1.

Reaction Paper on the article: DBM trims departments’ budget for ‍COVID fund

“The national budget is one of the clearest expressions of a government’s values, its priorities,
and its plans for the country. It tells us to what extent our politicians reflect the will and interests
of the people.”

This 2020 agency budget cuts covered programs, activities, and projects whose
implementation can be delayed to next year. Suffering the biggest budget cuts were the
Department of Public Works and Highways (reduced by P123.1 billion); Department of
Education (P24.2 billion); Commission on Higher Education (P13.9 billion); Department of
Agriculture (P13.9 billion); and Department of Transportation (P8.8 billion). -DBM

When I learned about these cuts, the first thing that came to my mind is the marginalized
because they will be the first ones who will be directly hit by this move. First, the realignment of
the budget from the Department of Education will hit the vulnerable students. About 80 percent
of (DepEd’s) enrolment is in the marginalized sector which should be supported by the
government. Thousands are on the brink of losing their scholarship grant subsidies because of
the reduction in the appropriations for the Senior High School Voucher Program so an increase
in dropout rate is looming as the budgetary items that were cut from DepEd’s 2020
appropriations were intended to help learners on scholarship grants.

Second, funds for the Commission on Higher Education (CHED) are also being cut.
Worst hit would be the implementation of the free tuition law and CHED’s student financial
assistance programs. I remember when the free tuition law was signed by Pres. Duterte in
2017 despite qualms among his economic managers that it’s unsustainable. When asked how he
would fund it, Pres. Duterte memorably said, “I don’t know.” True enough, it seems he doesn’t.

How frustrating that these budget cuts on education agencies and institutions came at a
time when public schools needed to adjust to online means of learning amid a “new normal” of
social distancing before classes start by August. I understand they’re cutting where it’s needed,
but education is definitely one aspect that is an absolute necessity during these times because
we’re dealing with the marginalized sector. It is important to secure the future of these
students and also the employment of teachers in private schools. We don’t want dropouts
and unemployment in the education sector. This is where government should extend
assistance to private schools. So, if they want to reach out to them, they should have not
slashed these budgets in the first place.

Meanwhile the deep cut in the Department of Agriculture (DA) budget also hurts. For
this year, the agency received a budget 20 percent lower than it had last year. This amount can
jumpstart better social programs, provide avenues for modernization and self-sufficiency for
Filipino farmers/fisherfolks, and safeguard micro-businesses and SMEs. I thought that a bigger
budget for the DA is in line with the pronouncement of President Rodrigo Duterte to prioritize
the agriculture sector through sufficient fund allocation. Don’t we need more farm-to-market
roads, augment diminishing marine resources, augment the effects of infectious diseases in the
meat industry such as the African Swine Fever, and support the agricultural industry so our youth
can re-imagine what farming is – a world of endless and fruitful opportunities? Instead of
slashing the budget, channel more funds. Isn’t the ultimate goal is to restore profitability and
dignity in the farming sector, especially for the most vulnerable of our countrymen? Making sure
that the DA has sufficient funds to implement its intended programs is going to do that.

Finally, the huge reduction in the country’s two major infrastructure-implementing

agencies DPWH and DOTr’s budget seemed out of sync from the economic team’s plan to ramp
up infrastructure spending so that the economy could quickly recover post-pandemic. We have
learned that the infrastructure programme remains to be the best driver of economic growth
because it has the best multiplier effects in terms of employment and shared prosperity. It will
primarily fuel the bounce back plan and will help the economy recover quickly. I guess the
ambitious “Build, Build, Build” infrastructure program, the government’s “most impactful”
flagship projects could ultimately face delays and construction activity could be further reduced
thus completion will be slow as a consequence.

2. Discuss the impact of the current pandemic on governance and public fiscal administration.

Indeed, COVID-19 virus is a true “Black Swan” event. And the pandemic poses
significant challenges to political leaders - and time is of the essence.

Throughout 2020, and arguably beyond, governments will be facing the challenge of
responding effectively to an ever-unfolding event with many 'unknown unknowns'. A major risk
is that political and administrative leaders disassociate, engage in policy paralysis, or fail to fully
recognize the threat until it leads to irreversible damage, which is, unfortunately, exactly how our
country seems to have responded.

As a cross-border crisis, COVID-19 represents a significant challenge to public leaders

and their policy advisors, who are expected to perform key functions like taking decisive action,
handling overwhelming amounts of data, making critical decisions regarding resource
allocations, and coordinating with stakeholders. These managerial activities are challenging
enough without a global crisis to contend with. In the current context, they are further
complicated by the ambiguous nature of rapidly changing events, which can make the links
between cause and consequence unclear.

Timely response is of the essence. It marks the difference between containing a crisis and
allowing it to spill over and completely overwhelm public organizations’ ability to function
effectively. Unintended consequences may occur, requiring a degree of improvisation beyond the
standard capacity of even the most skilled bureaucracies like the first world countries, as rules
that apply to routine operations quickly become ill-suited and outdated.

This is a test for our governance system, and it is safe to say our collective response will
shape the future for years to come.

*****

The government is borrowing more than usual this year in order to fund healthcare, social
protection, and other essential programs while our revenues are down. And they are advances
that we, or even our children and their children, will have to pay for in some way in the future.
The Duterte administration’s policy is to be careful not to borrow beyond sustainable levels, lest
we fall into a vicious cycle of accumulating unmanageable debt, which might drastically increase
our financing costs, and plunge us deeper into debt. Hence, it is imperative that we limit state
spending to a manageable and sustainable level.

But the government has had to increase spending to implement its Four-Pillar
Socioeconomic Strategy against Covid-19 even as strict mobility restrictions that national and
local governments imposed since March to suppress the coronavirus’ spread had curtailed
economic activity and led to a sizable drop in the state's revenue intake. The government’s Four-
Pillar Socioeconomic Strategy against Covid-19 is made up of emergency support for vulnerable
groups and individuals; marshalling of resources to fight Covid-19; fiscal and monetary actions
to finance emergency initiatives and keep the economy afloat; and an economic recovery
program focused on getting businesses back on their feet to sustain and create jobs. 

COVID-19 response is a ‘continuing saga’ and the government really needs to be

prepared particularly on the matter of providing the necessary funding support to all of the
activities in response to the pandemic.