2022 Development Finance Assessment shows PH Financing Landscape in the time of COVID-19 and the nearing deadline for SDGs
The 2022 edition of the Development Finance Assessment (DFA) comes at the right time.
With eight years to go before the 2030 deadline to achieve the Sustainable Development Goals, the COVID-19 pandemic slowed and even reversed progress in some SDGs globally. The Philippines is not spared, regressing even in targets that were already on track previously.
Impacts of COVID-19 on both SDG progress and development financing are compounded by the lingering effects of pre-pandemic shocks such as the Taal eruption, and a few new ones.
The beginning of the pandemic in 2020 saw a deep dive in Domestic Private Investment (a 25-percent drop versus 2019), and a decline in Government Revenues (5-percent decrease v. 2019) and Foreign Direct Investment (FDI) inflows.
On the other hand, a surge in public borrowings was seen, both on the domestic (187 percent year-on-year between 2019 and 2020) and international (141 percent y/o/y) fronts. Development aid surged by 46.4 percent as well.
The 8.6% deficit in 2021 shows how COVID-19 shrank the country’s revenue base when needed most. Public borrowings remained high for 2021, to cover for this two-fold increase in public deficit. This trend reflects a narrower fiscal space to address competing priorities for pandemic response and initiating recovery efforts.
Amid the gaps in progress towards meeting the 2030 SDGs and the narrowing fiscal space, the bright side is the government has tapped additional financing sources for the SDGs. New strategies for generating more SDG-aligned resources are also explored.
The passage of an updated Sin Tax law led to a rise in excise taxes levied on alcohol, e-cigarettes, and heated tobacco products. Collection in the past three years totaled P200 billion, 65% of which went to free insurance for poor families and members of informal economy.
Together with the private sector, the government has also raised USD 1.8 billion in labeled bonds for climate mitigation, renewable energy, and other green projects.
UNDP Philippines estimated private sector contributions to sustainable development at P41 billion in 2017. While the sector continues to make transformational investments, these need to be costed. This observation highlights availability of data as among the main challenges in scanning the horizon of financing for the SDGs.
Collaboration with international development agencies facilitate the achievement of SDGs. NEDA’s portfolio review showed a 47-percent increase in Official Development Assistance in 2020, largely for COVID-19 response and infrastructure development. However, the entire universe of initiatives for development has yet to be scoped in terms of number, amount, and possible intersections.
The assessment also recognizes the Department of Health’s efforts at costing a few specific targets towards Good Health and Wellbeing for All (SDG 3). The agency’s medium-term expenditure program covers up to 2026. It has also made budget estimates available for critical programs such as those to fight TB and HIV until 2023. This is a good starting point to find the cost of meeting the respective targets by 2030.
Still, many opportunities, in the form of new policies, proposed measures, and recently formed government structures, are opening towards stronger public sector commitment and multi-sectoral collaboration to achieve the SDGs.
One of these opportunities springs from the Mandanas-Garcia Supreme Court ruling, which increases local government units’ resource base and consequently, their role in delivering public services that directly impact the achievement of Goals.
Diaspora investments may also be explored and maximized by developing spatial- or area-based bonds that will tap on overseas Filipinos’ sense of nostalgia and desire to give back to their respective communities.
Equally promising in terms of development financing is the passage of the Ambisyon Natin Fund Act, which seeks to make funds available for LGUs specifically to carry out programs that align with the longer-term development vision of a “strongly rooted, comfortable, and secure life (matatag, maginhawa, at panatag na buhay)” by 2040.
