WE SEE flood control public works project all over Bacolod. Over the weekend, Bacoleños saw how these projects performed.
There were some floods at the corner of Araneta-Alijis Roads but along the Sugar Regulatory Administration office, it was mainly a ho-hum event. Also in downtown Bacolod, when I went home after the Saturday Feast.
In fact, these projects are a small part of the overall scheme of the national government.
“Our main priority in building ports, airports, roads or railways, is to uplift the lives of millions of Filipinos,” says Department of Finance (DoF) Undersecretary Grace Karen Singson.
The government will build eight bridges connecting the Visayas to Luzon and Mindanao to facilitate faster movement of people and goods across the archipelago.
These eight bridges estimated to cost a total of P269.19 billion will also be complemented by the rollout of road networks aimed at transforming the Visayan Islands into growth corridors.
Singson said the Duterte administration intends to spend around $158 billion over the next five years on its “Build, Build, Build” program, so that infrastructure spending would reach 7.3 percent of gross domestic product (GDP) by the end of the president’s term.
Singson added, “With economic studies showing that every peso invested in infrastructure yields two pesos and four centavos in economic activity, we can expect this stimulus to cause a surge in our growth.”
And where the government gets its funds? According to the DoF website, the enactment into law of the Tax Reform for Acceleration and Inclusion Act (Train), which will ensure a steady revenue flow for the government totaling P786 billion over the medium term, along with prudent fiscal management and declining debt service payments, will make this ambitious infrastructure buildup financially feasible.
These projects can be exciting. Then comes some sobering prognosis that will rain on this parade of good news. According to the South China Morning Post on May 12, “Philippine Secretary of Budget and Management Benjamin Diokno estimated some US$167 billion would be spent on infrastructure during Duterte’s six-year term, under the slogan “Build! Build! Build!”
According to Dr. Ander Cors, this could increase current Philippine national government debt of approximately $123 billion, to $290 billion. But that does not include interest. High rates of interest that China, the most likely lender, could impose on the new debt could balloon it to over a trillion U.S. dollars in 10 years.
More likely according to Cor’s analysis, at 10 percent interest, the new debt could go to $452 billion, bringing Philippines’ debt: GDP ratio to 197 percent, second-to-worst in the world. That understates the burden to the Philippines, as existing national government debt would also accrue interest over that time, and such interest was not included in the analysis.
“Dutertenomics” fueled by expensive loans from China, will put the Philippines into virtual debt bondage if allowed to proceed.
Who are we to believe? Diminishing debt service payments or ballooning foreign debts? Let’s see in the coming years. (bqsanc@yahoo.com)