A budget for recovery?

By Dr. Jaime Jimenez, BusinessWorld, 19 Jan 2021

In a pandemic, the prevention of a wider spread of a virus and economic recovery are the essentials of the day. Among other things, budgeting during a pandemic needs to focus on three things: response measures, social protection, and economic stimulus.

The theme of the 2021 General Appropriations Act (GAA), signed and approved on Dec. 28, 2020, is “Reset, Rebound and Recover: Investing for Resiliency and Sustainability.”

With this theme, building health and economic resilience, specifically the “Build, Build, Build” program, agriculture, the food value chain, and other new normal priorities will be given due importance by reprioritizing the 2021 and 2022 national budgets, according to the National Economic Development Authority (NEDA).

NEDA also emphasized the following measures as the focal point of the recovery program, namely, the Bayanihan to Recover as One Act and other key legislation, i.e., Financial Institutions Strategic Transfer (FIST) bill, Government Financial Institutions Unified Initiatives to Distressed Enterprises for Economic Recovery (GUIDE) bill, Corporate Recovery and Tax Incentives for Enterprises (CREATE) bill, the “Build, Build, Build” infrastructure program, the national budgets for 2021 and 2022, Amendments to Public Service Act, Amendments to the Foreign Investment, and the Amendments to Retail Trade Liberalization.

Pegged at P4.506 trillion, the 2021 GAA has seemingly defined a recovery outlook for the new normal and beyond. However, in the latest Stratbase Occasional Paper entitled “The 2021 National Budget: What Promise Does It Bring to the Filipino People?,” authors Edwin P. Santiago and Venice Isabelle T. Rañosa of the Stratbase ADR Institute look into the sectoral and departmental distributions of the GAA. Their comparative analysis of departmental budgets raises intriguing questions.

By sectoral distribution, the Social Services sector (P1.7 trillion or 37.0%), Economic Services (P1.3 trillion or 29.4%), General Public Services (P747.8 billion or 16.6%), Debt Burden (P560.2 billion or 12.4%), and the Defense sector (P206.8 billion or 4.6%) have been allocated fairly according to the budget theme and the need to prioritize response measures, social protection, and economic stimulus. It also jives with the seven budget priorities expressed by President Rodrigo R. Duterte in his Budget Message for Fiscal Year 2021.

Accordingly, the 2021 Budget Priorities were emphasized, namely, Health, Nutrition, and Wellness; Education; Food Security; Social Protection; Preparedness and Resiliency; Enhancing Interoperability to Address Coordination Gaps; and Safety, Security, and Stability.

There seems to be a disconnect, however, when it comes to departmental distribution. Based on the 2021 GAA, the following top 10 departments were allotted budgets as follows: Education (Department of Education, state universities and colleges [SUCs], Commission on Higher Education [CHED], Technical Education and Skills Development Authority [TESDA]) with P751.7 billion; Department of Public Works and Highways (DPWH) with P695.7 billion; Department of Interior and Local Government (DILG) with P249.3 billion; Department of Health (DoH) with P210.2 billion; Department of National Defense (DND) with P205.8 billion; Department of Social Welfare and Development (DSWD) with P176.9 billion; Department of Transportation (DoTr) with P87.9 billion; Department of Agriculture (DA) with P71.0 billion; the Judiciary with P4.3 billion; and the Department of Labor and Employment (DoLE) with P37.1 billion.

While there could be no question about Education garnering the top spot, the distribution gets a little skewed on two grounds. Should the priority on health (for COVID-19 vaccines), social protection (for dislocation), digital infrastructure and technology (for digital transactions and services), trade and investments, and job creation and income generation be on top of the list to facilitate recovery? If so, should the departments like the DoH, DSWD, DA, Department of Science and Technology (DoST), Department of Information and Communication Technology (DICT), DoLE, and the Department of Trade and Industry (DTI) be on the priority list?

More so, the departmental distribution or allocation insinuates partisan budgeting at work. In turn, the disconnect between budget priorities and departmental funding can put the whole recovery program at risk.

Less becoming a so-called people’s budget, the increases and decreases of departmental allocations between the 2020 and 2021 fiscal years based on the authors’ computations become more illustrative of budget misalignments and the obvious priorities of the national administration. While the 61.3%, 14.5%, and 10% respective increases in the budget of DPWH, DND, and the Judiciary are not politically surprising, the notable decrease in the DSWD budget, from P366.6 billion to P176.9 billion or -51.7%, is quite disturbing.

Further, the 2021 budget distribution specifically allocates for COVID-19 vaccines funds amounting to P2.5 billion. This, however, thinly compares with the provision of P19.1 billion for the National Task Force to End Local Communist Armed Conflict. As the Stratbase study puts it:

“Ironically, even during a pandemic and a public health emergency, the government seems to be singularly focused on national security.”

On this note, one wonders: Could we have budgeted more for social and health interventions to address rising inequality and the continuing health crisis and its economic consequences?

Another area that appears to have been mis-budgeted is preparedness and resiliency. Under the National Disaster Risk Reduction and Management Plan, the DoST is the overall responsible agency for Disaster Prevention and Mitigation, the DILG for Disaster Preparedness, the DSWD for Disaster Response, and the NEDA for Disaster Rehabilitation and Recovery. Given such a disposition, how in particular can DoST and DSWD perform their mandate if they have been allocated such budgets?

In its entirety, the 2021 GAA significantly reflects the outlook for recovery within the pandemic and beyond. Nonetheless, would the disconnect between budget theme, sectoral distribution, budget priorities, and departmental distribution be a critical factor in disrupting a recovery program?