24 November 2008 - The goal of most nations is to have a balanced budget, such that their growth is financed by internal sources (taxes and non-tax government revenues), rather than borrowings.

However, despite President Gloria M. Arroyo’s call for austerity measures in government, per Administrative Order No.103 (August 31, 2004), expenditures of government even speeded up to reach P1.155 trillion more, or 62% more than when Mrs. Arroyo started in 2001 at P710 Billion.

Worse, growth continues to be debt-financed. Mrs. Arroyo’s era (2001-2009) is marked by deficits, with debt projected to escalate to a record-breaking P3.961 trillion next year from P3.712 trillion in 2007.

As last year, every child born in this country had already inherited a per capita debt of P43,612, even before he can learn to read.

This year, the projected P40-billion deficit will likely be breached because of the present global financial meltdown and the depreciation of the Philippine peso.

The Bangko Sentral ng Pilipinas recently borrowed $1 billion to buttress its treasury reserves in the wake of external global threats. This, plus the increasing peso cost of oil imports and foreign debt due to the currency slide, means the deficit could hit as much as P120 billion this year.

Hence, the target of a balanced budget for 2010, as mentioned in the 2004 10-point agenda of Mrs. Arroyo, would likely remain a pipe dream.

Except for Fidel V. Ramos, all three elected post-Marcos presidents operated on a budget deficit, culmina-ting in Mrs. Arroyo’s all-time high deficit of P213 billion in 2002.

Mr. Ramos showed relative-ly strong fiscal sense in registering surplus in the years 1994-1997, mainly through massive privatization efforts and 10% forced savings on government agencies.

From a low P600-billion debt in 1990 under the term of Corazon C. Aquino, total country debt escalated to hit the P2.166 trillion during Joseph E. Estrada’s last year in 2000.

It was in Mrs. Arroyo’s regime that debt increased in the greatest absolute peso magnitude of P1.328 trillion to P3.712 trillion last year from P2.304 trillion in 2001.

In 21 years, the budget ex-panded more than 10 times from P110 bil-lion in 1986 after the EDSA revolt to a mind-bog-gling P1.155 trillion last year under Mrs. Arroyo.

Does the country really need that kind of awesome budget or can we live with less than a trillion peso budget?

The Center for National Budget Legislation believes that once we trim the fat — involving widespread, systematic corruption consisting of lump sums, realignments, improper use of savings, arbitrary "special purpose" and unprog-rammed funds (SPFs and UFs, respectively) — the Philippines can actually move on well with very much less.
The P1.415-trillion national budget proposed for next year will eclipse the P1.2 trillion of 2008.

Senator Manuel A. Roxas III had even suggested that the bud-get of 2009 will have to be adjusted to reflect the impact of the global crisis on government revenues, as well as the higher oil and debt cost plus rising inflation on government expenditure.

Apart from that, steady vigilance must be exercised by all since two political developments — the new wave of charter change ("cha-cha") initiatives and the 2010 elections — are rearing their ugly heads.

An administration that needs to advance these two political events will not be immune to the temptation to dig its hands deeper into the country’s coffers through the abuse of budgetary allocation and implementation. It behooves every civic-minded Filipino to scrutinize possible budget leakage that will occur to clandestinely finance the "cha-cha" campaign and to favor the administration’s electoral bets in 2010.

Reviewing the table below allows the reader to focus on certain agencies which, in our analysis, could be potential sources of illicit funding for political ends. Basically, the possible red flags will be the lump-sums in regular agency budgets of the nine government departments and agencies, the SPF, UF, and the various earmarked revenues.

A comparative list of these sources for 2008-2009 is displayed in the table on the left.

The table on the right shows assumptions on diversions from 2008 and 2009 budgets, according to expense categories of personnel spending, maintenance and other operating expenses, as well as capital outlay, that may be used for illicit "cha-cha" and election operations.

Assuming that unscrupulous hands will tamper with just 5% of this P1.396 trillion areas for potential leakages, the amount will be a huge P69.8 billion.

A review of the fiscal performance through the years will display average to dismal performance of the various administrations of Aquino, Ramos, Estrada and Arroyo.

From the woeful debasement of the economy by the bankrupt Marcos regime, Mrs. Aquino (1986-1992) appeared to be a transition leader that brought back democracy and a republican government into life again.

Fidel V. Ramos (1992-1998), with his military-civilian background, showed some glimmer of fiscal promise in certain years.

Joseph E. Estrada (1998-2001) was then launched to the palace by the masses, who expected a non-traditional popular leader to work an economic miracle for them. That bubble burst in 2001, and a middle class-led action installed an economist-workaholic Mrs. Arroyo.

With her credentials and pedigree, Mrs. Arroyo represented the nation’s hope in 2001, raising expectations that, at last, the budget will be planned and handled with finesse and good judgment.

In turned out, however, that the deficit and debt problems escalated well into the 2004 — a tipping point where Mrs. Arroyo then outlined her 10-point medium-term agenda which, to our judgment, was barely met, going into the twilight of her last term (that will be the subject of a future analysis).

In the meantime, we await a political messiah from the 2010 polls — one who understands the budget and can do the highwire act of promoting the socioeconomic welfare of the nation with the right mix of debt and government revenues.

But to make that happen, we have to ensure that the 2010 election is a level playing field.

We should watch closely that the budgets of this year and next will not be used to install an ill-willed or ignorant candidate in the Palace, and that al-ready-scarce state funds will not be used to change the Constitution to extend the term of incumbents beyond 2010.