FACED with an admission by economic managers that next year’s budget of P1.645 trillion can only be supported by P1.41 trillion in revenues, senators said on Monday they will review the budget bill meticulously before committing to support the first big money measure endorsed for congressional approval by the Aquino administration.
Budget Secretary Florencio Abad admitted at the Development Budget Coordination Committee (DBCC) briefing at the Senate on Monday that next year’s budget could be supported by only P1.41 trillion in estimated revenues, of which P1.27 trillion will come from taxes and P137.2 billion from “nontax sources, such as fees and charges, income and foreign grants.”
Abad added, however, that from the record P325-billion budget deficit this year, the shortfall for 2011 is projected to go down to P290 billion, or 3.2 percent of gross domestic product.
“This will be financed by P257.3 billion of domestic borrowings [83.9 percent] and P49.5 billion, or 16.1 percent, from foreign borrowings,” he said.
In the middle of the DBCC briefing, Sen. Serge Osmeña asked the Department of Budget and Management (DBM) to submit additional information to the Senate Finance Committee, including documents detailing the consolidated public-sector deficit.
Sen. Edgardo Angara, while commending Abad for his “tough decision” adopting a zero-based budgeting policy, pointed out that the Aquino administration’s 2011 budget bill “does not seem to respond to the basic requirements of the country.”
Angara made the assertion in the wake of findings by the research group IBON Foundation that the proposed budget has actually decreased allocations for public hospitals, as well as subsidy for indigents, belying the administration’s claim of expanded coverage for universal health care.
IBON noted that allocations for 55 public hospitals nationwide were reduced by P363.7 million, from P5.2 billion this year to P4.8 billion in 2011.
It added that the budget for so-called specialty hospitals, including the Lung Center, National Kidney Institute, Children’s Medical Center, Heart Center and the Philippine Institute of Traditional and Alternative Health Care was cut by P970.6 million.
According to Sen. Frank Drilon, “The . . .2011 budget will be subjected to very close scrutiny [because] the capital outlay, which is the productive part of the budget, will be reduced by P12.8 billion in 2011.”
Drilon, who chairs the Senate Finance Committee reviewing the budget bill, noted that the current capital outlay of P196.6 billion would be much lower next year, and “this will be examined closely as the National Economic and Development Authority has briefed us that one of the risks in not achieving the policies set in the budget is the lack of infrastructure or less infrastructure than what was programmed.”
“The public-private sector projects are very iffy at this point. In other words, how much will be devoted to infrastructure would really depend on how successful the PPP projects will be. So this is one item in the budget where we expect a lot of debate,” Drilon added.
He told reporters after the budget briefing that the interest payments and amortization for 2011 “will be the biggest in history at P823.27 billion.”
Drilon confirmed that most of the loans due were secured in the past administration, “and it has failed to provide the development that the loans were secured for because of corruption. If you analyze, the DBCC, in their briefing, indicated that there is a direct correlation between corruption and competitiveness.”
“In other words, we are not competitive because of corruption. There is an exact correlation between the two aspects in the budget,” he added.
Asked if the government is obliged to pay for “tainted” loans, Drilon replied: “Yes. These loans we have to pay for because they were contracted. That is why we already raised the red flag on other loans that could be again secured, specifically, the Belgian loan for the dredging of the Laguna Lake for P18 billion. Again, this is a loan that has been approved by the previous administration and on commitment fees alone, we will be paying three-fourths of 1 percent, which means about, easily P150 million.”
Drilon indicated that the Finance Committee would initiate reforms that must be undertaken to address the issue.
“There is nothing objectionable about securing loans as long as we use the loan for the purpose for which it was intended, and its execution should not be tainted with corruption. Unfortunately, dredging is a rich source of corruption, a very potent source of corruption, because it is so difficult and it is impossible to measure how much were fulfilled in our program of work. This must be looked into. So these are the things that will be challenged in the budget debates.”
GOCCs, too
Drilon said the committee will also look closely into the corporate operating budgets of the 14 monitored government-owned and -controlled corporations (GOCCs) because senators recently uncovered in the course of the hearings the GOCCs’ fat bonuses and perks.
“Many of these GOCCs are independent republics and they use as an excuse the fact that they are not getting any subsidy from the national government or that they are not covered by the salary-standardization law. These are not excuses for them not to be subjected to the scrutiny of Congress because these are public funds, government funds that they utilize. So we will look closely into the corporate operating budgets of the 14 GOCCs because their deficits and their subsidies are part of the budget and their deficits would go into the consolidated public-sector deficit.”
Drilon hinted that the Senate would likely endorse the creation of a separate committee composed of the DBM and the Department of Finance that would review and recommend abolition of GOCCs found to have outlived their usefulness.
In an interview after the hearing, Abad told reporters the DBM had to reduce state subsidies not only for public hospitals but even for state universities and colleges (SUCs) because “we are facing a serious fiscal situation.”
“Many of these GOCCs, SUCs and [similar] agencies earn their respective revenues. In the case of SUCs, we found that they have accumulated cash balance of P16 billion. We’d like them to utilize the balances that they have, especially since right now we are facing a serious fiscal situation…and we’d like them to utilize what they have to save us from having to continue subsidizing institutions that, in fact, make money…for programs that benefit the poor,” the Budget secretary said.
Cash-transfers priority
Abad also told senators the Aquino government continues to stand for the conditional cash-transfer (CCT) program as an effective tool against poverty, both in terms of addressing immediate needs and achieving long-term development goals.
“The CCT program has been tried and tested in similarly situated countries. And here, we are seeing progress in the program’s two years,” he said, explaining, “we are little by little empowering the poor in the countryside. We see that it does not only address the immediate needs of the poor, but also encourages them to act for the long term by availing [themselves] of health and education services. We hope Congress supports the expansion of this program for the long term,” he stressed.
According to Abad, the Philippine CCT program “Pantawid Pamilyang Pilipino Program [4Ps],” started in 2008, provides a monthly stipend of P500 to mothers and P300 per child.
“This is on condition that they send or keep their children in school, that their children receive immunization and that the mothers avail [themselves] of prenatal and other checkups,” he added.
Drilon said the DBM, for the first time since 1993, did not include the automatic appropriations among the items for congressional scrutiny.
“This is because, basically, of the fact that the experience in 2010, the current year [budget] has not been very good, where the interest payments have been reduced [in Congress] by P64.5 billion and it has resulted in the increase of the appropriations of the Department of Public Works and Highways and other line agencies,” Drilon said. He added that it effectively increased the 2010 budget by P64.5 billion “since regardless of the reduction undertaken by Congress on the debt service, it would still amount to P340 billion as originally proposed.”
