As Congress tackles the proposed budget for 2021, priorities and trade-offs always have to be looked into when citizens scrutinize the budget. With massive job losses and depreciation in incomes, taxpayers are entitled to know where each centavo would go.

Supposedly, infrastructure projects that will promote better health services, and ease of transportation and mobility of essential goods – as well as IT infrastructure – should be prioritized.

There is also the urgent need for stronger social protection policies by increasing access to and faster delivery of social services to the most vulnerable groups in crisis situations. Healthcare emergency-responsive policies and social insurance systems for external shocks have to be in place in a new normal. 

There is also need to have a universal basic income scheme during pandemics that should be legislated, wage subsidy programs, unemployment insurance for temporarily laid-off workers, and an effective national targeting system in place.

Unfortunately, the 2021 budget seem to be a business-as-usual, pork-laden measure that would also fund repression through heightened counter-insurgency measures, including a draconian Anti-Terror Law. While trying not to overspend, government’s priorities in the budget are misplaced and miserable to Filipinos.

Increasing public sector debt

What is worrying is the ballooning national government debt and whether incurring more debt would benefit majority of Filipinos now and in the future. Duterte’s economic managers have scrimped on stimulus spending in fighting COVID-19, mainly on fears of runaway debt and a credit ratings downgrade. 

The emerging deficit for 2020 is projected to reach P1.563 trillion, equivalent to 8.1% of GDP, larger than the initial 5.3% of GDP projected in March 2020. The government debt to GDP is conservatively put at 49.8% by the end of 2020. 

With the cash budgeting system in place, what would actually be spent of the proposed P4.5-T budget will be P4.335-T as approved by the Development Budget Coordinating Council. This is 5.7% higher compared to this year’s P4.1-T cash budget.  

Most of the budget has already been earmarked and won’t be touched.  40.7% or P1.767-T is already earmarked for the cost of ongoing programs and projects. Automatic debt appropriations and special purpose funds will account for another P1.726-T or 39.8% of the budget. Of this earmarked amount, around P340.8-B will be payments for obligations from FYs 2019 and 2020 that will only be paid in 2021. 

So, the fiscal space for new programs and projects is just around P841.7 billion, or roughly 20.5% of the total budget.  New allocations would include a P2.5 billion for the COVID-19 vaccine next year but a high P16.4-B for the National Task Force to End Local Communist Armed Conflict.

Financing the budget will come from revenues and incomes targeted at P2.96-T while the remaining P1.3-T will come from borrowings. According to the Bureau of Treasury, national government debt rose to P9.05-T by end June 2020. By 2021, public sector debt could rise to P10.5-T or roughly 4.5-T borrowed under Duterte’s government. NG outstanding debt was recorded at P5.954 billion in end-2015.

Public works and security top increases

The National Expenditure Program (NEP) submitted by DBM to Congress shows the Department of Education, state universities and colleges, Commission on Higher Education, and the Technical Education and Skills Development Authority collectively getting the biggest slice from the proposed budget with an allocation of P754.4 billion. However, most of the funds will go to salaries and personal services.

Two major infrastructure agencies, the DPWH (P667.3-B) and the Department of Transportation (P143.6-B) had a massive 51% and 39% budget increase, respectively.  A total of P795.26-B is allocated for both or roughly 18.4% of the total budget.  

However, total infrastructure allocations will reach P1.1-T as Duterte ramps up infrastructure spending under his Build, Build, Build legacy program. Around P305-B worth of infrastructure projects are still to be identified by DPWH (and Congress) that are implementable next year when election season sets in.

The security sector also got the biggest slices through Department of the Interior and Local Government with P246.1-B and the Department of National Defense (DND) with P209.1-B. A big chunk of the budget allocates Filipino taxpayers’ money for fighting communist armed groups while leaving out our defenses in the West Philippine Sea being taken over by China.  

The counter-insurgency budget of P16.4-B would be using the same repressive tools of “search and destroy” from Marcos’ martial law era-AFP that led to the growth of the communist insurgency. Our military has told us since that rebel forces have been thinned by time and is now only a shadow of its former self.  After more than 50 years of counter-insurgency operations, we are again using the same tools and budget that precisely bred the insurgency!

Basic services delivery gets a total of P468.2-B going to the Department of Health and Philhealth at P203.1 billion, Department of Social Welfare and Development (DSWD) with P171.2 billion, the Department of Agriculture with P66.4 billion, and the Department of Labor and Employment with a measly P27.5 billion.  

What is appalling is that the health budget was even reduced from pre-pandemic levels, plus a measly P2-B COVID-19 vaccine allocation. Budget for the full implementation of the Universal Health Care law is becoming sketchy, with Philhealth funds a mess. 

With poverty incidence sliding back to 2015 levels, 60% of our people without any form of social protection, massive job losses, and one-third of registered businesses closing, Filipinos especially the poor will not get the needed support to tide them over. 

The Philippines is obligated to implement social protection measures under international human rights law and as state party to UN treaty bodies. It should be expansive and inclusive, ensuring that national budgets should not be diminished but rather increased in the light of a long-drawn health crisis.

Alas, it seems that securing the state against perceived enemies, including critics of government, is priority over that of securing the vulnerable sectors from poverty and health vulnerabilities.  

Misfire, stagger, and fail

The DBCC’s optimistic projections of a 5.5% contraction by this year and a high rebound of 7.1% economic growth in 2021 seems to be off given the risk of COVID-19 cases not contained. Credit ratings watchers, however, are taking a cautious note and warn that fiscal buffers can be wiped out if the virus is not contained.

With COVID-19 cases breaching 250,000 and positivity rates at a high 10%, the decision to open up the economy is a trade-off over bringing back lockdowns to stem the transmission of the virus. 

The 16.5% economic contraction in the 2^nd quarter was a game changer. It firmed up Duterte’s resolve to jumpstart the economy even if the country has not “flattened the curve.” The failure in leadership in handling the pandemic capped by massive corruption had all been sideswiped by political pragmatism when the budget season set in. 

For sure, the measly P140-B Bayanihan 2 for the remainder of 2020 will be a misfire and won’t help rebound the economy. With business confidence lowest at 1.2 points and a gloomy global outlook extending next year, government has be bold enough to “think without the box.”

Thus, a national budget that is expansive enough is needed for our people’s recovery and not a “contractionary” budget beset by misplaced priorities and too much reliance on infrastructure spending at a time when global aggregate demand is down and reopened economies operate at a maximum 90% capacity.  

Dutertenomics in the time of COVID-19 won’t do much for a “reset, rebound and recovery” for our people and economy. – Rappler.com

Tom Villarin is former congressman of Akbayan Party List in the 17th Congress. He authored the law Institutionalizing the 4Ps and the Safe Spaces Act, co-authored the Universal Health Care Law, Expanded Maternity Leave Law, Free Tertiary Education in Public Schools, and the vetoed Anti-Contractualization Law, among others.