'Corruption scandals to undermine growth'

Corruption scandals in large-scale infrastructure and flood control projects pose measurable risks to the country's investment climate, potentially driving up borrowing costs, discouraging foreign direct investment (FDI) and undermining long-term development prospects, governance and market analysts warned.

- KEISHA TA-ASAN, LOUELLA DESIDERIO and RICHMOND MERCURIO

In an interview with The STAR, Department of Economy, Planning and Development Secretary Arsenio Balisacan said corruption issues could undermine economic growth by deterring investment.

“Corruption has consistently been shown to undermine the pace, quality and sustainability of economic growth across countries. It reduces investment by creating additional risks and higher costs of doing business, while at the same time eroding fiscal capacity needed to build infrastructure and foster innovation,” he said.

Over the long term, he said high levels of corruption also lead to slower economic growth and weaker forms of growth, with the economy often relying on extractive industries rather than diversified, innovation-driven sectors.

Balisacan said serious efforts to combat corruption, however, can yield significant economic benefits.

“Strengthening transparency and accountability builds investor and consumer confidence, improves the efficiency of public spending and enhances the productive capacity of the economy,” he said, noting such reforms set the stage for faster, more inclusive and more sustainable growth.

As such, he said the government's creation of the Independent Commission for Infrastructure (ICI) to probe flood control projects in the last 10 years, is seen as a critical step.

“The move reflects a firm commitment to integrity in the use of public funds, strengthens governance systems and reassures both citizens and investors that infrastructure projects will be implemented with transparency, efficiency and fairness,” Balisacan said.

Despite the revelations, he noted that development partners remain on board.

“All engagements and scheduled implementations are proceeding as planned, with no indications of withdrawal, suspension or hesitation. On the contrary, our partners have commended the government's efforts to strengthen governance in investment programming and project implementation,” he said.