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PRESIDENT Arroyo’s Budget Call for 2009, which economic
experts claimed was a bit too late, is calling for
“perfect economic storm” because of the unrealistic
assumptions on the budget proposal.
In the view of the Alternative Budget
Initiative (ABI), the targeted GDP growth for 2008, 2009
and 2010 is incredible; the inflation rates are too low
for three years; and the exchange rate is estimated at
P40-P43 to a dollar while the current exchange rate is
much higher.
Considering these, the ABI is calling on
Mrs. Arroyo to give priority to social services in
government allocations to protect the people from the
“perfect economic storm.”
ABI is the the consortium of 50
nongovernment organizations which pioneered
civil-society engagement in the country’s national
budget process.
In an orientation on budget advocacies
for media over the weekend, former budget secretary
Benjamin Diokno, now a professor at the University of
the Philippines (UP) in Diliman, Quezon City, said the
budget call should have been issued in January this year
but Malacańang issued it on May 2.
“The budget call was really quite
late,” said Diokno.
The budget call, which is made to signal
the preparations for the drafting of the budget,
contains some macroeconomic assumptions, Diokno said.
In budget preparation, the Development
Budget Coordination Committee (DBCC) meets to approve
the macroeconomic assumptions needed for the budget
call. The Department of Budget and Management (DBM)
issues the Budget Call as guide for concerned agencies,
corporations and local governments in the preparation of
their budget requests.
Agencies prepare their budget proposal
and submit them to DBM, which conducts technical budget
hearings for all agencies of government, consolidates
requests and drafts the main budget proposal for
discussion by the Cabinet.
The DBM is expected to submit its
proposed 2009 budget 30 days after Mrs. Arroyo delivers
her State of the Nation Address (Sona) on July 28.
Failure to do so violates the Constitution and the
President may be impeached for that, Diokno said.
In the same orientation, Diokno equally
scored the President’s practice to ignore budget rules
and Congress’s failure to assert its power of the purse.
“Do budget rules matter? They should,
but they don’t. Despite the fiscally responsible budget
rules in the Constitution and existing budget laws,
deficits have ballooned in recent years. Why? The
President has chosen to ignore these rules and Congress
has failed to assert its power of the purse,” asked
Diokno in his presentation.
The Executive department, he added, has
probably abused the automaticity of debt-service payment
by prepaying public debt without congressional
imprimatur and creating indebtedness—which translates
into money to be paid out of the Treasury in the
future—without prior approval by Congress.
Meanwhile, Prof. Leonor Briones, lead
convenor of Social Watch Philippines, the organization
that initiated the ABI, said the country’s economic
performance in the first quarter and the macroeconomic
trends depict that the nation is heading toward a
perfect economic storm.
“Inflation continues to accelerate after
the first quarter, hitting a record of 11.4 in June. The
diminishing purchasing power of people’s money caused by
the surging prices of rice, food items and oil will
cause lower consumption and affect business
profitability. The oil prices, which, for the month of
June alone, already had four rounds of increases in
gasoline and diesel to a total of P6 per liter, will
also increase costs of farm inputs,” Briones said.
The lower growth in industry should also
cause alarm, Briones added.
The ABI cited data from the National
Statistics Coordinating Board showing GDP growing by
5.2 percent in the first quarter—and described this as
pitiful when compared with the 7-percent growth recorded
in the first quarter of 2007 and 7.4 percent in the last
quarter of 2007.
“The industry sector posted the most
significant slowdown from 6.6-percent growth in 2007 to
3.9 percent in 2008. This is caused by the downtrend in
manufacturing and construction, the main drivers of job
generation. The growth of the construction industry
slowed down from 21.7 during the first quarter of 2007
to 4.5 in the first quarter of 2008,” it said. F.
Marasigan |
