‘Shift debt focus to smaller projects’

MANILA, Philippines — The government should utilize its planned borrowings on projects that would address the current economic challenges faced by Filipinos, such as rising commodity prices, instead of focusing on big-ticket infrastructure.

In a briefing yesterday, research and advocacy group IBON Foundation said while debt in itself is not necessarily a bad thing if used to help the economy grow, the problem now lies on where the country’s borrowings actually go to.

“That’s where we disagree, with so much going to infrastructure projects. You’re not going to outgrow debt because you are draining resources in the economy,” IBON executive director Sonny Africa said.

“If the government wants more bang for their buck, you should borrow not for big-ticket infrastructure projects. You should borrow for small-scale agriculture infrastructure.”

Africa said the government should prioritize projects that would be beneficial in addressing the current problems hounding Filipino consumers, particularly the high cost of commodities.

For one, prices of onions have skyrocketed recently and farmers are calling for more cold storage infrastructure facilities to help them prolong the commodity’s shelf life and thus contribute to the lowering of prices.

“Sure, borrow, but borrow and spend it on agricultural infrastructure to spur income and productivity in the sector,” Africa said.

“Because infrastructure on its own without corresponding agricultural industrial development plan will just reinforce that exact same service and export orientation that we have right now,” he said.

Finance chief Benjamin Diokno earlier said the country’s agriculture sector should grow by two to three percent per year to significantly contribute to the country’s overall economic growth target.

This, as the economic team banks on high economic growth to surpass the increase in debt.

As of end-November 2022, the country’s outstanding debt was at a record P13.64 trillion. This was already 1.56 percent above the P13.43 trillion expected debt pile by the end of 2022.

For 2023, government data showed that the country’s total obligations would still reach a record P14.63 trillion despite the slowdown in debt.

Further, IBON maintained that another way to lower the government’s reliance on debt is to improve the country’s tax system amid its counterproductiveness and continued regressiveness over the past 20 years.

“We are more reliant on indirect taxes such as VAT (value added tax) and excise and these limit what you can earn from poor middle class Filipinos,” Africa said.

“If the government really wants to be solid in solving its revenue problem, it should stop giving tax breaks to large corporations. A progressive tax system that taxes those with the ability to pay more is the best way to lower the government’s reliance on debt,” he said.