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News
July 16, 2009
2010 budget assumptions untenable;
revisions necessary - Social Watch
Philippines
Soon after her SONA speech, President
Gloria Macapagal Arroyo will submit to
Congress her proposed 2010 budget.
Social Watch Philippines (SWP) warned
that 2010 targets on revenues,
expenditures and deficit are unrealistic
and that formulating next year’s budget
with these assumptions will push the
country to fiscal crisis.
The Fiscal Year 2010 Budget Call, which
was issued by the Department of Budget
and Management (DBM) last May to guide
all agencies in the formulation of their
budget, projects next year’s deficit to
reach P173.3 billion. This is based on
the assumption that government revenues
will reach P1.403 trillion while
disbursements will amount to P1.576
trillion.
“The signs that there will be serious
setbacks in meeting the fiscal targets
for 2010 are already apparent this year.
The DBCC already increased, yet again,
the deficit target for 2009 to P250
billion but revenue collections are
still below target, with P18 billion
shortfall for the first quarter.
Financing this deficit through more
borrowings will siphon not only this
years’ budget but also the budget for
next year,” Leonor Magtolis Briones,
Lead Convenor of SWP, explained.
The Development Budget Coordination
Committee (DBCC) revised its growth
forecast for 2009 from 6.5% to 7.3% to a
lower range of 0.8% to 1.8%. The deficit
target was also revised several times
from the original zero deficit in the
2009 Budget Call, to P250 billion as of
June this year.
Briones also explained that SWP, through
the Alternative Budget Initiative (ABI),
raised the dangers of using unsound
assumptions in the 2009 budget. Prior to
the adoption of last year’s General
Appropriations Act, ABI called for
adjustments in the budget citing that
the P1.39 billion expected revenue is
likely overstated, that the expected
P302.65 billion interest payment for
debt is likely understated and that the
expected P40 billion budget deficit is
likely understated.
“Mrs. Arroyo should refrain from
proposing to Congress a 2010 budget that
is not viable. Making legislators
believe that there are viable sources to
fund a budget bloated by questionable,
unnecessary and redundant items will
push the country further to unmanageable
deficits and eventually drain funds that
should otherwise be used to critical
social development to the benefit of the
poor,” Briones said.
Last week, DBM Secretary Rolando Andaya,
Jr. said he was “disappointed and
alarmed” by the collection shortfall of
the Bureaus of Customs and Internal
Revenue. He also said that it is
“understandable” that the collecting
agencies are missing their targets due
to the economic slowdown.
“While the economic slowdown certainly
contributes to the poor revenue
performance, we believe that
inefficiencies in tax administration,
such as tax evasion and misplaced fiscal
incentives, still have yet to be
decisively addressed by the authorities
and it is severely hurting us now,”
Briones pointed out.
Social Watch Philippines is part of the
international Social Watch network which
monitors and advocates financing for
development and the Millennium
Development Goals (MDGs). SWP
spearheaded the Alternative Budget
Initiative (ABI), a network of 60
non-government organizations advocating
and monitoring government’s budget for
education, agriculture, environment,
health and campaigning for budget
reforms.
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