New economic leaders pledge to support infrastructure projects

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The administration of President Ferdinand “Bongbong” Marcos Jr. is committed to supporting the Duterte administration’s “Build, Build, Build” infrastructure initiative because of its huge multiplier effect and impact on economic growth and job creation.

The newly constructed iconic bridge in Loay, Bohol.

Multilateral lenders such as the Asian Development Bank have already pledged their support for the continued financing of infrastructure projects, many of which have already started under the previous administration.

AfDB President Masatsugu Asakawa said in June that the bank was working closely with the government, development partners and the private sector to support infrastructure investments, including projects under the program ” Build, Build, Build”, promoting sustainable agricultural development and food security, and investing in the well-being of Filipinos.

“As we prepare our next Country Partnership Strategy for 2024-29, we will explore opportunities with the incoming administration’s priorities on climate change action to support a resilient and green economic recovery, smart transportation climate response and continued investment in education, job skills training, employment programs, health promotion and social protection,” Asakawa said.

Marcos himself pledged during the campaign period to continue the Duterte administration’s “Build, Build, Build” infrastructure initiative.

Government data showed that of the 119 flagship infrastructure projects under the ‘Build, Build, Build’ scheme, 12 had been completed and another seven were on track for completion in June, the last month of the government. Duterte administration. Around 12 more are expected to be completed by December 2022.

The Marcos administration inherits 88 projects that are expected to be completed over the next six years.

Former President Rodrigo Duterte expressed his confidence in the new administration to support the expensive infrastructure projects his government has launched.

Economic growth

Finance Secretary Benjamin Diokno, head of the Marcos government’s economic team, told an investor roundtable that these expensive infrastructure projects would integrate regional economies into broader growth.

“The Marcos administration will inherit a better state of infrastructure to help the country’s socio-economic agenda. It will inherit a strong pipeline of infrastructure projects ready for implementation. A total of 88 flagship infrastructure projects are ready for completion by 2023 and beyond,” Diokno said.

Infrastructure spending reached 895.1 billion pesos in 2021, up nearly a third from a year ago. Under the 2022 budget of 5 trillion pesos, about a fifth would be allocated to capital spending which includes infrastructure projects.

Former Finance Secretary Carlos Dominguez III said breaking the vicious cycle of contracting demand and supply in the national economy in the grip of the global coronavirus crisis could be done by accelerating the infrastructure program “Build, Build, Build” to create jobs, and, in turn, stimulate growth and stimulate domestic consumption.

Dominguez said restarting “Build, Build, Build” projects, especially those in rural areas, would be the best way to revive the economy due to the high multiplier effect of infrastructure spending to raise incomes. , stimulate demand and generate new jobs and businesses.

The “Build, Build, Build” program will not only revive the economy, but also repair the country’s weak infrastructure and logistics network, which has driven up production and operating costs for investors, said said Dominguez.

Policy Continuity

The World Bank said continuity of policies implemented in the Duterte administration that support growth and investment would be key to bolstering the Philippines’ recovery from the impact of the pandemic.

“The continuity of reforms over the past six years, promoting greater competition and attracting foreign investment, will further boost the country’s growth prospects in the years to come,” said World Bank Country Director Ndiamé Diop. .

“In the context of shrinking fiscal space, authorities can encourage public-private partnerships to support improvements in the country’s infrastructure assuming that the financial risks to the government are managed and the quality of services to citizens is guaranteed. “, did he declare.

Diop said developing measures to reduce the country’s budget deficit and debt would ensure long-term fiscal sustainability. These measures should focus on prudent spending, better revenue collection through public procurement reforms and increased private sector financing to ensure that government allocations for education, health, other social services and infrastructure are not sacrificed, he said.

Anchored on more robust domestic activity, the World Bank said the Philippines is likely to grow 5.7% in 2022 and 5.6% on average from 2023 to 2024 amid growing global uncertainties.

The Philippines recorded growth of 8.3% in the first quarter of this year, fueled by strong domestic demand and the recovery of the industrial and service sectors.

Continued growth this year would draw strength from an improving domestic environment, characterized by low COVID-19 cases, greater mobility of people and a broader resumption of economic and social activities.

The reopening bolsters services, particularly transportation, restaurants and food services, as well as wholesale and retail trade. Tourism prospects have also improved following the opening of borders to vaccinated people, the reopening of tourist attractions and the easing of travel conditions for travellers. Sustained public investment, as well as a resumption of business activity, will boost the construction and industrial sectors.

The World Bank, however, flagged several risks to the outlook, including rising inflation, geopolitical uncertainty caused by Russia’s invasion of Ukraine, tighter global financing conditions and weaker partner growth. trade like the United States and China.

He said that while the Philippines has entered a mild phase of the pandemic, the threat of another surge caused by variants weighs on growth prospects.

The report also warned that the protracted war in Ukraine and continued sanctions against Russia could further disrupt global economic activity, slow growth in the world’s major economies, and harm trade and financial flows.

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