budget

A preference for pork: The Philippine neopatrimonial state

handouts

Filipinos have a high tolerance for corruption, which they see as a necessary evil in the delivery of local programs and projects.

This is the only conclusion one can arrive at based on the results of Pulse Asia’s latest survey on the pork barrel, conducted during the last two weeks of September and released over the past fortnight (see part 1 here and part 2 here). For those who might have missed it, here is a quick round-up of results:

  • Awareness of PDAF or pork barrel was at 90%, up from 66% a decade ago.
  • Ability to identify a local project funded by PDAF over the past six years was only 39% nationwide down from 52% in 2004.
  • On what to do with the PDAF 45% were for its outright removal and for implementation to be left to line agencies, up from 30% a decade ago. The balance was split among those who wanted to keep PDAF in some shape or form, including 45% wanting some changes to the system to be made and 10% who don’t want any changes made at all.
  • On the use and management of PDAF about 8 out of every 10 Filipinos saw it as being undertaken for questionable motives such as electioneering, kickbacks and as inducements to support the executive’s legislative agenda.
  • On the proportion of PDAF going to corruption nearly 8 out of 10 Filipinos think that more than half of the pork allocation is being plundered.
  • On what legislators should prioritise in their work only about a third wanted them to focus on lawmaking, while 42% said they ought to focus on having projects and programs, i.e. pork barreling. The remainder was split between investigating scandals and other issues (14%) and reviewing and passing the budget (12%).
  • On the president’s handling of PDAF about two thirds believe that the misuse of pork has continued under his administration and the same amount approve of his handling of it (the Palace announced the suspension of PDAF but allowed congressional insertions or pork barrel projects in line agency budgets with more stringent requirements).

Despite a supermajority holding the view that PDAF is not being undertaken for its specified or intended use and that more than half of the money is being wasted or stolen, a plain majority are still in favour of keeping it in some shape or form. This explains the strong approval of the president’s actions in the wake of the PDAF scandal. Even among the educated, wealthier classes (ABC), where 9 out of 10 believe that half or more than half of the PDAF budget is being stolen, only 47% want pork abolished.

Support for the abolition of pork reaches a majority only in the NCR with 56% behind it. Mindanao is where support is weakest at 38%. The rest of the country hovers around the mean at 45-47%. There is little variability among classes ABC and D on the issue with 47-48% supporting abolition. It is Class E that diverges from the national mean at 38%. The median voter appears to sit somewhere in between the lower middle and poor classes of D and E.

Only about 38-39% of class D and E respondents could identify projects financed by PDAF in their community over the past six years, down from 53% a decade ago. There was hardly any change recorded for class ABC during this period with 46% indicating that they knew of such projects. People in Metro Manila were less conscious at 30%, down from 50%, and Mindanao had the highest level of awareness at 48% down from 60%. The rest of Luzon and the Vizayas hovered around the national mean at 37-38%, down from 51% and 54%, respectively.

Given the continued operation of PDAF, the lower levels of consciousness regarding projects benefiting the local community could be due to their being less conspicuous, which in turn could be because more money went to “soft” projects, that appear to be more prone to the “ghost” phenomenon. The suspicion that most of their pork goes to corruption has not deterred most Filipinos from supporting its retention.

PDAF was a way for the political elite to formalise their patrimonial activity by giving them access to public funds to distribute rents among their constituents, but it failed to address their need to finance campaign spending at elections and to provide an adequate level of compensation commensurate to the power and authority that they wield over the vast resources of government. As a result, it is no surprise that they did what they did.

Filipinos have always known and provided tacit approval for this. Just like traditional housewives from the 1950s who tolerated their spouses’ flings outside their marriage for so long as they were discreet about it and continued to be good providers of their households, the Filipino public was willing to accept a certain level of corruption by their padrino-politicians, for so long as they “brought home the bacon.”

Now that the game has been exposed, and the scale of their infidelity has been rubbed in their faces, the public has understandably become unsettled. But despite all this, what a majority of Filipinos still want is a return to the way things were. They appear half-hearted at best about doing away with a system of patronage that they believe has served them well.

Their inclination is to give it another chance, perhaps with some minor adjustments. Even if this means divorcing the set of politicos who have let them down and been found out, they would just as eagerly fall into the arms of another set who will offer them the same sort of pandering as the previous batch.

