It’s the Governance, Stupid!

The author is currently a professor in the Department of Economics of the Ateneo de Manila University, and was the secretary of Socioeconomic Planning and NEDA director-general throughout the Ramos administration.

Time and again, it is often asserted that the policies for social and
economic development espoused in our Medium-Term Philippine Development Plan (MTPDP) are generally sound – but it is in implementation where we fall apart. A key function of governance is the effective translation
of policies and strategies embodied in the nation’s development plan into tangible actions by the various players in society, both in and out of the government. But alas, governance is precisely where the previous administration went wrong.

The Estrada MTPDP addressed three aspects of governance: administrative
governance, economic governance and political governance. The first
concerns the efficiency and effectiveness of the bureaucracy, and the
plan strategies include streamlining, compensation reform, capacity
building, application of IT, and gender sensitivity and ethics.

Economic governance strategies include improvement in the public
expenditures management system, expanded privatization, focusing
government on eight core functions, and enhancing government
responsiveness to the poor. A key omission from this list is stronger
corporate governance, particularly as made imperative by the lessons
learned from the Asian financial crisis.

Government must now define more closely the parameters for such
corporate governance, to ensure that the vulnerabilities exposed during
the crisis will be avoided in the future. These include defining the
regulation of international financial flows, roles and accountabilities
of corporate directors, and stronger prudential rules on the banking
system, among other things.

Strategies to enhance political governance include eliminating graft
and corruption, improving peace and order and the justice system,
deepening devolution, institutionalizing participatory governance
mechanisms, and political and electoral reforms. Notably, the Estrada
Plan stopped short of identifying transparency as a guiding principle
of governance, even as accountability is asserted as one such
principle. Transparency is mentioned in passing, but only in the
context of devolution. This is a glaring omission, especially in the
aftermath of a government fraught with alleged secret deals and
nefarious transactions on the part of high-ranking officials right from
the very top. Transparency and accountability should go hand in hand.
Having these firmly in place minimizes the need for regulation and
controls (i.e. bureaucratic red tape), which when excessive stifles
innovation and creativity both in the public and private sectors.

Transparency is also important in facilitating working partnerships
with civil society and the private sector. One particular application
of this principle is in the devolution of development projects and
corresponding funds to local government units. Government is likely to
be more efficient and effective in delivering development projects, if
National Government departments and agencies (NGAs) channel a greater
(or even the greater) part of their development resources, including
ODA-funded projects, through the LGUs.

One compelling argument for this is the perennial experience where
central government agencies are able to expend only 70%-80% of their
annual budgets year after year, finding themselves in a rush to spend
money – usually recklessly – in the final month of the year. The record
is even worse for foreign-funded projects, where only 60%-70% is spent
on the average.

The situation is likely to be different if the NGAs would enter into
agreements with LGUs for the latter to implement their projects – and
handle the budgets themselves. Here we refer to resources beyond those
already devolved by law through the internal revenue allotment (IRA).
An important argument for this is that local executives and officials,
especially in consultation with nongovernment groups, are likely to be
in a much better position to understand the specific needs of their
localities, where certain facilities would best be located, and so on.
Thus, development projects are likely to be more responsive to actual
needs if devolved in this manner.

Not a few worry that this would court the risk of greater leakages from
public funds through graft and corruption, perhaps on the (debatable)
premise that local officials are more prone to misuse of public funds.
This is where transparency will be critical. For as long as information
on the kinds and amounts of devolved projects and funds is made widely
available and accessible, especially to local citizen groups, the
likelihood for funds misuse can be minimized. It is much easier for
local “watchdog” NGOs to monitor utilization of public funds put under
the control of specific governors and mayors than it is for national
NGOs to watch over aggregate project funds in the hands of central
offices of NGAs.

The key is to make it publicly known what and how much funds have been
channeled into whose control, and what these funds are supposed to be
used for. This is one important context within which government and
nongovernment groups working together can effect greater efficiency and
effectiveness in the pursuit of development all over the country.

Equally important is the need to formalize more mechanisms to foster
the trisectoral partnership among government, civil society and the
private sector from the national down to the community levels. At the
national level, multi-stakeholder policy bodies like the Philippine
Council for Sustainable Development (PCSD) and the National
Anti-Poverty Commission (NAPC) permit active participation of the
nongovernment sectors in policy making. At the regional level, the
Regional Development Councils (RDCs) provide the forum for
nongovernment participation in setting development directions at that
level of governance.

The MTPDP rightly asserts that governance is not a concern of
government alone. Governance should be a trisectoral partnership. It is
only by asserting this that the fundamental principles of transparency,
accountability, responsibility and professionalism can be best upheld
and operationalized. Under a new government that has been ushered in
through strong civil society action, expectations are high that these
principles will now be paramount in defining the conduct of governance
and politics in the country.

No comments yet.