The next administration would need to continue the ongoing infrastructure projects of the current government to support foreign direct investment (FDI) inflows, the Department of Finance (DOF) said.
Finance Chief Economist Gil S. Beltran said on Friday, March 25, that the ongoing infrastructure projects should accomplished by the next administration, citing they are “very important” for the productive capacity of the economy.
“It is very important that the ongoing infrastructure projects are completed for the country to benefit from their immediate catalytic effects as they increase the economy’s productive capacity,” said Beltran, who is also former DOF undersecretary.
“An unfinished bridge does not reduce travel time by even a minute and, consequently, does not inspire any additional investor confidence,” he added.
Moreover, Beltran suggested that other structure reforms are also needed to lure more FDIs.
“The next administration may need to continue structural reforms in the economy to sustain investor confidence and accelerate FDI inflows,” he said.
In 2021, the country’s FDI receipts hit $10.52 billion.
Last March 19, Beltran said that reducing infrastructure spending to temper the government's growing debt stock will be counter-productive in the long-run as far as economic recovery is concerned.
While there is a need to gradually narrow the government’s budget deficit, Beltran explained that it should be done without sacrificing infrastructure spending.
“It is important that infrastructure investments be continued,” Beltran said. “Cutting infrastructure spending may narrow down the deficit momentarily but will definitely be counter-productive in the long-run as far as economic recovery is concerned.”
In 2021, fiscal deficit was estimated to be around 8.2 percent of the economy, or gross domestic product (GDP) and is programmed to fall down to 5.1 percent by 2024.
In contrast, infrastructure spending, in percent to GDP, increased to as much as 5.6 percent last year and is expected to inch up further to 5.9 percent, before settling at 5.4 percent by 2024.
Beltran noted that while tax reforms and liberalization “definitely” attract investor interest and enthusiasm, infrastructure projects that are left unfinished do not inspire investor confidence.
“Simply put, a half-finished bridge does not cut travel time even by a minute. Infrastructure projects have to be fully completed before they can increase the country's productive capacity and enhance its growth potential,” Beltran said.
“Infrastructure are hard assets with which the economy can bootstrap itself into recovery, which, in turn, is hastened with the implementation of CREATE and the structural reforms on liberalization,” he added.