To be concluded…

 

5 things you need to know about PNoy’s Disbursement Acceleration Plan (DAP)

Screenshot 2013-10-02 21.55.08

1. Disbursement Acceleration Plan (DAP) is a government stimulus package.

It was meant to address the government’s low-level spending. Did it work?

The World Bank in March 2012 stated in their quarterly report on the Philippines: “The government’s Disbursement Acceleration Plan was partially successful and contributed 1.3 percentage points (ppt) to GDP growth in Q4”

In 2012, the National Statistical Coordination Board reported: 6.6 GDP. As of the 2nd quarter of 2013, the economy posted 7.6 GDP.

2. The Department of Budget and Management realigned unreleased appropriations from 2010, and 2011 plus windfall revenues from government-owned and controlled corporation dividends.

3. As of December 2011, the government announced that it had already spent 85% of DAP.

As of March 2012, the World Bank reported that 53% of DAP were released to National Government Agencies, and 37% to Government Controlled and Owned Corporations as well as 10% to local government units.

4. Former Budget Secretary Ben Diokno is questioning the propriety of DAP. What did Former Budget Secretary Diokno say about DAP in 2011? Here’s this article from Malaya’s business section:

“With only 10 weeks remaining of the year, the P72-billion acceleration program will barely have an impact on the country’s growth target.

“With 10 weeks to go before the end of the year, and the slow-moving bureaucracy, I expect that, at best, only one-tenth of the proposed outlay will be spent this year, the rest will be spent next year,” said Benjamin Diokno, University of the Philippines economist.

Diokno said that 10 percent of P72 billion, or P7.2 billion, won’t make much difference in a P10-trillion economy.”

5. So why were Senators involved? Budget Secretary Florencio Abad said on DAP releases in 2012: “2012, most releases were made during the period October-December, based entirely on letters of request submitted to us by the Senators.”

Image credit: Screenshot of World Bank’s Table 4.1, Philippines Quarterly Update (March 2012)

Trapo Alert! Detecting political pandering, part 3

Panderometer

Featuring Koko Pimentel, JV Ejercito and Jack Enrile.

This is the third part in a series on the candidates for the senate in 2013. Just a recap: I am attempting through this series to have a serious discussion of the aspirants and their political platforms (or lack thereof). I have identified nineteen so far that have articulated some kind of policy agenda in running for a seat in the upper house. These are put through what I call the pander-o-meter to determine whether the policy detail they have released so far places them in either the reformist or populist columns. The following table details the range of possible scores a candidate can get and the equivalent meaning of each reading:

Introducing: the ‘Pander-o-meter’ or Trapo Scale

A reading of… …is equivalent to…

1-2

Low levels of pandering detected, generally reformist in nature

3

A mixed bag of proposals aimed at both pandering and reforming

4

Trapo alert! Approaching dangerous levels of pandering

5

Could be likened to a vote buying trapo

In part 1, I covered Juan Edgardo Angara, Jr, Benigno Aquino IV and Alan Peter Cayetano. In part 2, I covered Francis Escudero, Risa Hontiveros and Loren Legarda.

In this instalment, I will be covering Aquilino Pimentel III,Joseph Victor Ejercito and Juan Ponce Enrile, Jr.

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Aquilino Pimentel III (PDP-Laban-Team PNoy) has served less than half his term as senator since he spent the first half proving that he was the rightful occupant of the 12th slot in the 2007 senate race.  His father was also a victim of cheating, which makes him a strong advocate of clean, honest elections. A good portion of the time he has served as senator though was occupied by the impeachment trial, which left little opportunity for lawmaking. But in that time, Koko as he is fondly called was able to propose one significant measure, which is discussed below.

“Hating Kapatid” of revenues between local and national governments: will increase the share allocated to local government units (LGUs) to 50% from the present 40% and will consider all national revenues in determining this share, not just taxes collected from the internal revenue agency (that means local governments would get 50% of customs, VAT, and other forms of income).

My critique:

It is important to know what problem this proposal seeks to solve. If it is to make local governments fiscally more autonomous, then what the bill will do is make them even more dependent on Internal Revenue Allotments (IRA) from the national treasury. There have been problems identified with the current method of distributing IRA (50% based on population, 25% on land area, and 25% on equal sharing) which does not necessarily match revenues with costs or responsibilities and capacities. This proposal seeks to address the current mismatch by simply throwing more money at the problem by increasing the take of LGUs.

