MANILA, AUGUST 28, 2008 (STAR) President Arroyo submitted for approval of Congress yesterday a P1.1415-trillion national budget for next year where she committed a 100-percent plowback of value-added tax (VAT) revenues in a social and infrastructure spending scheme called “HEARTS.”

In submitting the proposed General Appropriations Act (GAA) for 2009, Mrs. Arroyo also asked the Senate and the House of Representatives to pass a joint resolution increasing the pay of government workers.

Budget Secretary Rolando Andaya said since “no budget springs out of a vacuum, this one is shaped by the food and fuel price hikes, as it erects ramparts to protect the people while at the same time building up their capabilities for growth and prosperity.”

To give it flexibility to address economic challenges, the government officially “jettisoned our timetable to balance the budget this year in submitting the proposed GAA,” he said.

The proposed national expenditure program is anchored on the following macroeconomic assumptions: Gross Domestic Product growth of 6.1 to 6.8 percent; inflation of six to eight percent; Dubai oil at $115 to $125 per barrel; exports growth rate of seven percent; and foreign exchange rate of P42 to P45 to the US dollar.

The 2009 budget is premised on revenues of P1.393 trillion, representing a 16.3-percent revenue effort, 11.4 percent higher than this year’s projected take of P1.250 trillion, he said.

Of the target, the Bureau of Internal Revenue’s share is P968.2 billion while the Bureau of Customs is tasked to collect P300 billion, he said.

“Like in the past, the 2009 budget is a catalogue of rebates for the tax payments of our people. But next year the dividends will be bigger,” Andaya said.

“As to the VAT, we are instituting a 100-percent plowback policy, meaning all receipts from this tax, estimated at P111 billion next year, will be funneled to a verifiable spending menu called HEARTS for Health, Education, Agriculture, Roads, Technology and Tourism, Shelter and Security,” he said.

“The need to provide the vulnerable social protection takes precedence over the satisfaction of turning in a balanced budget scorecard,” he said.

He said next year’s budget has been increased by P188 billion or 15.4 percent from this year’s level to allow the government to respond to exigencies, meet current requirements, and “to invest in the future.”

Andaya said this will be aggressive because we cannot forever rely on foreign granaries to feed our people.

“For DA and AFMA, we are increasing their budget by 62 percent, from P22.1 billion this year to P35.8 billion next year.”

He said the executive branch is increasing the budget of the Department of Public Works and Highways (DPWH) by 17.2 percent from P102.4 billion to P120 billion as roads are being built to generate jobs and, when finished, spur economic activity.

The Arroyo administration, he said, is investing more for human capital development as P19 billion will be added to Department of Education’s (DepEd) budget, “bringing the latter to P168 billion next year, enough to fill its shopping cart with new books, more teachers, additional classrooms, and even breakfast packs for kids.”

He said the Department of Health (DOH) will be “given a shot-in-the-arm” as its budget would be increased up to P27.8 billion next year, or an increase of 37 percent.

“But of all the agencies, it is the Department of Social Welfare and Development (DSWD) that will receive the biggest funding hike, by 117 percent, or from this year’s level of P4.8 billion to P10.5 billion next year as welfare armor,” Andaya said.

This (increase in budget) will give DSWD more resources to provide “welfare armor” in the form of conditional cash transfers and subsidies to families at risk from food and fuel prices spirals, he said.

Prioritization of resources

In terms of prioritization of resources, social protection and investment tops the proposed budget, Andaya said.

By sector, the Arroyo administration is boosting the allocation for social services to 30.7 percent of the budget pie, and economic services to 25.5 percent, he said.

“By agency, we are increasing the budget of DSWD by 117 percent, of DA-AFMA (Agriculture and Fisheries Modernization Act) by 56 percent, and DOH by 37 percent,” he said.

In nominal terms, the top three agencies that will get the biggest augmentation are DepEd by P20.7 billion, DPWH by P18 billion, and DA-AFMA by 14.3 billion, he said.

By sectoral allocation, the Palace increased the share of economic services from this year’s P299 billion to P361.4 billion next year.

Under this group are agriculture and agrarian reform for which the amount of P673 billion, from P43 billion this year, has been earmarked,” he said.

“Social services allocation spending, the bellwether of any social payback drive, is increased from P377.5 billion to P434 billion,” Andaya said.

In this category is “education, culture and manpower,” with a proposed budget of P204.9 billion, up from P186.6 billion this year, he said.

Meanwhile, Andaya sought a 50 to 100-percent increase in salaries of over a million government personnel, including the President, Cabinet members, senators and congressmen.

He submitted the proposal yesterday to Speaker Prospero Nograles, together with President Arroyo’s proposed P1.1415-trillion national budget for 2009.

Andaya said the government-wide pay upgrading would be undertaken over four years, starting next year up to 2012, and would cost taxpayers a total of P109 billion.

He said the first installment, costing P20 billion, “is included in the proposed national budget for 2009.” – Paolo Romero, Jess Diaz

Chief News Editor: Sol Jose Vanzi

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