Too late

The realization must have hit like a thunderbolt. The sustained decline in our rate of growth is due principally to the collapse in public spending since this administration took over.

I have recently pointed out in this space the Aquino administration’s apparent obsession to hoard cash rather than duly deploy the national budget to support economic growth. That propensity to hoard extends to impounding funds allocated to fill up vacancies in the public sector.

Compounding government spending are the odd and arbitrary cancellations of several large projects involving official development assistance from European countries. These include the Belgian-assisted project to dredge the Laguna de Bay and the French-assisted program to build retracting ro-ro ports that will help link isolated island economies to the mainstream. The cancellations will likely end up in international arbitration courts and force us to pay damages in the billions.

Further compounding the underspending is the fact that not one of the identified Public-Private Partnership (PPP) projects has been successfully negotiated, not to mention actually initiated. In a recent policy speech before Makati businessmen, DOTC Secretary Mar Roxas indicated a policy shift away from the PPP and back to the old model of ODA-driven project financing.

The long-standing problem with ODA-driven projects is that the national government has always been unable to raise the required counterpart funding to get these projects moving. Roxas gave no indication about how this matter might be resolved. He made no mention, too, of the fact that projects undertaken by government agencies take too long to gestate. This is the reason, in the first place, why the BOT framework (the essential legal frame for the PPP) was legislated into place.

This week, the Aquino administration surprised everybody by unveiling a stimulus spending package amounting to P72 billion. The money will be used for infrastructure and poverty alleviation.

In his appearance before foreign correspondents yesterday, the President indicated that the P72 billion stimulus fund will be spent this year. That must have raised eyebrows in the crowd. We hope the President realizes that we effectively have only a little more than 8 weeks left to get anything going this year.

That is a tough sprint for this administration to win, considering that it allowed a year and a half to pass without any major project advancing to shovel-ready status.

To make matters worse, public works projects with completed engineering designs and ready contracts from the previous administration were put on hold “for review.” By this time, the negotiated contract costs should have changed dramatically and a flurry of re-bidding needs to happen literally in a matter of days for the stimulus money to rescue our economic growth before the year closes.

The President’s men must have neglected looking at the calendar. It is October. We are well into the fourth quarter.

It is odd enough that a stimulus package for the year was announced so late in the year. It is ridiculous that so much money is intended to be injected into the economy with so few working days left and so little ready shovel-ready projects on deck.

This package might not be too little but definitely too late to save a year lost. –Alex Magno (The Philippine Star)