Monday, September 26, 2005

Nr0926:2006 budget based on problematic assumptions

Mula sa Tanggapan ni Anakpawis Rep. Crispin B. Beltran
News Release September 26, 2005
House of Representatives, South Wing Rm 602
931-6615 Ina Alleco R. Silverio, chief of staff
Celphone number 09213907362

Large chunk of 2006 budget earmarked for debt payments; assumptions in the proposed budget are even more problematic – Rep. Beltran

On the first day of congressional deliberations on the proposed 2006 general appropriations act Anakpawis Representative Crispin Beltran said that he already sees a myriad of reasons why it should be opposed. The proposed budget for 2006 is higher by Php145.7B or 16.05% more compared to the budget for 2005, but, Beltran said, the Filipino poor will still benefit very little from it.

“While it is true that the fund for social services increased by Php39.6B or 15.6%, the increase for defense is being jacked by 18.7% or Php8.33B. The increase in the defense budget is almost as big as the proposed budget for the entire judiciary, the third branch of government,” he said. Beltran pointed out that even as the funds for social services increased, interest payments for the country’s debt servicing will eat up Php340B or 32.28% of the over-all budget for 2006. “This allocation increased by Php38.3B or 12.69% compared to last year’s.”

The veteran labor leader turned lawmaker also said that in the proposed GAA 2006, some Php381.7B is being squirreled for principal amortization of an off-budget item or funds that will no longer undergo the scrutiny of congress. “Compared to the principal amortization for this year, the 2006 principal amortization is poised to increase by Php37.6B or 10.93%. To summarize, the government will spend Php721.7B for debt payments in 2006. These debts grew by Php75.9B or 11.75% from last year’s Php645.8B. “This would mean that every Filipino pays P25 a day for debt payments – or Php9012.50 for the whole year. This is also equivalent to almost Php2 billion a day, a tremendous drain on our resources and a massive obstacle to real, lasting progress,” he said.

“Altogether, the 2006 proposal posits a total increase of Php134.6B over this year’s budget. But the projected deficit (essentially the money the country will borrow to bridge the difference between what the government expects to earn and what it proposes to spend) will be down to Php124.9B, from this year’s projected deficit of Php180B. Sabi ni Budget Secretary Romulo Neri, ito ay dahil daw sa mas mataas na revenue collection. But we must note that this proposed budget is highly conditional because the “increase in revenue collection” relies heavily in the implementation of E-VAT.”

Finally, the veteran labor leader turned legislator said that other assumptions in the proposed budget are even more problematic. “The proposal assumes that the economy will grow by 6.3% next year, a full percentage point better than it is expected to grow this year. It assumes an average exchange rate of Php55-57 per dollar. Worst of all, it assumes that the benchmark Dubai crude oil price will stay at the $55-$56 level per barrel. The chances of the economy improving in the coming year are only two – slim and none. Even now as Congress deliberates on the budget, oil prices have once more made a leap, dragging with them the prices of basic commodities and electricity rates,” he said.#


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