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News
July 16, 2009
Philippine Budget Call for 2010 is
calling
for fiscal crisis; Modification in 2009
expenditure pattern urgent to avert 2010
crisis
– Social Watch Philippines
Social Watch Philippines (SWP) warned
that the overoptimistic fiscal targets
in the President’s Budget Call for 2010
will worsen the fiscal crisis and
increase poverty in the country.
“The targets on revenue, expenditures
and debt for 2010 as contained in the
budget call for 2010 are unrealistic,”
said SWP lead convenor Leonor Magtolis
Briones. “If government insists on
formulating 2010's budget with overly
optimistic assumptions, it can only lead
to further ballooning of deficit by 2010
due to heavy borrowing to finance the
budget,” the former national treasurer
added.
The 2010 Budget Call proposes a
revenue growth rate of 8.3 percent and a
53.4% Debt to GDP Ratio. Briones also
noted that for FY 2010, the general
expectation is a global economic rebound
which would fuel growth in the
Philippine economy.
“The signs that there are serious
setbacks in meeting the fiscal targets
are too apparent. The economy posted a
measly 0.4% growth for the first quarter
of 2009. The revenue shortfall is indeed
disturbing. Moreover, as reported by the
National Statistics Coordination Board (NSCB),
the leading economic indicators for the
second quarter of the year breached into
negative territory confirming the all
too real threat of recession,” Briones
said.
Briones warned that more deficit
spending will just worsen the country’s
debt crisis. “With falling revenues,
further increase in deficit target for
2009 from current P199 billion can only
be financed through more borrowings. Our
P4 trillion debt would only balloon if
the government insists on a drastic
increase in expenditure,” Briones
explained. She noted that government
expenditure for 2009 was 15.5% more than
that of 2008; and the deficit this year
became 333.3% more than the deficit for
the same period in 2008.
Rene Raya, a convenor of SWP said that
the danger on government’s aggressive
government spending to drive economic
growth in the first quarter of the year
has failed because its fiscal stimulus
is largely focused on tax breaks and
incentives to rescue big companies
rather than prioritizing social
services.
“The Philippines is among the
countries in Southeast Asia with the
largest fiscal stimulus for tax breaks
and incentives and rescue operations for
industries and infrastructures. The
government has set up a separate $6.5
billion allocation for conditional cash
transfers, which is even bigger than
that of Indonesia, Thailand, Malaysia
and Vietnam, “ Raya said.
“We should take the examples of China
whose $584 billion package to stimulate
domestic demand includes $123 billion to
improve the country’s health care system
including annual subsidy; upgrading of
grassroots medical institutions, health
services and public hospitals. We should
also look at examples from Korea with
its 50 million won ‘Green New Deal Job
creation Plan’ intended for
environment-friendly job creation,” Raya
added.
SWP, which is recognized by the
international community for its
leadership role in the campaign for
financing for socioeconomic development
and budget advocacy since 2001, is
calling on civil society to closely
monitor the utilization of the 2009
budget especially with the coming
national elections in 2010.
Raya explained that the 2009 spending
will significantly impact on the
recovery or recession of the economy in
2010. “The spending in 2009 will
significantly impact on the recovery or
recession of economy in 2010. We must
be wary of reports from the Bangko
Sentral ng Pilipinas (BSP) that there
doubts on the accuracy of the
expenditure report,” Raya said.
Briones also emphasized that the 2009
expenditures should have the highest
social rates of return because the 2010
national budget will be limited by
restrictions in spending imposed by
election laws. “Election-related
spending can only provide temporary
growth and little impact on sustainable
poverty alleviation,” Briones added.
SWP, through its Alternative Budget
Initiative (ABI), is supporting 60
non-government organizations in
monitoring the release
of funds for education, agriculture,
environment, health and conditional cash
transfers to make sure that the funds
are used for their intended purposes and
not go to the pockets of corrupt
officials. The NGOs are also advocating
for intensive funding for the MDGs.
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