Budget 2011: This is it?

Monday, 14 February 2011 00:00

Written by Louie C. Montemar

The new Philippine Medium Term Development Plan (MTPDP) promises to “integrate current and emerging concerns, such as achieving the Millennium Development Goals (MDGs), adopting a human rights based approach in development planning, and responding to climate change, which are also concerns advocated by the UN.” Hopes are high too that the MTPDP will “sharpen its focus” on addressing the concerns of the rural areas as it the country aims at competitiveness.

But the MTPDP is still being crafted. It therefore remains unclear where the Daang Matuwid (straight path) should “officially” lead us to. There is, however, the 2011 national budget. The government's expressed concerns for development should be reflected in the national budget for Fiscal Year (FY) 2011. What do we have there?

Following the so-called “zero-based budgeting” approach developed in the experience of the US government, the 2011 budget was pegged at P1.645 trillion, 6.8 percent higher than the 2010 budget. This is 18.2 percent of the country’s Gross Domestic Product (GDP). Last year’s was 18.5 percent of the GDP, “indicating a smaller but more efficient government.” More notable is that the the President calls it a “reform budget” that has an explicit “bias for the poor and the vulnerable.”

The President says that “Consistent with our bias for the poor, the social services sector is... the top priority... The social services sector will get some P560.8 billion or 34.1 percent of the total. The economic services sector comes next with P361.1 billion, 22.0 percent of the total budget. It is followed by our debt burden, with P372.1 billion (22.6 percent); general public services, with P273.5 billion (16.6 percent); and defense, with P77.5 billion (4.7 percent).”

The budget for education is supposed to be biggest increase allocated for education in over a decade and the Department of Social Welfare and Development jumps to being 6th (from 8th last year) in terms of budget share compared to other departments. The DSWD budget was increased by P18.9 billion or 122.7 percent! It now has a P34.3 billion budget. This notable increase provides for the second phase implementation of the KALAHI-CIDSS Project in 96 municipalities, conditional cash transfers to 2.3 million households, rice subsidy, and pensions for indigent senior citizens.

The figures indeed look good. But a closer review of the budgetary allocations and looking beyond the budget and into other program development matters may suggest some key concerns. For instance, the so-called “social services” are a cluster of items that include these: “Education, Culture and Manpower Development;” Health; Social Security, Welfare and Employment; Housing and Community Development; Land Distribution; Subsidy to Local Governments; and, “Other Services.” Examining the figures more closely, all the social services got budget increases. But notably, “Other Services” has a 26% decrease in allocation while the health sector gets a 4% slash. That means 586 million was taken from other social services and, for health, a hefty 1.5 billion pesos.

This could even be more telling: the cluster “Agriculture, Agrarian Reform and Natural Resources” (under the Economic Services sector) also gets a budget slash. In 2009, said cluster got 109 billion pesos. In 2010 it was to get about 153 billion pesos, but in 2011 it will have a budget of only 101 billion, the lowest in three years. There is a drop in its budget of 34% (52.25 billion pesos).

These budgetary cuts for key development areas take on a peculiar hue for some sectors considering that the interest payments alone for the country’s debts will amount to 357 billion pesos, an increase of 80 billion pesos from the previous year or a change of 29%. Total National Government Foreign Debt Service Expenditures will be at 281 billion pesos, which means an increase of 35.76 billion (or 15%) from the previous year. It could thus appear ironic for some that the deficit for 2011 will be financed through more boorowings — P257.3 billion of domestic borrowings (83.9%) and P49.5 billion of foreign borrowings (16.1%).

In addition, the 2011 budget the budget has not addressed perennial criticisms about under investing in key factors for sustained national growth. Lobbying efforts were unsuccessful in pushing for an automatic appropriations for education “at 6% of GNP as recommended by United Nations Educational, Scientific and Cultural Organization (UNESCO),” and at “5% of GDP for health as recommended by the World Health Organization (WHO)” In the education arena in particular, the government, through the years, has drastically slashed the budget of tertiary public schools. For the 2010 national budget for SUCs, the budget for capital outlay, used for the procurement of new equipment/facilities and creation of new buildings, has been reduced to almost zero. For 2011, there is zero allocation for such capital outlay.

Especially given government’s unenviable track record on dedicated anti-poverty projects, the “pro-poor” rhetoric appears worrisome. The almost a decade-old KALAHI CIDSS “has not made a significant dent in poverty reduction efforts of the government” according to one reliable study done by a network of non-profit organizations. This is affirmed by official government statistics which, it should be noted, are even considered by some as having been fixed to show a rosier picture of reality. As it is, data as of February 8, 2011 by the NSCB shows that at least 970,000 Filipinos joined the ranks of the poor from the year 2003 to 2009, most of them farmers and farmworkers.

Let us consider that even a World Bank study says that the Philippines' “main problem has been that the sector that employs the bulk of low-skilled workers (agriculture) has been growing more slowly than the other sectors, while the sectors that have been contributing most to the acceleration of GDP growth (mostly manufacturing) have been very capital-intensive and have not generated many low-skill jobs.”
Indeed we direly need a budget for the poor. This is it?