Congressman Ridon: 2015 Proposed Budget More Pork, More Debts

MANILA – Kabataan Partylist Rep. Terry Ridon on August 7 emphasized the apparent baselessness of a consistent boast of President Benigno Noynoy Aquino III regarding the country’s supposed stable economic fundamentals.

“What he (Aquino) fails to disclose is that his government’s spending bonanza is largely funded by debt – debts which condemn the Filipino people to more years of underspending for basic social services and jobless growth,” Ridon said in a statement. Congress started deliberating on Malacañang’s proposed 2015 budget last Wednesday.

The proposed budget is bigger than last year; it still has lump sum appropriations or pork, plus mechanisms to turn into pork other funds which Congress would approve for other projects in their deliberation. Because the proposed budget is bigger, the Department of Budget and Management (DBM) foresees deficits which it proposed to plug by borrowing money.

They get the pork, people pay the debt

Until now the public is demanding for Malacañang’s full disclosure of releases of pork funds. But up to the first day of the budget hearing, Budget Secretary Forencio “Butch” Abad could only promise, yet again, that they would soon be able to finish their report.

Instead, the lawmakers were given copies of its 2015 budget proposal including Malacañang’s wish to legalize the Disbursement Acceleration Program (DAP) and its mechanism of impounding savings. It is the same mechanism unanimously declared as unconstitutional [2] by the Supreme Court on July 1.

Abad said the SC decision on DAP will no longer hold once Congress redefines savings. “If you look at the reforms that the president is implementing, you’d see that he’s ceding a lot of authority in the name of efficiency and transparency,” Abad claimed.

But that is not true, said Kabataan Partylist Rep. Ridon. “To truly see the president’s subtle yet full control of the SPFs, one needs to read the fine print,” the youth legislator said, pointing to several “troubling special provisions” governing the SPFs (Special Purpose Funds), for example, “buried in the National Expenditure Program’s (NEP) fine print.”

Ridon stressed that there are also several SPF provisions buried in the NEP that essentially allow cross-border transfers to other branches of government and constitutional commissions, an act already declared unconstitutional by the SC.

With such “discreet insertions” in the budget’s fine print, Ridon said the DBM “might be aiming to confer to the president unrestricted power to treat at least P284 billion ($6.5 B) in lump sum funds as his very own discretionary piggy bank.”

The Aquino administration has yet to fully account for its more than 30-months’ worth of impounding and disbursements under DAP (Disbursement Acceleration Program), but based on statements of Kabataan’s Ridon and other partylist lawmakers from the Makabayan bloc, there are, once more, various slabs of similar pork in Aquino’s proposed 2015 budget.

So far, they have noted the DAP-like funding for local governments [3], on top of usually huge pork or lump sum appropriations that are not expected to be looked into as Congress crafts the GAA [General Appropriations Act.] These lump sums include, as mentioned, the President’s Special Purpose Fund, P378.603 billion ($8.6 billion), and unprogrammed expenditures, P123.056 billion ($2.8 billion), or a total of P501 plus billion ($11.4 billion) under the president’s discretion; Internal Revenue Allotment P389.860 billion ($8.82 billion); and debt servicing P372.863 billion ($8.434 billion). All in all, these comprise nearly P900 billion [420.36 billion] in the proposed budget.

“There has not been a satisfactory accounting of the DAP yet Aquino is already pushing for another set of king-size pork funds. Does he think that his tears in his SONA already washed away his sins over the DAP?” asked Elmer ‘Bong’ Labog in another statement. The labor group and urban poor group Kadamay marched to Mendiola Aug. 6 to condemn Pres. Aquino’s insistence on amassing king-size pork funds yet again.

Worse, based on Ridon’s statement, the bigger, still pork-laden budget proposed for next year would have to be funded with more taxes and burdens on majority of Filipinos.

Higher, pork-laden budget, heavier burden on people

Government employees are already protesting their tax burden [4], but the said burden seems headed for the worse under Aquino’s proposed budget.

The DBM targets P2.337 trillion ($52.863 billion) of its proposed P2.606 trillion ($58.95 billion) budget to be funded by tax collections, non-tax revenues, and privatization next year. This means increased taxation and increased ways of earning non-tax revenues (such as the complained of hike in traffic fines, sin taxes, hike in various government fees). Practice shows privatization also results in higher service fees (for example, higher water and power rates, higher oil prices, proposed hike in train fares, etc.).

As for the projected budget deficit, the government targets to borrow P700.8 billion ($15.85 billion), of which only P283.7 billion ($6.42 billion) will be used to plug the projected fiscal deficit, and P26.7 billion ($604 million) will be set aside for the government’s cash buffer account, Kabataan Rep. Ridon said.

The larger portion of Aquino’s target new borrowings, amounting to P390.4 billion ($8.831 billion), would be used to pay for the amortization of the principal of the outstanding national government debt.

Rep. Ridon said the government’s targeted borrowings highlights the debt-driven nature of the country’s fiscal program. In other words, next year, the government will incur loans amounting to billions of pesos once again and the bigger part of it would be used to pay these debts. In the last few days the Aquino administration has frequently cited ‘savings.’ But if it’s true that there were ‘savings,’ then why does it continue to incur loans?

Higher debt

On top of these new and bigger debt burdens, there are more. Based on the 2015 Budget of Expenditures and Sources of Financing (BESF) submitted by the Department of Budget and Management (DBM) to Congress, the national government targets to incur an additional P902.6 billion ($20.42 billion) domestic debt, mainly through treasury bills and fixed rate treasury bonds, said Ridon.

The government also targets to incur an additional P145.723 billion (US$3.3 billion) foreign debt, mainly through loans from international funding institutions including the World Bank, the Asian Development Bank, and the Japan International Cooperation Agency (JICA), among others. [Click here for data [6]on outstanding external debt of the national government.]

With the government incurring a total P1.048 trillion ($23.706 billion) additional domestic and external loans next year, the total outstanding national debt would increase to P6.47 trillion ($146.4 billion, net of targeted principal payments for 2015).

This translates to a higher projected nominal debt of P62,856 ($1,422) for every Filipino next year, Ridon said, using the estimated 102.965 million population projection of the National Statistical Coordination Board for 2015.

As such, he concluded: “Even Filipinos yet to be born are already indebted by nearly P63,000 ($1,425) by 2015.”

Vicious cycle

Since Aquino became president in 2010, the national government debt has steadily increased. In 2010, the yearend outstanding debt was just P4.36 trillion ($98.623 billion) and debt burden per capita was P46,377 ($1,049 for each of 94 million Filipinos). By next year, every Filipino would be indebted by nearly P63,000 ($1,425), no thanks to a fiscal program that remains dependent on loans, according to Ridon.

The progressive lawmaker offers a solution to break this vicious cycle, the same solution which the progressive organizations have long pushed the succeeding governments to take.

“If Aquino really wants to create stable economic conditions, he should push for national industrialization and genuine agrarian reform, a tandem which could provide stable jobs for Filipinos and a stable source of income for the government. If we continue relying on loans, windfall revenues, and speculative foreign investment, our nation would be condemned to the perpetual cycle of debt,” Ridon concluded.

The labor group KMU, meanwhile, urged Filipinos to intensify protests against Aquino’s huge pork barrel funds, the pork barrel system and corruption in government, saying Aquino must be held accountable for maintaining the pork barrel system and being the latter’s main beneficiary. (bulatlat.com)

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