National Budget Priorities

Thursday, 16 February 2012 03:48

Written by Louie C. Montemar

Unless a miracle comes to pass or the national government, especially through the BIR, is able to generate more than its projected revenues for the year — which could itself be considered a miracle — we will have to live with certain priorities as set within the national budget.  The hard reality is that in any budget scheme, certain constituencies will get more of the budget pie.

Let me sketch here in broad strokes the outline of the national leadership’s “priorities” as suggested by the design of the 2012 national budget. 

If the figures bore you and make you yawn, I hope you realize as well that these numbers will define the parameters of our national life for the rest of this year.

Prioritized Departments. The Top 5 Departments in terms of budgetary allocation have reportedly remained the same with some key changes in their program composition and relative rankings:

• DepEd, or the Department of Education, remains at the top, with another significant budgetary increase of 15.2 percent to P238.8 billion from its previous budget of P207.3 billion.  Most significantly, it has been claimed that “from the 12.6 percent increase in 2011, the largest in over a decade, the increase [education] for 2012 is even larger.”
• DPWH—public works and highways—remains in second position with another significant increase of 13.5 percent to P125.5 billion, from P110.6 billion in 2011.
• The DND or the Departmenmt of National Defense, at third, receives almost P108 billion, slightly higher by 3.1 percent than its 2011 allocation. To fund unfilled positions, at least P989 million has been given to the DND.
• The Department of Interior and Local Government (DILG) is at fourth with P101.4 billion, representing an increase of 15.1 percent. This covers allocations for the security sector agencies, including the the PNP, the Bureau of Jail and Management Penology (BJMP) and the Bureau of Fire Protection (BFP)
• Finally but certainly not the least concern is the Department of Agriculture (DA), at fifth, getting the biggest rate of increase of 53.6 percent to P54.1 billion, from P35.2 billion in 2011.

This last item on the DA appears the most strategically meaningful given the qualification in the President’s Message that: “With better targeting of agricultural support for small farmers and sustainable fisherfolk, the increased agriculture budget will support this administration’s Rice and Food Sufficiency agenda: the construction and rehabilitation of irrigation facilities, the establishment of postharvest facilities, the expansion of research and development (R&D) and increased provisions for the National Rice, Corn, Fisheries, Livestock and High Value Crops Programs.”

Prioritized Agency Items. From a bicameral conference committee report of the Philippine Congress, as presented by Senate Finance Committee Chair Franklin Drilon to media, some government agencies or services got a increased budget.  As reported by one national media outfit, most notable of these are:

• P351 million for the House of Representatives for personal services;
• P96.69 million for the Senate for the operational requirements of the 5th global conference of the Global Parliamentarians Against Corruption, and for the repair and construction of conference rooms;
• Restoration of P500 million to the Department of Agriculture for irrigation projects;
• P100 million as initial funding for newly-created Governance Commission for Government-Owned and -Controlled Corporations;
• P36 million for the Philippine National Police for its Anti-Illegal Drug Special Operation Task Force, which will be sourced from the budget of the Philippine Drug Enforcement Agency;
• P30 million for the Department of National Defense for the payment of a property of the Philippine Navy in Puerto Princesa City; and,
• P25 million for the reconstruction and renovation of the Armed Forces of the Philippines' General Headquarters and buildings at the Philippine Military Academy.

On the other hand, the same media report noted that the budgets for these offices were notably reduced (the amounts mentioned pertain to the decrease they experienced relative to their 2011 allocation):

• P697.83 million from the President's miscellaneous personnel benefit fund;
• P138.3 million from the Payapa at Masaganang Pamayanan (PAMANA) fund;
• P224 million from the Department of Health, which was deemed an excess in the fund for senior citizens' vaccines;
• P100 million from the Philippine Drug Enforcement Agency; and,
• P91 million from the Department of Labor and Employment, which was supposed to be for the operation of Filipino centers abroad.

