am urging implementing agencies to upgrade their internal execution mechanisms to ensure that they keep in step with the sharp increases in their budgets,” he said.
“I would be lying if I don’t admit that my greatest fear is that we may not be able to spend the budget,” Diokno said.