Red tape feared to render "stimulus fund" fruitless

CEBU, Philippines - “The Philippine government should set aside bureaucratic red tape on releasing the stimulus fund, otherwise it will become too late and defeat its purpose.”

This according to economist Rafael S. Algarra Jr. adding that the worry now lies on how fast the government can provide the money for its end-purpose, which is to spur economic activity and infrastructure spending.   

“The government has to make sure that the money will get to the end-user in the fastest possible time, or else it may be too late,” Algarra said.

According to Algarra the government’s strategy to load the stimulus fund on infrastructure and agriculture related projects is a wise and smart idea, but it has to set aside the problems of bureaucratic red tape, so that the money will be put to good use the soonest time possible.

Spending the fund on infrastructure is seen to have long term effects and in process will provided employment and spur movement in the construction industry, whereas a mere dole-out to empower the purchasing power of the consumers is deemed fleeting and only has short term effects.

Charles Ledesma, a noted academician from the University of the Philippines College of Business Administration, said it is important for the Philippines to provide income to consumers in order to avoid deflation, which is a dangerous indicator of the economy’s health.

Thus, Ledesma said it is important for the Philippines to invite and encourage economic investments, such as expansion of companies, real estate projects, infrastructure building, to sustain jobs and income of the consumers.

For his part, Cebuano economics academician Perry Fajardo believes that if the government is sincere in providing effective stimulus fund package it has to source out new money instead of getting the fund from the existing budget allocated for different government agencies, especially with the Government Financial Institutions (GFIs).

“What the government is doing, is trying to re-package existing projects and programs, and diverted it to the ‘stimulus fund’ package,” Fajardo said.

He said the government is hard-up of funds, and if it were to put up an economic recession firewall, it has to get fresh money from “somewhere”, meaning it has to borrow money for this particular purpose.

 The Philippine government announced that it has to allocate over P300 billion “Stimulus Fund” in order to safeguard the Philippine economy from being adversely affected by the global recession.

Economists feared that this good intention of the government might just fall into the pit of corruption, if not handled carefully while maintaining speed of funding releases.

Overall, Algarra said the Philippines is still in the healthy economic position compared to its neighbor countries in the region.