DepDev vs corruption

The annual gathering over the weekend of the Neda Alumni Association—composed of former officials and staff of the National Economic and Development Authority, now known as the Department of Economy, Planning, and Development or DepDev—featured a panel discussion on the agency’s role in curbing corruption. With a proud tradition and reputation for integrity, competence, and professionalism, the group felt it was timely to reflect on the topic, given how it has even dramatically slowed down the economy this past year. Past and current leaders of the agency shared perspectives and information on the latest corruption scandals and on what DepDev could do to help reduce, if not prevent, those massive fund leakages.

While everyone noted that corruption has been with us since time immemorial, all agreed that the magnitude of what we’re seeing today is unprecedented. Dr. Felipe Medalla, my direct successor who headed Neda during the aborted Estrada presidency, declared, tongue-in-cheek, that we are the ones to blame, referring to our past and present economic managers, including ourselves, in the panel. “We’ve been so successful in raising so much money for the government, so now there’s a lot more to steal,” he quipped, alluding to the wider fiscal space that has come with improved tax effort (i.e., tax-to-gross domestic product (GDP) ratio). He recalled how this ratio was just around 10 percent at the time of the late President Ferdinand Marcos Sr. It peaked at 17 percent under former President Fidel Ramos in 1997, sank back down to 12 percent in 2004 under former President Gloria Macapagal Arroyo, and is now back up to around 16 percent.

Borrowing has also become so much easier for our government, as the spread between Philippine and United States interest rates is down to around 100 basis points (one percentage point) from over 400 basis points in the past. And borrow it did indeed. Our debt-to-GDP ratio has again breached the 60 percent rule-of-thumb safe level, at 63.2 percent. National government debt was P17.7 trillion at the start of this year, nearly triple what it was in 2016. And at the rate the government is spending way beyond its means (only to funnel huge funds into corrupt officials’ pockets), this is projected to climb to P19 trillion by the end 2026.

So what can DepDev do to stop this bleeding? Among other things, I pointed to its “gatekeeper” role via planning, policymaking, and public investment programming. Both Dr. Dante Canlas, who headed Neda under Arroyo, and I noted how, as an oversight agency, it develops policies and programs to achieve the goals of the Philippine Development Plan, coordinating across the various sectoral concerns represented by the various government line departments as it does. I’ve always maintained that these policies and programs are best done in pursuit of the greatest good of the greatest number, not the greatest good of the most powerful, wealthiest, or loudest number. The Public Investment Program (PIP) that accompanies the Philippine Development Plan translates the development plan into projects on the ground, including hard and soft infrastructure. Line departments propose projects for funding either by official development assistance (foreign loans or grants) or taxpayer money, which are evaluated and approved by the interagency Investment Coordination Committee (ICC). Major projects in the regions are also vetted through the regional development councils, which are analogs of the Cabinet in our various regions, and technically supported by DepDev’s regional offices. DepDev’s technical staff undertake the due diligence to ensure that these public investments are conceived and designed for maximum and widest benefit. Only then should these projects find their way into the budget through the National Expenditure Program submitted to Congress.

But DepDev’s current officials lamented how this process had increasingly been bypassed and circumvented by politicians in recent years, through the now infamous budget insertions that replaced the pork barrel funds outlawed by the Supreme Court years ago. These projects were not in the PIP, hence never went through proper evaluation. Canlas stressed the importance of upholding the PIP and ICC process, but politicians now manage to secure their allocations directly from line departments, especially on infrastructure and social protection, with the Department of Budget and Management in seeming quiet acquiescence. The result has been what we are seeing today.

Medalla blames the fact that only Janet Lim Napoles, and no politicians, went to jail in the wake of the pork barrel scam she facilitated in 2013. “It proved to our politicians that corruption is a high-return, low-risk activity,” he rues. And so, while DepDev can institute all the processes it can to help ensure that taxpayer pesos are used right, unless someone cracks the whip from higher up, there seems little it can do to stop the corrupt from getting their hands on the money anyway.

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