Arroyo has only P1.13 trillion to finance SONA promises

President Gloria Macapagal Arroyo has only about P1.13 trillion to finance the infrastructure projects she promised to implement during the remaining three years of her term. In her seventh State of the Nation Address on Monday, Mrs Arroyo promised the country at least 29 airports and several more roads and bridges to be built until 2010. She said the money for the projects will come primarily from government revenues. The basket of projects the President presented to Congress, otherwise known as the Philippine Medium Term Development Project, will cost about P1.7 trillion, P1 trillion of which will come from revenues, P300 billion from the earnings of government-owned and -controlled corporations, and the rest from government financial institutions, private investments and multilateral partners. Less than a third of the P1.7 trillion budget for the project, which was introduced by the government in 2004, was already spent, said Romulo Neri, director of the National Economic and Development Authority. He said a huge chunk of the money that was already spent came from revenues. “A major portion of the less than one-third that has already been spent came from the government’s budget, which was sourced from revenues," Neri told GMANews.TV. According to GMANews.TV calculations, this means that only P1.13 trillion is needed to finance the remaining infrastructure projects Mrs Arroyo promised in her SONA. Neri said the government will accelerate disbursements during the next three years to complete the promised projects. However, proceeds from the reformed Value Added Tax alone are enough to fund the requirements for the remaining projects, said Budget Secretary Rolando Andaya. This year, the government sees incremental revenues from the implementation of the reformed VAT law to increase by 15.5 percent to P88.8 billion. The VAT rates were raised to 12 percent in February 2006 from the previous 10 percent to raise additional revenues to put the country’s fiscal house in order. Under the law, about 35 percent of the additional revenues from the reformed VAT law would be used to bankroll government expenditures, particularly on infrastructure and social services, while 65 percent would be used to finance the budget deficit. The government, however, is currently suffering from weaker-than-programmed tax revenues. Disappointing collections by both the Bureau of Internal Revenue and the Bureau of Customs led to a budget deficit of P41 billion in the first semester, which is about P9.7 billion below target. It put in jeopardy the government’s plan of ending the year with no more than P63 billion in deficit. Low collections also led to the axing of former BIR chief Jose Mario Buñag. Among the President’s proposed projects are: - The Luzon "Urban Beltway": Four major and other road projects, including the Subic-Clark-Tarlac Express Road; the radar approach control of the Clark Airport; the C-5-Katipunan section for the North Luzon and the South Luzon Expressways; the widening of the Alabang Viaduct up to Santo Tomas, Batangas; and the extension of SLEX to the Southern Tagalog Arterial Road. * For the central Philippines, roads will be built "to enhance tourism" and move people and goods in Panay Island, including Boracay: eight major ports and airports projects worth P15.51 billion, including the Jagna Port in Bohol, the Iloilo International Airport, the Kalibo Airport, the Bacolod Airport, and the Guiuan Airport in Eastern Samar. * Also for the central Philippines, 16 airport projects are to be improved or constructed as part of the intra-regional and extra-regional transport system. * For the North Luzon Agribusiness Quadrangle, six airport projects. * For Mindanao, seven airports. Mrs Arroyo said 21 road and bridge projects in the beltway would add to the existing 20,568 kilometers of paved national roads. Economic road map Mrs Arroyo used one of the most stable periods of her troubled tenure to tout her government's economic successes and promise the impatient poor that they will benefit soon. The President told a joint session of Congress that she hopes the Philippines can join the ranks of wealthy nations in 20 years. ''By then, poverty shall have been marginalized, and the marginalized raised to a robust middle-class,'' she said. Arroyo has gone from crisis to crisis, fending off at least three coup attempts and two impeachment efforts since taking office during the country's second ''people power'' revolt in January 2001. But midterm elections quashed opposition hopes of initiating another impeachment move, leaving her with no likely legal challenges until her term ends in 2010. That doesn't mean clear sailing, though. Coup rumors always are bubbling, and Congress is divided, with Arroyo backers ruling the House and the opposition increasing its advantage in the Senate. Showcasing the rowdy politics that have hounded her rule, the new House engaged in hours of tense debate to elect a speaker. Jose de Venecia won a record fifth term. Arroyo said a new anti-terror law that took effect July 15 underscored resolve to deal with terrorism and contribute to regional security. She tried to assuage critics' concerns that it endangers human rights. She asked for legislation to protect witnesses, guarantee swift justice in special courts, impose harsher penalties for political killings that have sparked international criticism, and increase penalties for rogue elements in the military linked to coup plots. Arroyo, the daughter of a president, is a former economic professor. Her speech sometimes sounded like a lecture as she detailed how the economy is growing at its fastest pace in 17 years, surging 6.9 percent in the first quarter of 2007. The stock market has hit an all-time high and the peso is at a seven-year high against the US dollar. ''We were able to strengthen our economy, because of the fiscal reforms we have adopted at great cost to me in public disapproval,'' Arroyo said. ''But I would rather be right than popular. All that will remain for my successor is to gather the harvest. He or she will have an easier time of it than I did.'' Arroyo promised record funding levels over the next three years for infrastructure projects to increase business confidence, efforts to crush terrorism and bring peace to the troubled Mindanao region, and a stronger and wider social safety net with better education, cheap medicines and affordable housing. Economists have credited Arroyo with crucial fiscal reforms to hike revenues, reduce the budget deficit and tame inflation while inviting more foreign investment. But critics say growth has not alleviated poverty or significantly reduced unemployment. Nearly half of the country's 87 million people still live on US$2 a day, and 10 percent of the population works abroad, sending home US$12.8 billion last year in remittances. To maintain the pace of reforms and increase growth, Arroyo has invited foreign companies to participate in huge public works projects worth nearly US$1.7 billion. Once backed by the powerful Roman Catholic church, Arroyo has found herself increasingly isolated. Archbishop Oscar Cruz criticized her in his Web log. ''Words are only good as long as the one saying them is not only trustworthy and credible, but also capable of making them realities,'' Cruz wrote. ''When someone is much discredited and thus deeply distrusted, his or her words are simply discarded and ridiculed.'' But Cerge Remonde, director-general of the Presidential Management Staff, said leaders face an impossible task because politics has become so divisive. ''Whoever sits as president of the Philippines, even if Jesus Christ will come down to become president, he'll end up being nailed to the cross. That's how difficult governance is in this country,'' he said. - GMANews.TV, with a report from AP