[PHOTO - That’s how it is! President Aquino converses with Senate President Juan Ponce Enrile and Speaker Feliciano Belmonte Jr. during the signing of the 2012 budget at Malacañan Palace.]

MANILA, DECEMBER 18, 2011 (MALAYA) BY JOCELYN MONTEMAYOR - PRESIDENT Aquino signed into law Republic Act 10155 or the 2012 General Appropriations Act but vetoed five provisions including a 60 percent cap on the public sector debt.

Aquino said while he recognizes the "noble intent" of Congress in imposing the debt cap, the GAA is not the proper venue to amend Presidential Decree No. 1961 which authorized the President of the Philippines to enter into foreign currency loan, deposit and guarantee agreements and arrangements, as well as the Republic Act No. 4860 or Foreign Borrowings Act.

"A change in our borrowing policy ought to be more deliberately discussed and embodied in a separate substantive law. For the foregoing reasons, I am constrained to veto General Provisions, Section 14, "Government Indebtedness and Guaranty." Besides, no fiscal rule can take the place of government’s unwavering commitment to fiscal prudence and discipline," he said.

The President also vetoed provisions under the grant of special allowances, the Metro Rail Transit fare subsidy, the legislative coordination during program or project implementation, and the quick response fund under Priority Development Assistance Fund (PDAF).

Budget Secretary Florencio Abad said imposing a ceiling on the public sector debt would force the government to constrict spending, especially on critical social services and infrastructure.

He said public sector debt as of 2010 already stood at 73.3 percent of gross domestic product (GDP), which is well beyond the 60-percent debt cap provision included by Congress in the General Appropriations Bill.

With this, he said, a debt cap would tie the hands of the Executive.

"The Executive should be given flexibility in managing its finances and in borrowing responsibly in order to stimulate economic growth and provide ample social services to the poor," he said.

The budget secretary assured the government is committed to reduce the fiscal deficit and public sector debt stock in the medium-term.

He said the fiscal consolidation efforts have so far gained ground, leading to increased investor and creditor confidence in the country, while the prudent and efficient liability management efforts of government, including debt swaps, have improved the quality of government debt through lower interest costs and extended maturities from an average of 7.9 years as of June 2010 to 9.2 years as of July 2011.

The President said he removed a provision on the grant of special allowances because he is duty bound to adhere to the provisions of laws on the grant of special allowances as advances of future salary increases.

The provision pertains to the Department of Justice-Office of the Secretary (DOJ-OSEC) Special Provision No. 1 on the use of income, and the item on commissioners under Department of Labor and Employment-National Labor Relations Commission (NLRC).

"In the case of the DOJ, the vetoed special provision authorizes the continued grant of special allowance to all members of the National Prosecution Service and Office of the Chief State Counsel, and Undersecretaries over and above their respective salaries, regardless of any subsequent salary increases that may be provided by law. This is in direct contravention to Section 4 of R.A. No. 9279 (An Act Granting Special Allowances for the Members of the National Prosecution Service and the State Counsels in the DOJ)," Aquino said.

The special provision under the NLRC was also vetoed because the special allowance of Commissioners had already been fully integrated into their basic salary.

Aquino said he vetoed the Department of Transportation and Communications (DOTC)-OSEC, Special Provision No. 4 on MRT Subsidy which he said restricts his constitutional authority to use and realign savings to more critical projects of the National Government.

"This provision earmarks any excess or savings due to peso appreciation in national government support to the Metro Rail Transit (MRT) for additional subsidy to the MRT fare. It is interesting to note, however, that government subsidy of P48 to the MRT fare had already been fully provided in the DOTC budget. We, therefore, find no cogent reason to prepare for such a contingency unless Congress, contrary to existing policy, intends to increase the existing government subsidy to the MRT fare," he said.

Aquino also vetoed the provisions on the Department of Education (DepEd)-Office of the Secretary (OSEC), special provision for basic educational facilities" and the general provision on the realignment and relocation of capital outlays.

"Such realignment or relocation of capital outlays shall be done only upon prior consultation with the representative of the legislative district concerned. Notwithstanding these vetoes, I direct all agencies to inform and apprise legislators on the implementation of projects within their respective legislative districts. Collaboration between the Executive and Legislative Departments is productive, as long as it does not infringe upon agencies’ independence in determining the manner by which to properly execute their which programs and projects," he said.

The President also vetoed a special provision under PDAF that pertains to the relief and rehabilitation assistance program for victims of calamities.

He said the assistance program for the calamity victims are sufficiently provided under the Quick Response Fund of the Departments of Social Welfare and Development, Public Works and Highways, National Defense, and DepEd which are promptly released when needed.

Aquino described the budget signing as historic.

"Nasaksihan ninyo ang pinaka-maagang pagsasabatas sa taunang budget mula ng mabawi natin ang demokrasya nuong 1986," he said.

During the term of President Corazon Aquino the budget was signed December 18, 1986; Fidel Ramos, January 6, 1993; Joseph Estrada, December 30, 1998 and Gloria Arroyo, January 21, 2002.

Abad said the early signing of the budget meant that government could immediately implement its programs and key infrastructure projects even on the first day of the new year.

"In contrast to 2011 when infrastructure spending was delayed, we intend to begin 2012 on a very strong note. The swiftness of the budget signing also means that the government can hit the ground running with its programs, starting with key infrastructure projects. It also reinforces the President’s commitment to his Social Contract with the Filipino people and underscores our mission to ensure economic development and transparent government spending," he said.

The Department of Education still gets the biggest allocation with P238.8 billion which is 15.2 percent higher than its budget in 2011 of P207.3 billion.

Sen. Joker Arroyo said by vetoing the provision placing a ceiling on public debt, President Aquino is following the footsteps of former President Gloria Arroyo.

He said when the previous administration was in power it left hundreds of billions in public funds open to "shady deals and anomalous transactions."

He said Congress has always put a ceiling on the government’s total borrowings in the annual budget but were struck down by the former president.

He explained that Congress leaders, in adopting the debt cap, wanted to spare the Philippines from the predicament of some European governments on the brink of bankruptcy "because they over-borrowed."

"Kung walang debt ceiling, we will likely end up like some EU economies that are on the verge of collapsing because they have no debt cap. That is why we included the debt cap provision in the budget," Sen. Arroyo said.

"During our deliberations, we were told by Finance Secretary Cesar Purisima and Budget Secretary Butch Abad that the national debt stood at 50 percent of GDP. But it turned out in the Palace veto message that it is now 73 percent of GDP. Bakit sinabi sa amin 50 percent lang, yun pala 73 percent," Arroyo complained. "When we deliberated, they all agreed on the debt cap, now the President vetoes it." – With JP Lopez

Chief News Editor: Sol Jose Vanzi

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