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News Commentary

Commentary: A closer look at 2021 budget

Paco Pangalangan - Philstar.com
Commentary: A closer look at 2021 budget
Workers clean the glass of a high rise building in Makati last Jan. 21, 2021.
The STAR/Michael Varcas

The first Occasional Paper for the year of the Stratbase ADR Institute was a timely discussion of the country's 2021 General Appropriations Act (GAA).

Entitled "The 2021 National Budget: What Promise Does It Bring to the Filipino People?" authors Edwin Santiago and Venice Isabelle Rañosa of the Stratbase ADR Institute analyze the sectoral and departmental distributions of the 2021 GAA and share insight on how the appropriations reflect the Philippine government's real priorities.

According to the study, "the national budget is the financial expression of a government's intended courses of action for a given period. As such, the General Appropriations Act is customarily used to read into the priorities of government—whether expressed in terms of absolute amounts, in terms of the percentage of increase from the previous year's level, or as a slice of the entire pie." 

The theme of this year's General Appropriations Act was "Reset, Rebound and Recover: Investing for Resiliency and Sustainability." President Rodrigo Duterte, in his budget message, said that the 2021 budget is focused on our "greatest priority" of sustaining and strengthening government efforts in responding to and recovering from the COVID-19 pandemic. 

"Shifting priorities and realigning spending policies are a must," the president added, to focus the budget on containing the spread and mitigate the effects of the pandemic; funding a vaccine and restarting the economy.

That said, given the deep effects that COVID-19 has had on the country, it is safe to assume that Filipinos expect nothing less from their government. A year after its initial detection in the country, Philippines has now breached the 500,000-mark in recorded cases and have over 9,900 deaths. 

At the same time, it is also forecasted that the Philippines will be the last economy to fully recover in the Asia Pacific Region.

However, the promised shift in budget priorities and realigned spending policies do not seem as apparent as the grim public health and economic realities we currently face.

As expected, Education (DepEd, SUCs, CHED, TESDA) received the highest funding in the 2021 GAA with P751.7 billion. Of course, this complies with the constitutional requirement that education should be the state's top budgetary priority.

The department with the second-highest budget, however, deserves additional scrutiny. 

As noted in the Stratbase ADRi study, when comparing department allocations year on year, it becomes apparent that the Department of Public Works and Highways' (DPWH) 2021 budget of P695.7 billion saw a sharp increase of P264.5 billion this year alone. 

In this regard, the DPWH "overshadows" all other departments with its glaring 61.3% budget increase. This drastic increase can be attributed to the government's plan to jumpstart the country's economic recovery initiative in line with its Build, Build, Build program.

However, given COVID-19 is not just an economic crisis but a public health crisis too, it would have been expected that the Department of Health would receive a significantly higher budget this year as well. But the DOH budget of P210.2 billion pales in comparison.

"Instead, what turned out to be glaring is that the budget for the DOH and PhilHealth cumulatively represents only 4.7% of the total 2021 national budget and increased by only 14.6%, even less than the budget for the Department of Interior and Local Government… these factors put serious doubts about addressing the pandemic, or the resetting part as the administration calls it," the study said.

The study also pointed out the risk of corruption, especially of the DPWH budget, given the concern that this creates more opportunities for illicit transactions that lead to commissions and kickbacks from contractors. 

Concerns over corruption are further amplified by the fact that the 2022 elections are fast approaching and that public funds might instead be diverted to the campaign war chests of some legislators. 

In addition, the study also pointed out some controversial provisions in the GAA, such as the vetoed provision that would have allowed Congress oversight on the government's use of intelligence funds.

The 2021 budget may manifest risks and controversies down the road. Still, the apparent disconnect between its supposed priorities and the departmental distribution raises questions about government priorities at a fundamental level.

The argument for Build, Build, Build as a tool for economic recovery is sound, given the multiplier effect of infrastructure projects. However, the budget, as aptly described by Santiago and Rañosa, is a "zero-sum game," allocating limited public funds to one program means less available funds for others. 

This begs why the government decided to allocate such a large percentage of government funds to infrastructure projects when the private sector is more than willing to bare part financial burden and risk through the public-private partnership model of infrastructure development. 

From the start of the Duterte administration, it turned away from PPPs, preferring to fund infrastructure projects through taxes or overseas loans. However, if PPPs were now used for more infrastructure projects, more public funds would be freed for other priorities. In the case of a pandemic, this would mean that more funds could be dedicated to responding to the health aspects of this crisis.

As pointed out in the Stratbase ADRi paper, "as it is, the GAA 2021 seems like business as usual. Based on the allocation for DOH, there is very little hint that we are amid a pandemic. Neither does it look incredibly healthy enough to be a strong driver for public health sustainability." 

The government's rhetoric may paint the picture of a budget that shifts its focus to responding to the COVID-19 pandemic, but numbers don't lie, and a closer look at the 2021 GAA shows where the government's priorities truly do.
 

Paco Pangalangan is the executive director of think tank Stratbase ADR Institute.

2021 BUDGET
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