Questionable DAP spending belies economic stimulus claims by Aquino gov’t

Posted: February 7, 2014 in Socio-Political

Two days ago, the Manila Standard reported the supposed P2 billion Tarlac road projects funded by the controversial Disbursement Acceleration Program which first appeared in this blog. The news report confirmed funding for the road project, with Malacanang saying that there is nothing wrong if the President pours in P2 billion for public works in his home province. Malacanang seems to have forgotten that time when Arroyo was being criticized for funding so many projects in her home province of Pampanga.

In any case, we should look closer at the projects being funded by the so-called DAP. Some projects are either implemented because of patronage politics or because they provide an opportunity for corruption (or both). The DAP spending submitted by the DBM to the SC belies the government propaganda that the DAP was supposed to stimulate the economy and have a positive effect on growth.

In all their memos to the President, Abad and the DBM always claim that the proposed additional projects have been chosen based on three criteria:

a)      their multiplier impact on the economy and infrastructure development

b)      their beneficial effect on the poor

c)       their translation into disbursements

Against these criteria, let us now examine some of the uses of DAP based on an October 2011 memo to the President by the DBM.

The DAP was used by the Department of Agrarian Reform to pay P5.432 billion as landowner’s compensation. DAP’s beneficial effect and multiplier impact on the economy is achieved by paying landlords? How much do you think would go to compensating landlords that are political allies of the regime? Was DAP also used to compensate Luisita landlords?

The Department of Justice used P11 million through DAP for the operating requirements of 50 investigation agents and 15 state attorneys.

The Office of the Presidential Adviser on the Peace Process (OPPAP) was given P1.819 billion through DAP as supplementary budget for unfunded GPH-CPLA peace pact livelihood projects, support for so-called peace and development communities of the MNLF, PAMANA communications plan, support for reintegration of CPP-NPA rebels, farm-to-market roads, health centers, multi-purpose halls, livelihood and agriculture production etc. So OPPAP now wants to play congressman with its own set of infrastructure and livelihood projects for the implementation of questionable peace deals?

The DPWH had P5.5 billion for “various infrastructure projects” usually upon the recommendation of politicians. To quote the DBM, “the requested amount shall provide for additional priority infrastructure projects of the DPWH which include road, bridges and flood control projects. Many of the identified projects are quick-disbursing projects below P40 million which will be implemented by the district offices nationwide”. It doesn’t take a rocket scientist to figure out how corruption will take place in this set up.

There’s also the P6.5 billion “LGU support fund” also released through DAP which was justified as a buffer for the cut in the IRA share of LGU’s. The support fund was set up for “LGU’s requiring financial assistance to implement projects under a prescribed menu”. This definitely stinks like pork. LGU’s lining up to the DBM and DILG to get “financial assistance”? Good old-fashioned patronage politics.

There’s the P8.592 billion ARMM Transition and Investment Support Plan that covers “improvement of service delivery performance, creation of enabling environment for PPP towards equitable growth, improvement of public safety and security, cleansing the electoral system etc. This DAP allocation is supposed to be implemented by several agencies. The very description of the project raises a lot of questions on its legitimacy.

Still on the DILG, there is the P250 million Performance Challenge Fund that claims to be “People Powered Community Driven Development”, an empowerment fund that covers “various capacity building activities for the poor and participatory poverty action planning and budgeting projects in crafting local anti-poverty plans in the poorest municipalities. The project is jointly undertaken with the DSWD and NAPC. Pork, this time in the guise of poverty alleviation.

Residents of North Triangle in Quezon City should know that P11 billion was supposedly allotted for in-city housing for “20,000 informal settler families”, along with the construction of a Medium Rise Building in Camarin, Caloocan. We should find out the status of this housing project, especially in the aftermath of the very violent demolition of residents recently. Are they even aware that an MRB project is waiting for them in Caloocan?

