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A budget for the post-pandemic Philippines

 

The 2021 NEP is decidedly forward-looking, but critics say that might be its biggest flaw
The Duterte administration sent a clear signal that is looking beyond the Covid-19 pandemic with its 2021 National Expenditure Program (NEP), built around the theme “Reset, Rebound and Recover: Investing for Resiliency and Sustainability.”

But critics in Congress, where the budget is currently being deliberated, and among the public have questioned the administration’s priorities. They charge that the spending program falls short of the needed response to the ongoing pandemic and overlooks the recovery needs of households, displaced workers, and small businesses.

By the numbers
As submitted to Congress on August 25, the 2021 NEP is worth P4.506 trillion, about 9.9 percent higher than 2020’s P4.1 trillion and equal to about 21.8 percent of 2019 gross domestic product.

 


Budget Secretary Wendel Avisado said the proposed 2021 budget would help sustain the government’s efforts to “recover and rebound” from the Covid-19 pandemic.

Broken down in broad economic categories, the NEP provides P1.663 trillion (36.9 percent) for social services; P1.347 trillion (29.9 percent), economic services; P742.2 billion (16.5 percent), public services; P560.2 billion (12.4 percent), debt service; and P210.6 billion (4.7 percent), national defense.

Among departments, the education sector — the Department of Education (DepEd), Commission on Higher Education, Technical Education and Skills Development Authority, and state universities and colleges — would get the largest allocation at P754.4 billion, up 16 percent from the P650.2 billion earmarked in the 2020 outlay.

The Department of Public Works and Highways is set to receive the second highest allocation at P667.3 billion; followed by the Department of Interior and Local Government, P246.1 billion; Department of National Defense, P209.1 billion; Department of Health (DoH), P203.1 billion; Department of Social Welfare and Development (DSWD), P171.2 billion; Department of Transportation, P143.6 billion; Department of Agriculture (DA), P66.4 billion; the judiciary, P43.5 billion; Department of Labor and Employment, P27.5 billion; and the Department of Trade and Industry (DTI), P20.162 billion.

In a statement during the ceremonial handover of the NEP to the House of Representatives, Budget Secretary Wendel Avisado said the proposed 2021 budget would help sustain the government’s efforts to “recover and rebound” from the Covid-19 pandemic by improving the country’s health care systems, ensuring food security, creating more labor-intensive jobs, enabling a digital government and economy, and building community resilience.

“The imposition of [the] community quarantine has had a significant impact on the economic and social activities in our country while our health care sector continues to struggle against the pressure of the pandemic,” Avisado said. “We in government must be able to effectively respond, and with the NEP, we hope to fully address the impact of the health crisis and accelerate our economic recovery.”

How well does the NEP meet its goals?
As it does every year, the proposed budget inspired a number of detailed analyses. In the case of the NEP, most of the analyses revealed that in spite of the pandemic clearly being far from over, the government seemed to be getting ahead of itself in reducing budgets for critical health care and social safety net needs, or in some cases, presenting budget goals more suited to the pre-pandemic world.

Manila Times columnist and agricultural advocate Marlen Ronquillo, in a lengthy critique, decried the cutting of health and social programs in favor of infrastructure spending. He described it as a “throwback to a normal world barely touched by the virus … The 2021 proposed budget appears to have been framed from a universe circa 2016-2017, when the buzz words brandished were ‘Infrastructure Golden Age’.”

Independent think tank IBON Foundation expressed a similar view in a September 12 commentary, saying “the infrastructure priorities are puzzling and the government seems to be getting ahead of itself with all that interconnectivity infrastructure.”

“As it is, the coronavirus still hasn’t been contained over seven months since [Covid-19] broke out in the country. Many businesses aren’t able to reopen and many families are still jobless or have low incomes, even with lockdown restrictions eased. It is not just unclear, but actually doubtful that many of the infrastructure projects proposed [would] help all those who will remain distressed next year,” it added.

Several members of Congress also questioned some trends in the NEP as budgetary discussions got underway, criticizing reductions in allocations for health programs, agriculture, housing, and small and medium enterprise support under the DTI in favor of increased infrastructure spending.

The Times’ own analysis tends to support many of the criticisms that the program is “out of touch” with the realities of an economy very much still burdened by the pandemic. DoH spending, which in 2020 totaled P153.47 billion (a combination of its original 2020 budget of P104.5 billion and P48.98 billion allocated under the Bayanihan 1 and 2 stimulus packages), will be reduced by 14.2 percent to P131.7 billion. Other notable cuts include a nearly 75-percent reduction —from P24.4 billion to P6.2 billion — for Covid-19 vaccines and medications, personal protective equipment, contact tracers and isolation facilities, and a 63-percent reduction (P8.1 billion) in the budget for the Health Facilities Enhancement Program.

Agriculture, which was to be given a boost through the DA’s Plant, Plant, Plant initiative that received P35.4 billion from the Bayanihan 1 or 2 packages, will receive no budget for this program in the NEP. Also, the budget for the National Irrigation Administration (NIA) would see a further 13.3-percent cut in the DA’s proposed 2021 outlay.

For the DSWD, while its 2021 budget is increased slightly to P170 billion from P168.85 billion in this year’s budget, the P211.6 billion added by Bayanihan 1 and 2 for social support for this year’s spending is missing from the 2021 budget. This is another indication — along with the DoH budget cuts — that the government considers the pandemic as good as finished, despite obvious evidence to the contrary. The biggest hits to the 2021 DSWD budget fall on its Sustainable Livelihood and Supplementary Feeding Programs, which essentially lose 47.4 percent of their 2020 budget. In the case of the Sustainable Livelihood Program, the cut is straightforward; the P5.45 billion received in the 2020 General Appropriations Act is now slashed to P4.27 billion in the 2021 NEP.

As noted earlier, infrastructure is a bright spot in the 2021 NEP, with the combined public infrastructure budget across five agencies increasing by 11.9 percent from P989.3 billion in 2020 to P1.107 trillion in 2021. Interestingly, however, the infrastructure budgets under two of those agencies — the NIA and DoH — have been reduced by 11.7 percent and 36.7 percent, respectively. This again prompted critics to question the timeliness of the Duterte administration’s budget objectives.

 

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