The administration of President Ferdinand ‘Bongbong’ Marcos Jr. vows to sustain the “Build, Build, Build” infrastructure initiative of the Duterte administration because of its huge multiplier effect and impact on economic growth and job creation.
Multilateral lenders such as the Asian Development Bank already assured their support for the continuous financing of infrastructure projects, many of which already started in the previous administration.
ADB president Masatsugu Asakawa said in June the bank was working closely with the government, development partners, and private sector to support infrastructure investment, including projects under the “Build, Build, Build” program, promote sustainable agri-development and food security, and invest in Filipinos’ welfare.
“As we prepare our next country partnership strategy for 2024-29, we will be exploring opportunities with the incoming administration’s priorities on climate change action to support a resilient and green economic recovery, climate-smart transportation, and continuing investments in education, vocational skills training, employment programs, health promotion, and social protection,” Asakawa said.
Marcos, himself, promised during the election campaign period to continue the “Build, Build, Build” infrastructure initiative of the Duterte administration.
Government data showed that of the 119 infrastructure flagship projects under the “Build, Build, Build” program, 12 were completed and seven more were about to be completed by June—the last month of the Duterte administration. About 12 other are set to be completed by December 2022.
The Marcos administration inherits 88 projects that are expected to be completed in the next six years.
Former President Rodrigo Duterte expressed that confidence the new administration would sustain big-ticket infrastructure projects that his government started.
Economic growth
Finance Secretary Benjamin Diokno—the head of the Marcos government’s economic team—told an investors’ roundtable discussion that these big-ticket infrastructure projects would integrate regional economies into mainstream growth.
“The Marcos administration will inherit a better state of infrastructure to aid the country’s socioeconomic agenda. It will inherit a robust pipeline of implementation-ready infrastructure projects. A total of 88 infrastructure flagship projects are ready for completion by 2023 and beyond,” Diokno said.
Infrastructure spending reached P895.1 billion in 2021, growing by nearly a third from a year ago. Under the P5-trillion 2022 budget, about a fifth would be allocated for capital outlays which include infrastructure projects.
Former Finance Secretary Carlos Dominguez III said breaking the vicious circle of shrinking demand and supply in the domestic economy under the grip of the global coronavirus crisis could be done by accelerating the “Build, Build, Build” infrastructure program to create jobs, and, in turn, stimulate growth and boost domestic consumption.
Dominguez said restarting “Build, Build, Build” projects, especially those in rural areas, would be the best way to revive the economy because of infrastructure spending’s high multiplier effect of raising incomes, stimulating demand and generating new jobs and businesses.
The “Build, Build, Build” program will not only rev up the economy but will also fix the country’s weak infrastructure and logistics network, which pushed up production and operational costs for investors, Dominguez said.
Policy continuity
The World Bank said the continuity of policies implemented in the Duterte administration that support growth and investments would be key to strengthening the recovery of the Philippines from the impact of the pandemic.
“Continuity of reforms in the last six years promoting greater competition and attracting foreign investments will further boost the country’s growth outlook in the coming years,” said World Bank country director Ndiamé Diop.
“In the context of narrowing fiscal space, the authorities can encourage public-private partnerships to sustain improvements in the country’s infrastructure assuming financial risks to the government are managed and the quality of services for the citizens are secured,” he said.
Diop said developing measures to reduce the budget deficit and the country’s debt would ensure long-term fiscal sustainability. These measures should focus on prudent spending, improved revenue collection through reforms in government procurement, and greater private sector financing to ensure that government allocations for education, health, other social services, and infrastructure are not sacrificed, he said.
Anchored on more robust domestic activities, the World Bank said the Philippines would likely grow by 5.7 percent in 2022 and 5.6 percent on average from 2023 to 2024 amid intensifying global uncertainties.
The Philippines grew 8.3 percent in the first quarter this year, fueled by strong domestic demand and the recovery of industry and services sectors.
Continuing growth this year would draw strength from an improving domestic environment, characterized by low COVID-19 cases, greater mobility of people and wider resumption of economic and social activities.
The reopening is shoring up services, especially transportation, restaurant, and food services, and wholesale and retail trade. Prospects also improved for tourism following the opening of borders to vaccinated individuals, reopening of tourist attractions, and relaxed travel requirements for travelers. Sustained public investments, along with recovering business activities will boost the construction and industry sectors.
The World Bank, however, flagged several risks to the outlook, including rising inflation, geopolitical uncertainty brought about by the Russian invasion of Ukraine, tightening global financing conditions and weaker growth of trading partners like the United States and China.
It said that while the Philippines entered a benign phase of the pandemic, the threat of a new variant-driven surge hangs over the growth outlook.
The report also warned that prolonged war in Ukraine and the continuing sanctions on Russia, could further disrupt global economic activity, slow down growth of major economies in the world, and impair trade and financial flows.