Urban poor slams Aquino veto of debt cap in 2012 budget

Published on December 21, 2011

By INA ALLECO R. SILVERIO
Bulatlat.com

The country’s urban poor have one more reason to consider President Benigno S. Aquino III an enemy of the poor: he vetoed a provision inserted by the House of Representatives into the 2012 national budget that would have forced the government to put a limit on borrowing funds from foreign sources. The removed provision would also have placed more stringent boundaries on spending for infrastructure and other government projects.

In reports, Budget Secretary Florencio Abad announced that Aquino used his executive prerogative to veto the imposition of a ceiling on public sector indebtedness. Aquino removed the provision before he signed the 2012 budget law December 15.

The said provision reads, “the total indebtedness of the national government and any of its agencies, offices, GOCCs, which carry the sovereign guaranty of the Republic of the Philippines, shall not exceed 60 percent of the latest GDP (gross domestic product).”

It further stated that any borrowing in excess of the ceiling requires prior consent from Congress.

Next year’s budget assumed a fiscal deficit of P286 billion ($6.65 billion) or 2.6 percent of the GDP. This is lower than 2011′s fiscal gap target of P300 billion ($6.97 billion) or 3 percent of GDP.

Abad justified the veto by saying that the public sector debt as of 2010 already stood at 73.3 percent of GDP which is beyond the 60-percent debt cap provision. He also said that the government will continue to utilize unspent funds from the 2011 budget that were originally intended for infrastructure-related projects that did not push through because of various considerations.

A budget obedient to the World Bank’s neo-liberal policies

Malacanang’s reasoning, however, did not cut any ice with the Kalipunan ng Damayang Mahihirap (Kadamay). The group’s secretary-general Gloria Arellano said Aquino’s veto of the borrowing and spending limit provision is “A sign of the Aquino administration’s blind obedience to the neo-liberal policies and its thrust to continue borrowing from the World Bank (WB) and other multileral finance institutions.”

The group noted that to protect its interests amid the global financial crisis, international financial institutions have imposed policies that encourage nations to do more of public borrowing and to limit public spending on basic social services including education and health services.

“Filipinos should keep an eye on other possible implications of Aquino’s removal of the debt cap provision. We should also be more vigilant against the relentless and excessive borrowing various government institutions and agencies are doing,” Arellano said. ” The government should refrain from borrowing more from these financial institutions. It should also stop allocating a huge chunk of the national budget to debt-servicing.”

Allocations for foreign debt payments in 2012 is pegged at P367 billion ($8.53 billion), 19.6 percent of the total national budget.This means that with the country’s population at 95.6 million, each Filipino has an outstanding debt of P50,141 ($1,166).

Aquino himself has said that his veto on the imposition of a ceiling on public burrowing is justified because he wants to stimulate economic growth and provide ample services to the poor. Arellano, however, said that if Aquino wants to protect poor Filipinos from the harsh effects of the global financial crisis, it should focus on job creation, increase workers’ wages and implement genuine agrarian reform.

“These are what’s needed, not dole-out programs,” she said. “The Aquino administration should control its penchant for following neo-liberal policies that have dwarfed our economies for decades, and have buried millions of Filipinos into a massive foreign debt, and into chronic poverty.”

In the meantime, Kadamay also demanded that the Aquino administration should realign huge funds for so-called “palliative programs” toward programs that provide direct social services and public employment.

The urban poor group previously condemned the government’s decision to devote a large sum in the 2012 national budget to the “palliative pro-poor projects,” including the P39 billion ($906 million) Conditional Cash Transfer scheme and the P10 billion ($232 million) relocation program for the urban poor.

WB President Robert Zoellick, in his recent visit, offered debt-assistance of $100 million for the Aquino administration’s CCT program.

“While its long-term effect is yet to be proven, CCT condones and even fosters a mendicant attitude among the urban poor,” Arellano said.

Official records show that the CCT began as a completely government-funded program; but with a dramatic expansion in the program’s coverage since 2008, the government started to supplement the CCT budget with loans from the WB and the Asian Development Bank (ADB). These loans have altogether amounted to $805 million or P34.6 billion.

Official data also show that for 2010-2011, about 32 percent or P10.2 billion ($237 million) of the expenses for the CCT would be paid through these loans.

Meanwhile in August this year, the government’s debt stock rose to P4.79 trillion ($111.48 billion). This is up by one percent, from the July level primarily due to a weaker Philippine peso and a net issuance of domestic securities.

Insufficient budget for the needs of the poor

Kabataan Party-List’s representative in Congress Raymond Palatino also did not welcome the signing of the 2012 budget. He said it is “insufficient” when it comes to what’s needed for social services on the one hand, and contained “bloated questionable funds for debt-servicing, unprogrammed funds, military and band-aid programs” on the other. He said the 2012 national budget is “anti-poor as it neglects sufficient funding for basic social services.”

Palatino explained that with the government-projected population of 97.5 million Filipinos in 2012, the national budget will undoubtedly fail to address the needs of the poor for education, health, food security and housing. While the daily budget for social services for each Filipino, majority of whom are poor, translates to as low as 11 centavos , the total budget for contentious items go as high as P1.069 trillion ($24.86 billion).

Concretely, Palatino said, the 2012 budget allows only P224.92 billion ($5.23 billion) for education for P6.32 ($0.15) for every Filipino; for health a total of P42.77 billion ($1.029 billion) which translates to P1.20 ($0.03) for every Filipino.

“There’s something fundamentally wrong with an administration that claims it wants change but refuses to do anything substantial for social services like education, health, food and housing. It’s firm in its refusal to actualize the change the people want and the change the people need,” he said. “The national budget is biased against the poor and their basic needs. It merely repeats the funding priorities of the past Arroyo administration.”

Palatino also scored the questionable budget items which he said proves that President Aquino remains within the policy framework of the previous Macapagal-Arroyo administration.

For debt-servicing it’s giving P738.6 billion ($17.17 billion ); the Department of National Defense P106,905,022 ($2.48 million); for Unprogrammed Funds P152,821,845 ($3.55 million) ; the Pantawid Pamilyang Pilipino Program or CCT program P39,400,000 ($916,279); Public-Private Partnership program or the privatization of social services, natural resources, and institutions P22 billion ($511 million); the PAMANA Fund which is said to be a CCT imitation P1,764,300 ($41,030); the National Anti-Poverty Commission which critics say has no clear anti-poverty plan P102 billion ($2.37 million); and for the calamity fund a measly P7,500,000 ($174,418).

Youth group Anakbayan also scored the passage of the budget.

“While Aquino boasts of P568.8 billion for all social services combined, he conveniently forgot to mention that debt servicing alone will receive P738 billion, or a whopping 40 percent of the whole, ” said Vencer Crisostomo, national chairperson of the youth group Anakbayan, and spokesman of the anti-budget cut alliance Kilos Na.

“We could have doubled funding for social services next year. Instead, Aquino chose to divert two-fifths of the public’s money to big banks, investment corporations, and institutions like the WB and the Asian Development Bank,” he said.

Urban poor slams Aquino veto of debt cap in 2012 budget

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