From one government that failed to spend the budget, the economic team of the Duterte administration is doing the opposite. The new administration is throwing caution to the wind, but it seems to be more of a calculated risk.
The government is expanding the budget deficit ceiling up to 3 percent of the gross domestic product, funding a massive infrastructure plan and a broader social services and human capital development program in the country.
Budget Secretary Benjamin Diokno said the economic team, composed of his department, the Finance Department and the National Economic and Development Authority, is increasing the deficit-to-GDP ratio from 2 percent to 3 percent.
Diokno said the higher ration implied a budget deficit target of P478 billion in 2017, rising up to P777 billion by 2022, the last year in office of the Duterte administration.
“The expansionary fiscal stance would allow us to spend more to support our desire to make up for the past neglect of public infrastructure,” Diokno said.
He assured investors the planned deficit-to-GDP ratio of 3 percent was manageable, appropriate and sustainable.
“The three percent deficit-to-GDP ratio is appropriate for as long as the deficit is spent for well-selected public infrastructure, with high economic payoffs, and for investment in human capital,” Diokno added.
The Aquino administration lagged behind its infrastructure and capital outlays target in its last full year in office in 2015.
Data showed infrastructure and capital outlays stood at P345.3 billion in 2015, missing a fifth of the programmed spending.
Latest disbursement data from the DBM showed that infrastructure and capital outlays in 2015 missed 20 percent of the P431.6-billion programmed spending.
To further boost economic expansion and get away with budget mismanagement of the past, the new administration plans to increase infrastructure spending to about P860.7 billion in the first national budget proposal of the Duterte administration for 2017. The figure will account for about 5.4 percent of the P3.35-trillion budget proposal.
The DBM said the amount of P355.7 billion would fund transport infrastructure projects such as railways, seaports, airports and road networks. About P31.5 billion will be set aside for the Mindanao Logistics Infrastructure Network to lower transporting cost in the island.
The agency said P124.5 billion would fund the construction and rehabilitation of school buildings, while P75.8 billion would finance flood control systems, such as the Manila Core Drainage Project and the Mindanao River Basic Flood Control Projects.
“To ensure food security and equitable growth, particularly in rural areas, the government allocates P120.5 billion for the agriculture and agrarian reform sector,” the DBM said.
The department said P206.6 billion would be provided for public order and safety, while P147.8 billion would be earmarked for defense to ensure public safety.
Diokno said the government would implement a 24-hour-a-day, seven-day-a-week construction among public projects to ensure that the budget for infrastructure would not sleep with the implementing agencies and clog the flow of investments.
“This is recognition of the economic cost of project delays. The estimate is something like P2.3 billion everyday… so to get things done much faster, we will work 24/7 and that will also have an impact on employment,” Diokno said.
Aside from increased spending, infrastructure development will be accompanied by procurement and implementation reforms. The implementing rules and regulations of the Government Procurement Reform Law will be simplified to avoid delays in project implementation.
The government plans to revitalize the public-private partnership to fully tap the potential of the private sector.
The administration also aims to speed up the PPP approval process and implementation in at least 18 months.
The present administration has noted that the previous government approved 12 PPP projects at an average of 29 months.
In contrast and with barely three months in office, the National Economic and Development Board headed by the President already approved nine projects worth P171.4 billion, including the Ninoy Aquino International Airport PPP project of the Department of Transportation.
Infrastructure projects will also be equally distributed to the regional areas to balance the share of growth across the country.
“The Duterte administration is serious in pursuing a pro-growth but disciplined fiscal policy. Indeed, change is coming for a more positive business climate, a better, safer, more peaceful and beautiful Philippines,” Diokno said.