Villegas: Corruption risks more poverty as infra spending drops

CEBU, Philippines — More Filipinos risk falling into poverty as corruption concerns stall infrastructure spending, while rising geopolitical tensions and higher global costs add pressure on household incomes, economist Bernardo Villegas said.

Speaking during an economic briefing in Cebu, Villegas said alleged leakages in public spending, particularly in flood control projects, have contributed to a sharp decline in infrastructure investments that traditionally served as a major driver of economic growth and poverty reduction.

“Infrastructure spending used to account for about 6 percent of gross domestic product. Now it is closer to 2 percent,” Villegas said. “That means resources that should have gone to roads, bridges, irrigation systems and other public projects are not generating benefits for the broader population.”

Villegas, founder of University of Asia & the Pacific (UA&P), said weaker public infrastructure investments have reduced one of the government’s most effective tools for creating jobs and improving productivity, particularly in rural areas where poverty remains concentrated.

The issue comes as Filipino households continue to grapple with higher living costs fueled by geopolitical tensions in the Middle East, which threaten to push up global oil prices and transportation costs.

Villegas said even households whose incomes remain unchanged are experiencing a decline in purchasing power as food, fuel and other essential goods become more expensive.

“People may be earning the same income, but they can buy much less,” he said.

The Philippines imports most of its fuel requirements, making the economy vulnerable to supply disruptions and price spikes resulting from conflicts in key oil-producing regions. Higher energy costs typically ripple through the economy by increasing transportation, manufacturing and food production expenses.

Villegas warned that a prolonged slowdown in infrastructure spending could further weaken economic growth if public works projects remain stalled while authorities investigate alleged irregularities.

Still, he said corruption alone does not determine a country’s economic prospects, citing several Asian economies that achieved rapid growth despite governance challenges.

“The fight against corruption must continue because it is wrong and unjust,” Villegas said. “But at the same time, we should not conclude that the Philippines is incapable of achieving higher levels of development.”

He expressed confidence that the current administration could eventually restore momentum in infrastructure development once governance issues are addressed, noting that sustained investments in public works remain critical to raising productivity, supporting agriculture and reducing poverty.

For an economy where a significant portion of workers earn less than P30,000 a month, the combined impact of reduced government spending and rising prices poses a growing challenge.

Economists have long viewed infrastructure investments as a key mechanism for expanding employment opportunities, lowering logistics costs and improving access to markets, particularly in the countryside where most of the country’s poor reside.

Without a recovery in infrastructure outlays, the Philippines risks seeing more households pushed into economic hardship as rising global costs erode already constrained household budgets, Villegas added. — (FREEMAN)