Infra spending key to jobs, says think tank

Infra spending key to jobs, says think tank

By Kyle Aristophere T. Atienza

JOB CREATION this year will depend largely on how efficient the government is in administering its infrastructure program, with underspending cited as a key risk, according to an infrastructure think tank.

“The Duterte government should do what it can to deliver on its 2021 infrastructure projects as this boosts economic productivity at a time of high unemployment for a large chunk of our working class. This should, however, be contingent on our ability to fund continuing responses to the pandemic, such as the procurement of vaccines from various sources and social programs in the event of future lockdowns,” Terry L. Ridon, convenor of InfraWatch PH, told BusinessWorld Sunday via messenger.

Mr. Ridon warned that underspending “despite the pandemic” will further disenfranchise workers in the infrastructure sector.

Acting Socioeconomic Planning Secretary Karl Kendrick T. Chua has said that unemployment will likely fall to between 6% and 8% this year, citing the boost to growth provided by the P4.5-trillion national budget, which sets aside at least P1.1 trillion for infrastructure.

“Underspending despite the pandemic will reflect poor budget management and implementation of funding that could have been used elsewhere, such as funding for other aspects of the coronavirus response,” Mr. Ridon said.

The Budget department estimates that infrastructure and other capital outlays declined by 50% to P40.3 billion in November. Infrastructure spending in November was also 29.4% smaller than the October total.

According to preliminary data presented by the Finance department on Jan. 12, overall government spending hit P4.205 trillion in 2020, short of the P4.23-trillion target.

“There is still time to deliver on infrastructure commitments, and we hope the government can address weak areas in implementation in the soonest time,” Mr. Ridon said.

Republic Act No. 11520, passed in mid-December, extended the validity of the 2020 budget to the end of this year for the financing of infrastructure projects that underwent procurement last year.

“Infrastructure spending will also be the showcase of the government’s legacy in the run-up to the 2022 polls,” Mr. Ridon said.

Herman Joseph S. Kraft, chair of the Department of Political Science at the University of the Philippines at Diliman, said the pandemic mitigation and the upcoming elections could serve as “stumbling blocks” for infrastructure spending this year.

“Political influence on decision-making, the prioritization of COVID-19 responses, and now the distraction of early campaigning for national elections mean that infrastructure projects, no matter how important, will have other interests competing with it for priority in the small amount of time remaining until the next elections,” he told BusinessWorld by telephone.

Mr. Kraft said the government should ensure that infrastructure spending is not used for local politics.

“Historically every end of every presidential term, budget spending and growth of the national product is always high, especially in the period nearing presidential elections,” Marlon M. Villarin, a political science professor at the University of Santo Tomas, told BusinessWorld in a Viber message.

He said the government must fully utilize spending to recover from declining foreign direct investment.

MIBON Foundation Executive Director Sonny A. Africa, said weak infrastructure spending even “six months since the end of the ECQ lockdown” only reinforces the inappropriateness of infrastructure as a stimulus measure.

“Not only is it import-intensive and boosting foreign economies rather than the Philippines, but absorptive capacity is apparently also low,” he told BusinessWorld via messenger.

Senator Panfilo M. Lacson has questioned the increase in the proposed budget of the Department of Public Works and Highways (DPWH) for 2021 citing low utilization. He said the DPWH’s unused appropriations totaled P81.9 billion between 2011 and 2018, with a disbursement rate of only at 37.8%.

“This is consistent with recent (Commission on Audit) reports of past years that the DPWH and (Department of Transportation) have a poor record of spending their annual budgets,” Mr. Africa said.

“This casts the doubt on whether the P1.1-trillion infra budget for 2021 will even be fully spent. The compulsion to implement infra projects to realize kickbacks in the run-up to the 2022 elections may still not be enough,” he added.

Mr. Africa said spending the same amount on cash subsidies will deliver more “stimulus bang for the buck” aside from also being more directly felt by more poor families.

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