Business-as-usual 2022 budget unresponsive to pandemic – IBON

August 26, 2021

by IBON Foundation

Research group IBON said that the proposed 2022 national budget is perplexingly business-as-usual with the same priorities as before the pandemic and only minor adjustments to the health crisis. There is still disproportionate attention to infrastructure, the military and police, and debt service with only marginal changes to the budgets for health and social protection. The group said that this latest spending plan should not just be scrutinized but also retailored to give due attention to urgent medical and economic responses.

The proposed Php5.02 trillion national budget for 2022 still gives disproportionate attention to pre-pandemic favorites even amid today’s radically changed conditions, IBON pointed out. The infrastructure budget keeps increasing, and at Php1.2 trillion, up from Php 1.1 trillion in 2021, eats up a huge 23.5% of the total budget. Yet the infrastructure outlay for hospitals and health centers is given just Php13 billion or barely 1.1% of the total infrastructure budget.

IBON belied government claims that infrastructure spending is the way out of the pandemic, pointing out that rapidly increasing infrastructure budgets since 2017 have not stopped the economy from slowing for three consecutive years even before the pandemic struck. The group said that part of the reason for this is that large parts of infrastructure spending leak abroad when paid to foreign suppliers and contractors.

The budgets for defense and public order and safety combined also increase to Php470.6 billion from Php444.2 billion in 2021 to take up 9.4% of the total budget. Debt service for interest payments also increases to Php512.6 billion, aside from Php785.2 billion in principal amortization that is not counted as part of the Php5.02-trillion national budget.

IBON meanwhile pointed out that the budgets for health and social protection are paltry and grossly disproportionate to emerging needs because of the pandemic and the considerable lockdown-induced economic scarring.

The pandemic exposed how underfunded and weak the public health system is such as by how testing, tracing, isolation, vaccination and COVID and non-COVID health care could not keep up with surging cases. Yet the budget for health functions will increase by only Php26.8 billion to Php248.4 billion in 2022 from Php221.6 billion in 2021. To illustrate misprioritization, IBON compared this increase as representing only about 20% of the Php100 billion budget increase for infrastructure. It is also only 32.4% of government’s estimated amount of Php82.5 billion for the vaccination program.

IBON also observed how the combined budgets of agencies giving emergency aid to needy households, farmers, and small businesses are smaller than the combined budgets for infrastructure, the military and police, and debt service. The combined budgets of the social welfare, agriculture, and labor departments which provide for emergency assistance, support to farmers, and subsidies for workers increase to Php305.1 billion in 2022. This is equivalent to just 59.5% of debt servicing (interest payments), 64.8% of the military and police budget, and 25.8% of the Build, Build, Build budget.

IBON said that the disproportionate allocations for infrastructure, military and police, and debt servicing should be corrected and more resources should be used for immediately addressing the country’s health and economic emergency.

The following items, for example, can be rechanneled to medical response and subsidies for households and small farmers and businesses: Php102.9 billion in infrastructure outlay for less urgent seaports, airports, and railways; the Php8.5-billion allocation for confidential and intelligence funds across agencies, with 73% going to the Office of the President (Php4.5 billion) and the defense department (Php1.7 billion); and the almost Php1-trillion combined allotments for defense and police services and interest payments.

The group stressed that the 2022 budget can be turned into a genuinely responsive expenditure plan arresting the pandemic-driven distress of the people. There needs to be much greater investment in the health system whose weaknesses will not go away even when the pandemic fades. Meanwhile, the tens of millions of Filipinos whose incomes have fallen and whose livelihoods have collapsed since 2020 need support even as late as 2022.

IBON urges lawmakers to prioritize people’s needs in these trying times by making the 2022 national budget responsive to the pandemic and the economic crisis. Mitigating the impact of the crisis on the most vulnerable, and not feeding vested interests in anticipation of the 2022 elections, should be the focus of the budget, IBON added.