'Bankrupt government for next president'
By Jess Diaz (The Philippine Star) Updated August 22, 2009 12:00 AM
MANILA, Philippines - President Arroyo’s successor faces a big budgetary problem, as he or she will inherit a practically bankrupt government, newly resigned economic planning secretary Ralph Recto said yesterday.
“Those aspiring to succeed her must explain to the people how they intend to solve this serious fiscal problem,” Recto told reporters in a chance interview.
“It’s easy to promise more jobs, more roads, more school buildings, but how you raise the funds to accomplish all that is the difficult part,” he said.
Recto said the president to be elected in the May 2010 elections will take over a government that is deep in debt and burdened with a budget deficit of more than P200 billion.
“Next year’s interest payments are projected to increase by P85 billion. The funding requirement for the salary standardization is about P75 billion. Billions more will be needed for the increase in the pension of retired military personnel. Where do you get the money for all those additional expenses?” he said.
By salary standardization, the former economic planning chief was referring to a law passed by Congress this year mandating a four-year adjustment in the salaries of the more than one million government personnel.
When the full increase is given, the lowest-paid employee will have received a 50-percent adjustment, while those getting huge salaries and allowances will have received more than 100 percent.
State workers started getting the first installment of the Malacañang-initiated adjustment last month.
Recto said Congress passed the law without an accompanying revenue measure.
He said the money needed for the pay increase and other big-ticket expenses will come from borrowings.
“That is why you have a projected 2010 budget deficit of about P230 billion. That will again add to our growing debt,” he said.
The country’s debt, according to former budget secretary Benjamin Diokno, has increased to P4.3 trillion under President Arroyo from about P2 trillion during the time of ousted President Joseph Estrada.
Recto is the author of the expanded value added tax (EVAT) law as well as the measure adjusting excise taxes on cigarettes and liquor.
He said EVAT has served as cushion against the impact of the global financial crisis.
He said the next president should tap all revenue sources, including cigarettes and liquor or the so-called sin products, as well as telecommunications services.
“But the government must first conserve resources by collapsing agencies that are not needed and saving on expenses. We cannot impose more taxes without resorting to honest-to-goodness austerity measures,” he stressed.
He pointed out that there are a lot of items in the annual budget where tens if not hundreds of billions in savings could be realized.
He suggested that the next administration, in formulating the budget, should start from scratch.
“We have to start from zero, decide which agencies and personnel to keep, how much to spend. The next president must have the political will to do that and collect taxes from everyone, including big business. He must not be hamstrung by political debts,” he said.
There are at least two tax measures pending in the House of Representatives that aim to narrow this year’s budget deficit, which is projected to reach an unprecedented level of P300 billion.
These are the increase in sin taxes and the metering of mobile phone services, including the imposition of a five-centavo tax on text messages.
Quezon Rep. Danilo Suarez, proponent of the measures, has accused Speaker Prospero Nograles of sitting on his proposals.
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'Bankrupt government for next president'
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