(STAR) The Philippines would have its military financing cut by half under a proposal the Bush administration sent to Congress last Monday.

President George W. Bush requested $15 million in military aid be sent to the Philippines next year.

He requested less than that last year, but the US Congress boosted military aid to almost $30 million.

Indonesia, another country the White House deems crucial to fighting extremists in Asia, would receive about the same as this year’s estimate, nearly $16 million, under Bush’s budget proposal.

Bush also proposed $500,000 in military financing for Vietnam, a fast-growing country the United States is trying to establish closer ties with after decades of hostility.

The Senate and the House of Representatives must make their own recommendations on the proposed budget, then negotiators from each side would work out a compromise bill before sending it to the President to sign into law.

The Philippines and Indonesia have previously had parts of their US military aid linked to improving their human rights records.

US officials have expressed worry over a wave of killings of left-wing activists blamed on Philippine government forces.

Armed Forces of the Philippines chief Gen. Hermogenes Esperon Jr. said the move to cut down US military aid by half would not affect the campaign against insurgency and terrorism.

Esperon said even if the US Congress approves the proposed cut, the country hopes to get more in terms of development funding for infrastructure projects.

He also said that the move would not affect the funds that have already been committed by the US to the AFP.

“While we recognize some contributions in terms of equipment, we have not seen any cancellation of any on steam funding or funds that are already committed, so we believe we are getting as much as we have expected and we hope to get more for the Philippines,” he said.

DOF sticks to balanced budget By Iris C. Gonzales Thursday, February 7, 2008

The government is sticking to its balanced budget program this year despite an anticipated US recession and proposals to allot P75 billion for a fiscal stimulus package for the Philippines.

Finance Undersecretary Gil Beltran said the Department of Finance (DOF) cannot afford to divert from the program because this has already been committed to international and local investors and to credit rating agencies.

“What face will show to the world if we do not meet the program?” Beltran asked.

He said other similarly rated countries have a debt-to-gross domestic product (GDP) ratio of 49 percent while the Philippines has a debt-to-GDP ratio of 59 percent.

Beltran said that when the government is able to fulfill its commitment to balance the budget this year, the country can enjoy lower borrowing cost which would in turn lower interest rates.

“Interest rates will be lower and it’s good for lending to SMEs (small and medium enterprises),” Beltran said.

Some analysts have said that the government may be better off with a budget deficit this year instead of rushing to achieve a balanced budget.

HSBC economist Frederic Neumann has said that instead of rushing to balance the budget this year, the government could boost spending for infrastructure and investments to help push economic growth.

The government hopes to balance the budget this year and expects to have incurred a deficit of around P9 billion last year which is significantly below its programmed deficit of P63 billion for 2007.

Albay Governor Joey Salceda, meanwhile, proposed to the government that it set aside P75 billion for a fiscal stimulus program that would help the country cope with the effects of a US recession.

Economic managers have thumbed down the proposal as this puts at risk the government’s balanced budget program.

As of end-November 2007, the Philippines recorded its highest ever monthly budget surplus of P54.1 billion, putting the budget surplus for the first 11 months of 2007 at P12.7 billion, against a shortfall of P55.1 billion in 2006.

The government attributed the surplus to the sale of PNOC-Energy Development Corp. (PNOC-EDC) for P58.5 billion, of which P47 billion went to state coffers.

Without the proceeds from the PNOC-EDC, the government would have recorded a budget deficit of P35 billion from January to November 2007.

Chief News Editor: Sol Jose Vanzi

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