HOUSE BEGINS FLOOR DEBATE ON 2005 BUDGET
MANILA, November 18, 2004 (STAR)
House begins floor debate on 2005 budget By Paolo Romero - The House of Representatives began last night plenary debates on the Malacañang-proposed P907.6-billion national budget with the chairman of the committee on appropriations painting a bleak fiscal picture for the country next year.
Camarines Sur Rep. Rolando Andaya Jr., in his sponsorship speech, said the committee had to make major changes in the macro-economic assumptions, which he described as too optimistic and do not really reflect the current economic realities in the country and in the world.
"After reviewing the robust economic assumptions and forecasts presented by our economic and financial managers to Congress, your committee on appropriations, in doing its duty as an economic and financial and legislative partner of the executive branch, had to re-study and balance out some of the assumptions presented. We therefore propose some changes on the macro-economic assumptions," Andaya said.
House Majority Leader Prospero Nograles said the chamber is expected to hold morning and afternoon sessions starting today to fast-track the bill’s final approval by early December.
In making changes in the proposed national budget, Andaya stressed that the budget "must be grounded on reality." The government, he said, has to strike a balance between the need to save without having to sacrifice growth.
In 2005, Andaya warned of tougher times brought about by political uncertainties. He said that the administration’s inflation target of four percent to five percent next year could be easily breached, and that it would average about six percent given the prevailing high oil prices that would push up prices of goods and services.
He said the 91-day Treasury Bill rate would increase by 0.5 percent, because of rising uncertainties over interest rates and the threat of a credit downgrade.
On the foreign exchange side, Andaya said that while the government sees an exchange rate of P54 to P56 to the US dollar in 2005, the committee perceives the forex rate to be closer to P57 to a dollar.
"It cannot be denied that even the present exchange rate has breached the government’s upper bound of P56 to the dollar. This would worsen the inflationary impact of rising oil prices as well as push up cost of input-import dependent semi-conductor exporting firms," Andaya said.
He also predicted oil prices in the world market to continue to soar next year so the government’s assumption of $32.7 per barrel for 2005 "would probably be off the mark."
"We say this because latest records show that the average price of Dubai oil in September 2004 was $35.5, while prices in October 2004 averaged $37.54, which is closer to the benchmark level of $40 per barrel. The committee therefore expects full-year average Dubai oil price to be $35 in 2004 to $36 in 2005," he said.
Reported by: Sol Jose Vanzi
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