The budget: 11 questions about 2011

After the chest-thumping and finger-pointing over the speedily approved 2011 budget dies down, it’s Question Hour.

While the media, the politicians and the pundits may find much to debate over the quick passage in Congress of the P1.46-trillion proposed General Appropriations Act, including some controversial outlays and cuts, the more pragmatic may prefer to move on and deliberate how to get the best out of the GAA and minimize the worst in it. So here go our 11 questions on the 2011 budget.

Will the budget deficit fall? In mid-2005, despite escalating oil prices and the “Hello, Garci” controversy, the peso strengthened, interest rates fell, and the stockmarket surged. Reason: the Arroyo Administration’s fiscal reforms slashing the budget deficit, which nearly disappeared three years later.
Today, exchange and interest rates remain benign and stocks are setting records. But if the budget busts the deficit, confidence will weaken, and the resulting capital squeeze will retard growth and investment. As always, the key is not curbing spending, but raising revenues.

Is there enough government spending to keep growth on track? This year saw strong expansion, thanks to the global recovery and election spending. Neither will give the economy a boost next year.
Government planners hope that private investment, including public-private partnership projects, would take over as the main lift. But that’s a big if. The government must be ready to spend for growth, and there should be ample funds if Congress kept the P148-billion public works outlay, up by half. Now the government must demonstrate greater absorptive capacity—and honesty.

Is there money for PPP? Business is expected to fund highways, railways and airports. But those projects require government money too, mainly for land and right of way, including resettlement of affected settlers. ROW can be very expensive, often exceeding the cost of actual construction. If projects get delayed because the government did not budget for its share of costs, it would sap their enthusiasm and again paint the Philippines as a bureaucratic quagmire.

Are there funds and programs for disaster preparedness, relief and recovery? President Benigno Aquino 3rd blocked two major projects for flood control, a Japan-funded package for Central Luzon, cited in the State of the Nation Address, and the Belgian-financed Laguna Lake dredging project. What will the government do in their place? With Metro Manila singled out as facing the greatest danger from floods and quakes among cities in Southeast Asia, the government must invest in protecting exposed communities, especially the poor, who suffer most from calamities. It has allocated P21 billion for cash transfers, but what use are they to inundated families.

What is the plan for CCT? Speaking of conditional cash transfers, Congress gave the Palace everything it asked for, including every peso it allocated to CCT. Now the Department of Social Welfare and Development must spell out exactly how it would ensure that the funds go to those who need them after complying with conditions and with no politics or corruption. It would indeed be an utter reversal of President Aquino’s campaign slogan if a major program to uplift the poor becomes the occasion for graft: Kung may mahirap, may corrupt.

Is there funding for anti-corruption campaign? And speaking of corruption, exactly what is the Aquino Administration doing to fight corruption, besides making public accusations and insinuations sans evidence?
It would be good to see if there is money in the budget for, say, rewards to whistleblowers, hiring and training of investigators and prosecutors for the Palace office now tasked with anti-graft probes, and training and streamlining programs for frontline offices of agencies and LGUs. The government must put its money where the President’s mouth is.

What outlays and programs are there for security and peace and order? After the Rizal Park hostage tragedy, PNoy announced the creation of a quick-reaction elite force against terrorists. Is this plan in the budget? What about police recruitment, training, transport, armaments, and high-tech investigation? Are there ample resources for anti-narcotics operations and units? Let’s not forget prosecution and correction.
And now that the President has done some cramming on the Zenarosa Committee report, what’s on the cards for dismantling private armies?

Will there be enough affordable rice? The SONA claimed that the previous administration imported too much rice, well beyond the projected shortfall. The government has since backtracked and admitted that the country still needed to import the staple. After Typhoon Juan’s ravages in the North Luzon rice belt, there may be more foreign grain needed. And if the Philippines buys more rice, it would quickly consume state funds. Indeed, this week, Vietnam lifted export prices after a major Indonesian purchase. If the cost of rice surges, does the government have money to keep the grain affordable? Not to mention its program for rice self-sufficiency by 2013.

What about the Bagong Bayani? With some $20 billion in annual remittances, overseas Filipinos deserve a fair allocation in the budget for assisting those in trouble abroad, where there may be no one who can help a Filipino in distress but the Philippine government. Is there more money for legal services, repatriation of stranded OFWs or those in hotspots, and temporary shelters? This writer has learned that due to the administration’s budget cuts, one embassy could no longer maintain its home for distressed workers. Many OFWs voted for Noynoy. What does PNoy have for them?

And have we forgotten land reform? Budget Secretary Florencio Abad probably would not, having been agrarian reform secretary in the first Aquino Administration (he was not confirmed), But Abad’s boss does not seem that keen about the issue, at least when his family’s Hacienda Luisita comes up (no such ambivalence about redistributing the lands of former First Gentleman Jose Miguel Arroyo’s family). Is there money to finally work away at the most contentious tracks yet to be transferred to the landless? Plus funds for programs and investments to make agrarian reform beneficiaries truly benefited by their emancipation.

Will the budget be online? The proposed GAA would require agencies to upload and update on the Internet not only the bidding and award of projects, but also the status of their implementation (see Sept. 6 column). In addition, DBM is supposed to post online all lump sum outlays and what they are spent on. That includes legislators’ pork barrel funds and the internal revenue allotments of local governments. Assuming all that was approved untouched by Congress, we may yet have the most transparent budget yet.

Now all we need to do is follow the law. That, of course, is the hardest part. –RICARDO SALUDO, Manila Times

Ricardo Saludo heads the Center for Strategy, Enterprise and Intelligence ( ric.saludo@censeisolutions.com This e-mail address is being protected from spambots. You need JavaScript enabled to view it ). He holds a M.S. in Public Policy and Management from London’s School of Oriental and African Studies.