DBCC approves higher 2010 budget, deficit

Economic managers approved to increase the government’s war chest for 2010 in a bid to improve social services and to complete the flagship projects of the Arroyo administration, a senior official said. In a statement, the inter-agency Development Budget Coordination Committee said the P1.541-trillion budget for next year is eight-percent higher than the P1.426-trillion 2009 budget. Next year's budget is hinged on a 2.6 percent to 3.6-percent economic growth forecast, a considerable improvement from this year’s government assumption of a growth in the economy of between 0.8 percent and 1.8 percent. “This administration is finishing the priority programs and projects that it has started. These will lay down the foundation for growth and an improved quality of life for future generations," said Budget Secretary Rolando G. Andaya Jr. said. Andaya is also the DBCC chairman. Finance Secretary Margarito B. Teves said the proposed 2010 budget shows the government’s commitment to fiscal consolidation. "This means further reduction in our debt burden and more resources to fund the urgent needs of our people such as quality education and health services," he said in the same statement. In a talk with Senate reporters, Andaya said the fiscal gap would hit P233 billion, or 2.8 percent of gross domestic product (GDP), a proxy for the country’s economic output. This is 11.8-percent higher than the P208.4 billion previously forecasted in July for 2010. However, the fiscal gap next year is lower than P250 billion or 3.2 percent of GDP this year. "This is more of a fiscal consideration. If there is a stimulus, this is a modest one compared to 2009. Let us put it this way , we look at infra and stimulus packages as a whole. We will be right back on track in expenditures for balanced budget in 2013. We are moving away from the spike in spending," he said. "We want to project even to the last budget fiscal disciple, we want to have fiscal consolidation so that the next administration will be on track for a balanced budget," Andaya added. In the statement, outgoing Socio-economic Planning Secretary and National Economic and Development Authority (NEDA) director general Ralph G. Recto said indicators show that the global economy is "stabilizing." "Because of unprecedented stimulus packages unleashed around the world, we have entered into an era of recovery. There is, thus, less need for pump priming. Fiscal and monetary policies are yielding fruit and we expect resurgence in private sector activity next year," he said. Bangko Sentral ng Pilipinas deputy governor Diwa C. Guinigundo said low inflation environment has allowed authorities to ease monetary policy rates which raised liquidity in the financial system. "That would help raise investments and sustain growth this year and next," he added. Andaya said the DBCC is on track to meet the deadline mandated in the Constitution to submit the budget to Congress within 30 days after the President’s State of the Nation Address. - with Amita M. Legaspi, GMANews.TV