Infrastructure program to help reduce Philippine poverty

MANILA, Philippines — Boosting the country’s infrastructure program will allow the economy to grow more and, in turn, reduce the poverty rate that has been exacerbated by the pandemic.

Department of Finance chief economist Gil Beltran said there is a need to push for more growth-oriented spending after COVID-19 pushed more Filipinos into poverty over the past two years.

While the Duterte administration made significant strides in reducing the poverty rate over the past years, mobility restrictions and closure of businesses led to a spike anew. Poverty rate is currently at 23.7 percent.

“The poverty rate has been declining from 2015 to 2018 when we had a very healthy growth rate, but because of the pandemic, it went up again,” Beltran said.

“During the next few years we need to push for more growth-oriented spending and of course social spending is there, it’s required by law and we should continue doing those,” he said.

As part of its medium-term fiscal framework, President Marcos and his economic team are working to bring down poverty incidence to a record-low of nine percent by the end of his term in 2028.

Beltran said the government would continue to push for infrastructure spending and social spending to ensure that the poverty rate would decline.

“CCT (conditional cash transfer) and infrastructure programs can give us a higher growth rate that will allow us to cut down poverty,” Beltran said.

“We believe that the only way we can grow is spending on health, education, and infrastructure. All those will continue to be supported by the government,” he said.

Ateneo De Manila University economist and professor Leonardo Lanzona, for his part, said targeting the poor in the depressed areas should be the main strategy of the government.

“If they will adopt Duterte’s strategy to simply push up those near the poverty threshold, then it can be feasible,” Lanzona said.

“But as we saw, these households which allegedly escaped poverty were again in the same dire situation when the pandemic happened. What we need is a meaningful program that makes these households move out of poverty and resiliently stay out of poverty in the face of any crisis,” he said.

Lanzona said the government needs substantial investments in human capital instead of putting much of its resources on infrastructure.

The Marcos administration has committed to allocate five to six percent of gross domestic product for infrastructure over the next six years.

Research and advocacy group IBON Foundation noted that the nine percent target is an ambitious one that projects optimism, but would be “extremely difficult” to achieve.

IBON executive director Sonny Africa explained that poverty reduction in the past years were mainly due to increased cash transfers for Pantawid Pamilyang Pilipino Program (4Ps) beneficiaries.

Unfortunately, Africa said the boost to household incomes needed to substantially improve poverty figures, as was done before, would be harder to finance.

This is amid the conservative fiscal program and over prioritization of infrastructure and debt servicing in the national budget.

“There are also many additional countervailing factors that have to be overcome — lockdown-driven economic scarring, stubbornly high joblessness, including poor quality work, accelerating inflation, and volatile global economic conditions,” Africa said.

“Real ambition by the government would be raising the poverty threshold to a much higher level, and real intent to eradicate poverty would involve serious income and wealth distribution astride serious rural development and national industrialization policies,” he said.