Consumers Domain
By Ian Seruelo

The 2005 Budget

“For 2005, the government will actually spend P1.2 Million EVERY MINUTE for debt payments!”

—The Freedom from Debt Coalition

Currently the 2005 National Government budget is still being deliberated in Congress.   The proposed budget for this year is P907,589,726,000 or that's P907.6 Billion.   It is already mid-February and yet the 2005 budget is still in the works.  

We hope that such will be passed soon as we don't want a repeat of the 2004 budget which was a reenactment of the 2003 budget.   A reenacted budget means that practically no new programs for the year will be implemented and that the corrupt President will have the discretion to realign budgets for program and projects particularly those which were consummated the preceding year.

We still remember how Gloria squandered more than P8 billion of taxpayers' money to her electoral campaign last year with the reenactment of the 2003 budget.   Further the reenactment gave her more control over pork-barrel allocations to the delight of favored crocodiles in Congress.  

Hmmm, based on these maybe we should institute impeachment proceedings against Gloria as suggested by Pimentel. But well, that's another story.

Now, let us go into the meat of this article which aims to look into the current proposed budget.   The exercise of scrutinizing the budget of the government is a very important undertaking, especially for us who are into advocacy work.  

The budget is a reflection of the government's prioritization and thrust.   It is a translation of how this government will spend its resources -- taxpayers' money.           

The state is responsible to ensuring the operation of the government and all its departments.   It is also tasks with the responsibility of investing in public goods.   These public goods may be tangible such as economic infrastructures (road and bridges) or intangible social infrastructures (labor skills, education and public health).   How this government will invest its resources is shown in its budget.

So here you go folks, here are some figures on sectoral allocation to show you how Gloria will spend its P907.6 Billion in 2005: 33.24% to debt service (interest only); 28.02% to social services (education, health, housing, etc.); 17.54% to economic services (agriculture, industries, etc.); 15.50 to general public services; 4.87% to defense; and the remaining .84% to net lending.

So there you go, interest payments eats one-third of the budget pie. And take note that allocation for principal payments for debts, which is an off-budget item is not yet included in that figure.  

Payments for principal amortization is not included in the annual budget for some accounting practice magic but it remains a real obligation as the government automatically appropriates for its payment annually.   Now you ask how much? It's a whooping P344.1 Billion!

Now adding the allocation for principal and interest payments we arrive at P645.8 Billion! That is more than the proposed budget less allocation for interest payment (i.e. total debt payment = P645.8 B vs. budget less interest payment = P605.4 B).   According to the Freedom from Debt Coalition (FDC), the 2005 budget can actually fund two (2) governments!   

Government prioritization can also be shown by comparing the previous year's budget with the current being proposed.   In nominal terms, that is in actual value without taking into account inflation, the allocation for interest payment increase by 11.11%, for social services by 2.59%, for economic services by 2.30%, for general public services by 2.46%, for defense by .79% and for net lending by 38.18%.

All in all, in nominal terms, the 2005 budget is 5.33% higher than the 2004 budget.   But now in real terms, which is factoring in 5% inflation, the increase in the total budget is only .33%.   Further, in real terms all allocation to services went down and the only real considerable increase is on interest payment (and well also for net lending, but as you can see this allocation for lending to other government departments only account for a negligible .84% of the budget.)

This means this year there will be decrease is real terms in the budget for education, health care, housing, infrastructure, and other social economic and social services.

Want to know more about other gruesome figures related to the 2005 budget? Here we go:

(1) This year, the government will spend P1.2 Million PER MINUTE for debt payments!

(2) Total debt payment is 95.15% of projected tax revenues for the year!

(3) Total debt payment is 85.15% of projected tax and non-tax revenues for the year!

(4) 83.1% of the P907.6 Billion budget is tied to mandatory expenses that include interest payment, salary of government employees, allotment to local government units (LGU) and others!

(5) Only 16.9% is left for programs!

With this anti-poor and anti-taxpayer budget, factor in the tax leakage and corruption in the government (which according to studies are both somewhere around 30% to 40%), will anybody now convince the hungry Filipino to agree to more taxes and more belt tightening…   

(For comments and suggestions please email ianseruelo@yahoo.com or send text message to 0919-3486337.)