(STAR) By Jess Diaz - President Arroyo will most likely veto the P35-billion cut the Senate and the House of Representatives made in the debt service fund in this year’s proposed P1.415-trillion national budget.

“Under the law, Malacañang is authorized to automatically appropriate debt service payments,” an official of the Department of Budget and Management (DBM) told reporters covering the House yesterday.

“The debt service funds in the 2009 budget are already programmed based on an assumed peso-dollar rate. If the President does not veto the huge P35-billion reduction and the government makes the debt payments based on the assumed exchange rate, that will increase the budget deficit by an equal amount,” he said.

The official, who did not want to be identified, said the Arroyo administration no longer wants to return to a regime of high financing deficits.

“High budget deficits make life difficult for most Filipinos. They cause interest rates, including those for consumer borrowings such as loans for vehicles, appliances and credit card purchases, to go up,” he said.

In fact, he pointed out that the President had wanted to wipe out the financing gap by the end of her term in 2010.

But obviously, that goal may no longer be attained given the raging global financial crisis. Three or four years ago, the Arroyo administration posted the highest deficit ever – about P200 billion for two consecutive years. With cooperation from Congress, Malacañang has since reduced the deficit.

The gap narrowed to about less than P100 billion in 2008 largely due to the imposition of the expanded value added tax and not to any Palace-imposed austerity measures. On the contrary, expenditures rose as evidenced by the increase in the annual budget.

This year, the government’s initial projection on its budget deficit is about P110 billion.

The DBM official said this year’s projected deficit would most likely be exceeded because revenue agencies would not be able to meet their collection targets due to the prevailing economic difficulties.

“The Bureau of Internal Revenue has already reported a P60-billion collection shortfall. The Bureau of Customs will have a hard time attaining its revenue goal due to reduced imports and the fall in oil prices,” he said.

“The situation will be made doubly difficult if the Palace gives in to pressure from lawmakers for unnecessary political spending,” he said.

In their final version of the proposed 2009 budget, senators and congressmen agreed to reduce debt service funds by P35.3 billion to P252.6 billion to fund their additional pork barrel allocations.

The additional allocations are hidden in various agencies and in lump-sum appropriations, including the priority development assistance fund (PDAF), the only transparent pork barrel fund in the budget.

The agency that received the biggest augmentation is the Department of Public Works and Highways, which got a P9.4-billion adjustment. Its budget went up from P120.5 billion to P129.9 billion.

The Department of Transportation and Communications received an additional P3.8 billion, bringing its funds for this year to a total of P25 billion.

The budget of the Department of Education, on the other hand, was increased by P2 billion to P158.3 billion.

These three agencies are the lawmakers’ sources of funds for road construction, road maintenance, airport and port construction and rehabilitation, classroom building, school supply purchase, and related projects.

Many senators and congressmen are known to meddle in the awarding of contracts for these projects.

Lawmakers also increased the lump-sum priority development assistance fund (PDAF) by P3.4 billion to P9.7 billion.

PDAF is the only transparent pork barrel fund in the budget in that it is clearly specified as a lump-sum appropriation. The other pork barrel funds are hidden in agency budgets.

Senators and congressmen bloated their pork barrel funds apparently in preparation for the May 2010 elections.

The Senate created a P10-billion “economic stimulus fund” supposedly to help the nation survive the global financial and economic crisis.

But even this fund smells of pork barrel.

For instance, P500 million of the fund would be allotted as “financial assistance for the Talinong Pinoy program,” P1 billion for “education and skills development training programs for Kabataang Pinoy,” P1 billion as training assistance for laid-off workers, P3 billion for school buildings, P1 billion for medicine and medical supplies, P2.5 billion for food production, and P1 billion for Bantay Kalikasan and Bantay Dagat programs.

Most agencies received big increases, except the Department of Agrarian Reform, which lost P1.2 billion, and the Department of Justice, whose funds were cut by P77.4 million.

The Department of Finance, the agency in charge of generating revenues to support the budget, ironically lost P6 million.

Congress helped itself, increasing its 2009 budget by P443 million to P7.4 billion. It was the Senate that initiated the adjustment. Senators proposed an additional P250 million for the Senate proper and P34 million for the Senate Electoral Tribunal, which has only one case to resolve.

The other agencies with huge adjustments include the Department of Foreign Affairs, P457 million; Department of Health, P456 million; Department of Interior and Local Government, P470 million; Department of Social Welfare and Development, P157 million; and other executive offices, P526 million.

Among these executive offices are Aurora Special Economic Zone Authority (ASEZA) and Cagayan Economic Zone Authority (CESA), which are creations of Sen. Edgardo Angara and Senate President Juan Ponce Enrile, respectively.

Angara’s finance committee proposed an increase in the ASEZA budget from P150 million to P400 million, and in CESA funds from P800 million to P1.129 billion.

Minority Leader Ronaldo Zamora, one of the minority representatives in the conference committee, complained that the joint committee chairmen, Quirino Rep. Junie Cua and Angara, failed to report to them the results of their meetings on the budget.

He said the entire committee met only once last Dec. 15, a meeting which he attended.

Chief News Editor: Sol Jose Vanzi

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