Prioritized Sectors, Slices, and “Packaging.” The President’s Budget Message, available online from Malacañang’s website, highlights how education and social services — “packaged” as one chunk — are getting the biggest slices of the national budget pie.  The Department of Education is reportedly getting P238.8 billion or 15.2% higher than its previous budget of P207.3 billion.  Social Services will get the bulk of the spending pie with P575.8 billion or 31.7% of the entire General Appropriations Act for 2012. 

Notably, also included in the rubric of “social services” is the Public Works Department, which is second in priority getting P125.5 billion.  What follows are the items for National Defense with P107.9 billion, the Interior and Local Government with P101.4 billion, and the Department of Agriculture with P54.1 billion.

The chunk called “Economic services” comes second to social services with Pesos 438.9 billion — 24.2% of the total national budget.  It shows the largest rate of increase at of 21.3%.  Debt servicing comes third with P356.1 billion; general public services with P332.1 billion; and, defence at P113.1 billion.

As the President’s budget message points out this “Sectoral Distribution of our proposed Budget reflects this administration’s priorities.”  Social services, on paper, is said to be the priority, while the the “Debt Burden” is supposed to only follow second and its share has been reportedly reduced by 3.0 percentage points to 19.6 percent or P356.1 billion, from 22.6 percent or P372.1 billion.

Still, the perennial “Automatic Appropriations,” debt servicing in the main, is the de facto number one national budget priority item and now amounts to P723.6 billion — the single biggest slice of the total 2012 National Budget, net of the Unprogrammed Fund.

Some Issues and Concerns. As they are, the allocations appear rational or meaningful enough.  But perhaps some points for critique have to be amplified.

First of all, the slight decrease in the allocation for debt servicing next year — the P738.6 billion allocation for principal and interest payment — is rather misleading.  This is still more than twice than P309 billion allocation for education and 15 times larger than the P49.9 billion allotment for health, as pointed out by one policy research institute.

Second, there is the apparent underinvestment in us, the people — on our education and health.  The budget for state universities and colleges (SUCs) for instance was reduced by P146.6 million, with 51 SUCs suffering cuts in their budget.  Meanwhile, the allocation for public hospitals in the country decreased by around P1.1 billion.  Formal complaint on the decrease in allotments for health has been manifested even within Congress.

Third, and perhaps most crucial of all from an economic manager’s perspective, revenue generation must keep pace with the budget.  Needless to say, the ability of the government to achieve its revenue goals will impact significantly on government’s budget plan.  As government is now wont to say, “Walang  mahirap, kung walang corrupt” [There will be no poverty if there is no corruption]; in this case, there will be nothing to spend without those revenues.

Finally, allow me to point out something related to my pet policy areas — science and agriculture.  Malacañang proposes “to support Research and Development (R&D) in the government by allocating sufficient budget and manpower on projects that would increase the Philippine's capacity to export, accelerate countryside development and promote sustainable development.”  DOST, in particular, says “R&D will be conducted in areas which address specific needs of clients specially agri/aqua enterprises and small and medium local manufacturers.”  But look at the table below and see where the cuts in the country’s science budget are made:

The Philippine Department of Science and Technology (DOST) Office, 2010-2112
Department of Budget and Management, National Expenditure Program 2012

Source: http://www.dbm.gov.ph/, as of 6 December 2011

Based on the figures above alone which indicate that there have been notable decreases in the science budget on certain matters such as forest, agriculture and textile development, there are fine tunings that can still be made, and the prioritization of government can still be improved, most certainly.  Controversial finance-related concerns regarding the Conditional Cash Transfer (CCT) program of government and its preferred development financing approach of Public Private Partnerships (PPP) have to be closely monitored, at the very least.

As mentioned at the onset, the hard reality is that in any budget scheme, certain constituencies will get more of the budget pie.  The converse is that certain items are given less budgetary support and attention.  Hence, if we wish to have better development priorities, we will need a public that is more informed of and concerned about such “boring” figures as have just been presented here.

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