Govt rethinks 2011 budget, eyes P1.645-T

With austerity measures being eyed for next year, the government reduced its proposed 2011 budget to P1.645-trillion, or 112 billion lower than the initial proposal of P1.757 trillion. In a press briefing on Monday afternoon, Budget Secretary Butch Abad said President Benigno Aquino III approved Monday morning the Development Budget Coordinating Committee's (DBCC) recommendation for a P1.645-trillion obligation budget, which was was pegged on a "conservative" 5-percent gross domestic product (GDP) growth even though the government is targeting a GDP growth of 7 to 8 percent for 2011. [See: P1.757-trillion budget eyed for 2011] "The process of zero-based budgeting was going to be an ongoing process and so as a consequence of that we continued to adopt measures to further bring down the expenditure as well as the deficit level," said Abad. Among the measures that brought down the proposed budget are the tightening of allocations for magna carta benefits and allowances of officials of government-owned-and-controlled-corporations (GOCCs), said the budget chief. Aquino slammed in his State of the Nation Address on July 26 the supposedly excessive allowances and benefits of the Metropolitan Waterworks and Sewerage System, prompting the Finance and Budget departments to craft guidelines for the allowances of officials of GOCCs and government financial institutions (GFIs). The guidelines, however, have yet to be finalized. [See: Purisima: New guidelines to keep excess pay in check] No new positions, buildings, or vehicles The budget proposal states that no new motor vehicles will be acquired, no new office building will be constructed, and no new government positions will be created except for "population-related" positions like teachers and medical personnel. The ban on new building constructions does not include school or hospital buildings, said Abad, reiterating that the Aquino government will invest heavily on social services. "The increases in social services are huge, particularly in basic education, in public health, in social protection," said Abad. Abad, who held the education portfolio during first part of the Arroyo administration, said the budget for the Department of Education (DepEd) will be over P200 billion. For the year 2010, the budget for education — including allocations for the DepEd, state colleges and universities and Commission on Higher Education — was P185.477 billion. Abad said investments in conditional cash transfers will grow from P10 billion to P21 billion next year, which would enable to government to cover about 2.3 million households — 1.3 billion more than the 1 million target households for 2010. For health care, the Aquino government also hopes to cover 5.3 million households, said Abad. "Next year for the very first time the government will begin to cover the informal sector which is the sector above the indigent sector," he said, adding that the government is targeting to cover about 25 percent of the 4.9 million Filipinos in the informal sector. More domestic borrowings As additional measures to bring down expenditures, the 2010 level for contraction and casual positions as a stopgap measure will be maintained, subject to the rationalization plan of various agencies, said Abad. There would also be limited increases in the expenditures for utilities, communications, and supplies, he said. Abad said the expenditures would balloon to P1.7 trillion if the continuing appropriations or disbursements for next year are included, which will result to a deficit of P290 billion. "It's unavoidable that we will have to once again go into borrowing," he said. Abad, however, said the country's fiscal managers want to increase the percentage of borrowing from local sources to shield the government from abrupt changes, considering the volatility, of the foreign exchange market. He pegged the government's borrowings from local sources at a little less than 70 percent. To achieve the growth target of 7 to 8 percent, Abad said the government hopes to bring in at least P180 billion pesos from the public-private partnerships Aquino said he wanted to pursue. Abad said his department has asked the departments of transportation and communication, public works and highways, tourism, and agriculture to finalize the line-up of proposed PPPs so the budget department can come up with an initial list of what projects to prioritize. The budget chief said Aquino will be thoroughly briefed on the contents of the budget, including the government's position on debt and borrowing, before the proposed budget is submitted to Congress on August 25 for scrutiny and approval. - JE/OMG, GMANews.TV