MANILA, JUNE 13, 2007
(STAR) - The government is eyeing a P1.227-trillion budget next year, or eight percent higher than this year’s P1.136 trillion, Budget Secretary Rolando Andaya Jr. said yesterday.

Andaya said the government’s projected P1.236-trillion revenue would finance next year’s proposed budget. He said it is “the first time in years that the budget is formulated with income projected to exceed expenses.”

“The result is a balanced budget, the first that could be achieved in more than a decade,” he added.

In his “National Budget Memorandum” to all heads of government agencies, Andaya said the “budget framework” is anchored on “achieving fiscal consolidation and balanced budget consistent with the medium-term macroeconomic and fiscal framework of the updated Medium-Term Philippine Development Plan.”

He said “preliminary parameters” of next year’s national government expenditures are contained in the “Budget Call,” a 92-page guide “to procedures in the preparation of the 2008 budget proposals sent to all agencies last May 4.”

Personal services, which include payroll of the 1.1 million national government employees and pension of military and police retirees, will get P377.6 billion. The allocation is P23 billion bigger than this year’s, according to the budget chief.

The proposed increase will cover the pay hike for government workers as well as the creation of new teaching and policemen positions or what the budget chief called “personnel matters which are triggered by rise in population.”

The next biggest allocation goes to debt service at an “indicative amount” of P300.7 billion. The figure, however, is P2.6 billion lower than this year’s allocation and may even get lower depending on the exchange rate. The allocation was based on a P49 to a dollar rate, “an assumption that could still improve together with the entire economic outlook,” Andaya said.

Maintenance and other operating expenditures or MOOE, will get P17.9 billion more allocation next year or P137.9 billion.

Andaya attributed the increase “to inflationary adjustments and additional funds for health programs.”

Andaya said that among the government agencies, the Department of Education would get the biggest allocation “consistent with what the Constitution says.”

Internal Revenue Allotment, which is the local governments’ share from national taxes collected three years earlier, will rise by 24.3 billion to P208.3 billion next year on bigger value-added tax collection.

Infrastructure will get a P156.6 billion “shot-in-the-arm” next year, or P22.6 billion higher than this year’s.

Overall, capital outlays, of which infrastructure is just one component, will increase to P208.5 billion, from the P182.4 billion budgeted this year.

Macroeconomic assumptions considered in the 2008 budget are the Gross Domestic Product real growth rate of 5.8 percent to 6.6 percent, inflation rate of three to four percent, and 91-day T-bill rate of four to five percent.

The assumptions, Andaya stressed, could change. “We shall be flexible enough during the budget preparation phase to adjust to changes.”

He said the Cabinet would have one last look at the budgets of the different agencies before these are collated in a budget bill and sent to Congress within a month after President Arroyo’s State of the Nation Address in July. – Paolo Romero

Chief News Editor: Sol Jose Vanzi

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