MANILA,  November 5, 2004
By Jess Diaz and Delon Porcalla - The fiscal crisis is not over yet, lawmakers from both sides of the political fence warned the administration yesterday.

Administration stalwart Albay Rep. Joey Salceda chided President Arroyo for saying the fiscal crisis was over as he reminded her that the government must still deal with it.

"Objectively, we are out of the bottom — but not the hole," Salceda told The STAR, although he acknowledged the "substantial gains" made by the government after the President admitted that there was a looming fiscal crisis on Aug. 23.

Senate Minority Leader Aquilino Pimentel Jr., for his part, said the President "is a magician for making the fiscal crisis she herself declared not too long ago disappear."

"The fiscal crisis is now over? Himala o milagro ’yan (That’s a miracle)," he added.

The crisis that Mrs. Arroyo recognized in August and brought about by three years of unprecedented budget deficits under her administration cannot be over in just three months, he said.

Her declaration that the problem is now over "has no basis in fact," he stressed.

Pimentel added that the President was making liars out of 11 economics professors of the University of the Philippines (UP) who urged the nation’s leaders to make painful and unpopular decisions such as increasing taxes and electricity rates.

Unless such decisions are taken, the government’s financial condition would worsen further and the economy could collapse in two years, the professors said.

Their predictions triggered public discussions on the financial problems the country is facing and prompted the administration to adopt austerity measures.

Salceda, who is also one of the President’s economic managers, warned against complacency, especially since the task of raising revenues is always unpopular among the masses who will bear the brunt of price increases and additional taxes.

"Apparently, President Arroyo believes that Congress will pass bigger revenue measures even without the ambience of a crisis," he said. "That’s a gamble."

"My biggest worry is that we may be prematurely lifting public pressure and intellectual basis for action," Salceda said. Of the P76 billion required adjustment for 2005, he added, P64 billion is already in place, not counting the freeze on local government units’ (LGUs) internal revenue allotment (IRA).

The IRA freeze, he said, "is expected to yield P10 billion in 2005," which will bring the government’s total revenues to fill the budget shortfall to P74 billion. The country’s debt runs between P5 trillion and P7 trillion. The consolidated public sector deficit is P312 billion.

For its part, the Senate, through the committee on finance and the committee on ways and means, launched an inquiry into the nation’s fiscal condition.

The two panels found out that the country had an accumulated debt of about P6 trillion as of December last year, about a third of which was piled up by losing government corporations led by the National Power Corp. (Napocor).

Administration officials told the Senate that about P155 billion was needed to avert the fiscal crisis. Of that huge amount, P80 billion would be in the form of new or additional taxes, and P75 billion in electricity rate increases for debt-laden Napocor.

So far, the Energy Regulatory Board has authorized an electricity rate hike of 98 centavos per kilowatt-hour effective last month.

As for the eight tax bills that Mrs. Arroyo proposed to Congress and which she hopes would generate an additional P80 billion, none of them has been approved.

Mrs. Arroyo based her declaration that the fiscal crisis is now over on her expectation that lawmakers would soon approve the increase in specific taxes on the so-called sin products like cigarettes and liquor.

The House of Representatives has already approved its version of the sin tax bill and has sent it to the Senate.

The measure is with the committee on ways and means chaired by Sen. Ralph Recto, which has opened public hearings on it.

Senate President Franklin Drilon has predicted that his chamber would be able to approve its own version before lawmakers go on their Christmas break next month.

Meanwhile, Tarlac Rep. Jesli Lapus urged the Union of Local Authorities of the Philippines (ULAP) "to contribute to solving the fiscal deficit by waiving their 40 percent share of incremental Bureau of Internal Revenue (BIR) revenues collected" — such as excise taxes — by their localities.

Reported by: Sol Jose Vanzi

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