“A national highway? No signs at all of any steel bars to reinforce the gravel-and-sand-and-concrete mix. No wonder Typhoon Odette (international name: Rai) could easily crush it and leave it looking like soda biscuits cracked into pieces,” Bishop Ambo said on Facebook. “The photo shows a road that is only about three inches (about 7.5 centimeters) thick with one inch of asphalt applied on top of it. Who would construct a national highway this way?” he asked.
Bishop Pablo Virgilio Siongco David, popularly called Bishop Ambo, is the bishop of the Diocese of Kalookan and president of the Catholic Bishops’ Conference of the Philippines (CBCP). He is a known critic of President Rodrigo Duterte’s War on Drugs and human rights violations (The Philippine Star, retrieved July 8, 2021).
But Bishop Ambo has asked a question that needed to be asked. Why do Filipinos get a national highway “looking like soda biscuits cracked into pieces” after a typhoon? Taxes have paid for infrastructure, and government has been incurring soaring debt to finance the shortfall of revenues for Duterte’s ambitious Build, Build, Build program. What for, then, is the National Budget?
On Dec. 20, 2021, Duterte signed a P5.024 trillion ($98.45 billion) budget for 2022, now the country’s largest ever, 11.5% bigger than the 2021 national budget. This budget is Duterte’s last before his single six-year term ends in June. Midway through the budget year, the new government to be elected on May 9 will have to take over and implement the spending plan based on the optimistic revenue and sources projections of the Duterte government.
The 2022 budget will “inspire actions that focus on building resilience amidst the pandemic, sustaining momentum towards recovery, and continuing the legacy of infrastructure development,” Duterte’s office said in a statement. It includes capital outlays of P1 trillion for infrastructure spending, budgetary support for state corporations, and capital transfers to local government units (https://www.reuters.com/, Dec. 30, 2021). The combined allocation for Road Networks and Flood Control System accounts for 48.3% of the total infrastructure outlay for 2022 (https://cpbrd.congress.gov.ph/).
The Congressional Policy and Budget Research Department (CPBRD) reports: “Combined allocations for all departments in 2022 amounts to P2,869.2 billion — which is 57.1% of the total P5,023.6-billion expenditure program. The remaining P2,154.4 billion are Special Purpose Funds (SPFs) involving appropriations for specific purposes, but recipient agencies have not yet been identified during budget preparation. Allocations for the Department of Public Works and Highways (DPWH) and the Department of Education (DepEd) combined accounts for over one-fourth (26.3%) of the total NG budget in 2022. Total ALGU-IRA (share of Local Government Units [LGUs] of all national tax collection including that of the Bureau of Customs) amounts to P959 billion which is P263.5 billion (37.9%) higher than the 2021 level.
“Other big items under SPF are as follows: 1.) Interest Payment, P512.6 billion; 2.) Pensions and Gratuity Fund (PGF), P232.9 billion; and, 3.) Budgetary Support to Government Corporations (BSGC), P206.7 billion. Next to ALGU-IRA, it is PGF that posts a relatively high increment in 2022 — i.e., it will increase by P80.1 billion of 52.4%. Roughly 71% of total PGF will be used to pay for pensions of the military and uniformed personnel or MUPs (P153.1 billion), veterans (P10.9 billion), and civilian personnel (P1.6 billion).” (Ibid., CPBRD). “The military and police both get bigger budgets than the health department. The Armed Forces of the Philippines was given P213.78 billion while the Philippine National Police was given P190.69 billion” (https://www.rappler.com/, Dec. 30, 2021).
“It may be noted that an amount of P45.4 billion for the procurement of COVID-19 vaccine booster shots was placed under Unprogrammed Appropriations — the funding of which will depend on availability of new sources of revenues, including foreign loans,” the CPBRD said (CPBRD, op. cit). The Department of Health was given a total of P188.3 billion in the budget (Rappler, op. cit.).
“The Philippines 2022 Budget is not afraid of Debt,” analyst James Guild says (https://thediplomat.com/ Nov. 14, 2021). “Outstanding government debt ballooned from P8.2 trillion in 2019 to P10.2 trillion in 2020 as the state ran big deficits to battle the pandemic. Through the first three quarters of 2021, government debt has increased again to P11.9 trillions. Even without knowing the final numbers for 2021, the government is planning to borrow yet another 7.5% of GDP in 2022 to finance public expenditures. That shows clear evidence to me that Philippine policymakers are not living in fear of capital markets punishing them for over-borrowing. They obviously feel it is more important at this time to stimulate the economy with counter-cyclical public spending.”
Guild says that this fiscal attitude of debt aggressiveness is similar to that of Indonesia in its 2022 budget, and quite different from that of Thailand which is seeking to reduce government spending, deficits, and borrowings as soon as possible. He suggests that “they (Philippine policymakers) expect economic growth in 2022 to be robust, with GDP growing between 7% to 9%. I don’t know if the economy is really going to grow at that clip, and neither do they. But the other important assumption is that they’ve allowed room for plenty of borrowing to make up the difference.” (Ibid.)
Gross domestic product (GDP) is expected to expand by 5% to 5.5% this year, up from a previous estimate of 4% to 5%, the government’s Development Budget Coordination Committee (DBCC) said after reviewing the 2021-2024 macroeconomic assumptions, fiscal program, and growth targets. The government retained its GDP growth targets at 7%-9% for 2022 and 6%-7% for both 2023 and 2024. The budget deficit for 2021 was estimated at 8.2% of GDP, considering higher-than-target revenues and lower-than-programmed disbursements. Government projects the deficits for the next three years to be on a downward trajectory: 7.7% of GDP for 2022, 6.1% of GDP for 2023, and 5.1% of GDP for 2024 (Reuters, op.cit.).
Three key actors in the National Government’s infrastructure development efforts (the Departments of Transportation or DoTr, Public Works and Highways, and Information and Communications Technology or DICT) have had dismal performances in terms of disbursement (over total available appropriations). In 2020, the disbursement rates of these departments were at a low of 23.3% (DICT), 28.6% (DPWH), and 35.3% (DoTr). The low absorptive capacity of these departments can be alarming especially as the infrastructure outlay for 2022 is considerably high (CPBRD, op.cit.). In 2021, the Health department (DoH) posted an obligation rate of 86.1%, and a much lower disbursement rate of 69.2%. This is also alarming considering the crucial role that the department has to play in the country’s fight against COVID-19. “It is incumbent upon DoH to ensure that appropriations redirected to it are actually expended, and that they are utilized wisely and prudently for specified purposes,” the CPBRD said in its website.
Funds are to be utilized for specific purposes. That is what the National Budget is for. A masterplan for spending is meticulously laid out and expected to be followed. But the intricacy of the bureaucracy dulls the sharp checks and balances, and “the devil is in the details” — the Devil meaning Corruption.
That’s how we get a national highway crushed by a typhoon “looking like soda biscuits cracked into pieces.”
Amelia H. C. Ylagan is a doctor of Business Administration from the University of the Philippines.