To illustrate where congressional and presidential pork intersect, there is the DAP to cover PDAF projects, under the title “Various Other Local Projects”, worth a whopping P6.5 billion. This will be used to augment presumably existing projects already funded by PDAF. That DAP is used to augment graft-ridden PDAF projects shows how this program cannot be but part of the system of corruption.

It gets better for 2012.

In a memorandum to the President dated June 25, 2012, Abad  again sought authority to utilize government savings (DAP) for “big ticket projects” such as the “National Road Projects” in the President’s home province of Tarlac amounting to P2 billion.

Abad also recommended the use of DAP to fund the fraud-tainted Tulay ng Pangulo para sa Kaunlaran project which began under the Arroyo administration. Around P1.8 billion was recommended for this, where P500 million will be sourced from DAR. These bridges are supposed to help farmers, but may have ended up, like in the past, bridges to nowhere.

Abad sought authority to use pooled government savings to fund “urgent” and “critical” projects such as a P5 billion Tourism Road Infrastructure Project, and again the so-called “priority local projects” nationwide amounting to an additional P8.295 billion.

Some P1.6 billion meanwhile was supposed to be allotted for the “Capability Requirements for the Operations of the Philippine Coast Guard in the West Philippine Sea”. How funding the Coast Guard in the West Philippine Sea has a multiplier impact on the economy and a beneficial effect on the poor is not clear from the memo.

Clearly, in many cases, the DAP projects mentioned here do not fulfill the three criteria set by the DBM. Many of the projects do not really have a multiplier impact on the economy or have any beneficial effect on the poor, especially not when projects become wells of corruption. The submission by the DBM to the SC undermines governments own claims that the DAP was a necessary stimulus program. Billions went to infrastructure projects, including those already funded by the PDAF, raising concerns about corruption. Tigilan na ang panloloko sa taong-bayan. The only thing stimulated by the DAP was the appetite for corruption by government officials.

DAP is a tool for patronage politics — for influence over lawmakers and local officials– as well as an opportunity for greater corruption in the form of lump-sum allocations.

What is alarming is that while the Solicitor General says that DAP is no more, the authority invoked to create DAP still remains. Presidential pork still remains. Our work is far from over then.  ###

 

P.S.

 

From Ibon’s November 6, 2013 release:

The Aquino administration defends the controversial Disbursement Acceleration Program (DAP) as, among other things, stimulating the economy in 2011 and creating momentum that continues until today. Pres. Benigno S. Aquino III in particular claimed that the DAP contributed 1.3 percentage points to growth in gross domestic product (GDP) in the fourth quarter of 2011. However this is an exaggerated interpretation of a misleading World Bank report.

  • ·         Pres. Aquino based his claim on the World Bank’s  March 2012 Philippines Quarterly Update which said that “the government’s DAP was partially successful and contributed 1.3 percentage points to GDP growth in [the fourth quarter of 2011]”.  The same report clarifies, although only in a footnote, that this  “1.3 percentage point” contribution actually refers to the contribution of total government consumption and public construction and not just of DAP-related spending.
  • ·         DAP-related spending was only a portion of total government spending in the fourth quarter of 2011. The Php61.4 billion in actual disbursements under DAP accounted for just 19.8% of Php309.7 billion in total government spending in the fourth quarter (Php309.7 billion) and just 5.4% of total government spending for the year (Php1,144.2 billion). Total spending is the sum of government final consumption expenditure (GFCE) and public construction in the national income accounts measured at current prices.
  • ·         The hype about the supposed contribution of DAP to growth is a selective use of statistics. GFCE actually grew slower at 6.4% in 2011 from 2010 compared to 10.6% growth in 2010 from 2009; public construction meanwhile contracted by 29.5% in 2011 after 8.1% growth in 2010. These are measured at current prices. Real GDP growth in 2011 of 3.9% was also a marked slowdown from 7.6% in 2010.
  • ·         The real contribution of DAP-related spending to economic growth is likely just one-fourth of a percentage point at most in the fourth quarter of 2011 and an even more negligible fraction for 2011 as a whole.

 

 

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