"In today’s pandemic, the “BBB” projects are far from inconsequential."
The administration over the weekend unveiled photos of the huge subway tunnel boring machines that will be imported from Japan to build the country’s first-ever subway system under Metro Manila. Each machine reportedly costs $100 million, capable of digging 12 feet per day. An initial six are expected to ship starting January, with the total order reportedly reaching as many as 25 machines.
Upon full build-out after five years, the new subway system is expected to carry 1.3 million riders per day. That takes a huge bite out of traffic in NCR, especially along EDSA and C-5 which will flank the system’s initial alignment. But there are also other surface infra projects, altogether comprising an expanded network that can recapture up to P400 billion of productivity being lost every year to the capital’s traffic woes.
In turn, this new surface network in Metro Manila is just one component of the major “Build Build Build” projects coming onstream under Duterte. Among those already completed—in addition to Manila’s Harbor Link connector—are the final stretch of TPLEX from Pozorrubio to Rosario, Phase 1 of New Clark City, the Laguna Lake highway, Sangley airport, a Luzon-wide broadband system in partnership with Facebook, and Cagayan de Oro seaport.
Lined up behind these in Metro Manila alone—presumably slated for completion by the time Duterte steps down in 2022—are Skyway Stage 3, MRT-7, LRT-2 East extension, and a new bridge from the Fort to Ortigas. Among projects near completion in the regions are the new passenger terminal at Clark Airport, new airports in Legazpi and General Santos, Phase 1 of the cross-cutting Central Luzon Link expressway, and the Boracay circumferential road.
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These projects are far from inconsequential. The pandemic has brought home the urgent need to divert demographics and development from the capital to the regions, if only to avoid aggravating the risk of pandemics and other natural disasters with the burden of population and construction densities.
Private spending on both consumption and investment will continue to be depressed by COVID-related uncertainties. In this environment, we must, again, count on the government to boost overall demand by spending for infrastructure, uniquely unconstrained in its powers to print money, tax, and borrow at home and abroad.
This is in fact the gist of the case for maintaining our investment grade ratings, at least according to the rating guys at Moody’s. It’s their job to assess—unsentimentally and cold-bloodedly—our government’s capacity to repay its borrowings from abroad.
As of last September 2, Moody’s maintained our credit rating of “Baa2-Stable,” exactly in the middle of their triple-B investment grade. Among the component sub-ratings, our lowest was, ironically enough, in “fiscal strength” where we scored only “ba1.” This reflected our relatively high foreign-currency debt of over 30 percent, aggravated by the expectation of “acute fiscal deterioration” due to huge COVID-related spending.
Slightly higher was our susceptibility to “event risk,” rated “baa.” This reflects a low probability of political stress emerging with a moderate impact on economic performance. This might be ascribed to the administration’s enduring hold on popular loyalties, notwithstanding adventurist importunings from both extremes of the political spectrum.
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Even higher was “institutions and governance,” assessed at “baa1.” This measured the ability of the government to maintain economic order despite a rising tide of political noise, with the opposition trying to exploit recent lapses on the health and corruption fronts. For this sub-rating, the Department of Finance and the Bangko Sentral must take much credit.
Highest of all, unsurprisingly, was our rating of “a3” for “economic strength,” which considers such plusses as our large and young population and the liquidity from OFWs and BPOs. Nonetheless, these too are increasingly being weighed down by the “acute cyclical challenge” posed by the virus, which has prompted extreme public health measures that are choking off growth.
Because of the way the virus has taken over our lives, it isn’t surprising that it also dominates the government’s economic plans at least for the short-term.
In the latest iteration of its national expenditure plan, NEDA forecasts our economy to contract by 5.5 percent by the year-end. Returning to positive growth by next year will depend critically on assuaging the fears that are holding back economic activity, as well, of course, as restoring to health all those businesses that are going under.
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Moving words for today’s special feast day, from the Magnificat of the Blessed Virgin Mary (Lk 1: 46-55):
“My soul proclaims the greatness of the Lord, and my spirit rejoices in God, my salvation. For he has shown me such favor—me, his lowly handmaiden.
“Now all generations will call me blessed, because the mighty one has done great things for me.”
Readers can write me at gbolivar1952@yahoo.com.