An alternative approach would be to increase the capacity of local governments to raise revenue autonomously from the national government. A discussion paper by the Philippine Institute of Development Studies noted back in 2009 that there was an “emerging consensus” which was “to amend Book II (Local Taxation) of the Local Government Code, which has the common support of the DILG and the various leagues.” The proposed package of reforms could raise revenues of local governments by about a third without increasing their cut from the national government.

As Fitch Ratings agency recently remarked, our government’s tax collections are abnormally low, relative to other countries that receive the same BBB- rating. The challenge therefore is to achieve the policy goal of raising the revenues of LGUs relative to the national treasury not by increasing its IRA but by amending existing laws to enable them to raise revenues on their own. That would be true fiscal autonomy responsive to the needs of local communities.

Overall comments:

When we talk of local government, there are two people that usually spring to mind. They are the former Senator Aquilino “Nene” Pimentel, Jr, the father of the Local Government Code of 1991, and the late-DILG secretary Jesse Robredo. Kaya Natin, a good governance advocacy group recently endorsed Senator Koko Pimentel, the son of the former, as a champion of the latter’s approach to reform.

Koko Pimentel is clearly seeking to further the reforms begun by his father, which have been credited with improving the quality and development capacity of LGUs nationwide. In principle, the cause of furthering local autonomy is quite laudable because it allows the allocation of resources to be determined by officials who are closer to where the needs are. There are many good examples of local innovations resulting from this practice. There are however a lot more cases in which LGUs have wasted and mismanaged resources transferred to them by the national treasury.

The late Jesse Robredo sought to correct this problem by encouraging LGUs to adopt best practices through a system of block grants and reward payments. Increasing the IRAs of LGUs has in the past limited the funds available to engage in such efforts. What this means is that we clearly have a choice of two philosophies. Senator Koko Pimentel’s approach of “hating kapatid” sounds folksy and politically easier to convey, but the evidence from over two decades of implementing the Local Government Code tends to point towards a different direction. Clearly, it is the one that Jesse Robredo would have favoured.

Pander-o-meter: 3 out of 5

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Joseph Victor Ejercito (PMP-UNA): the former mayor and congressman of San Juan has a thirteen point agenda listed on his website. These thirteen points fall under four priority areas: education, jobs, worker protection and Mindanao. This clearly echoes the priorities of his half-brother, Senator Jinggoy Estrada who has served as chairman of the senate committee on labour and the brand of his father, former President Joseph “Erap” Estrada whose popularity in Mindanao is without question. These priorities are covered below:

  1. Education: creating regional hubs for higher education, while increasing the budget for state colleges and universities (SUCs), encouraging youth development and monitoring the K+12 implementation.
  2. Jobs: improving higher education curriculum to match industry requirements, encouraging tourism investment through “innovative incentive packages”, stimulating agriculture investment in new technologies, infrastructure and market access, redesigning the Pantawid Pamilya program by converting it into a disabilities and pension scheme and redirecting it towards LGUs, and supporting LGUs in their livelihood programs.
  3. Worker protection: providing accessible government support services to overseas Filipino workers, improving health and safety measures within the business process outsourcing industry and monitoring the implementation of the Kasambahay Law.
  4. Mindanao: promoting economic development and power generation on the island.

My critique:

The priorities read, unsurprisingly like a list of motherhood statements and vague policy pronouncements. There is nothing in them that tells us what the outcome would look and feel like on the ground or what they would cost. The proposal for creating regional hubs for higher education could for instance mean amalgamating or merging some SUCs or it could mean increasing the number of SUCs. As he notes, the government has already increased spending in this area, so how much would be enough? The answer seems to be more than whatever the budget is. How can you arrive at a realistic outcome, then?

Does he intend to encourage the gerrymandering of SUCs as I have termed it, or does he intend to arrest it? We can’t really tell from his statement. Increasing the SUC budget is one thing, but allowing it to remain inefficient is another. Serious reform is needed in the sector which would improve the quality of the spending first, before significant budget expansion is done in my opinion.

Secondly what does he mean by “innovative incentive packages” to encourage tourism? I am worried especially as he cites the upgrade of hotels and restaurants near tourist spots needing attention. To my mind, these businesses aren’t infrastructure, at least not since the time of Imelda Marcos as Metro Manila governor have they been regarded as such. The same goes for his statement about encouraging investments in productivity improving technology in the agriculture sector. Here he cites hand tractors. What happened to Erap’s Karabao Bill?

Thirdly, the proposal to break up the Pantawid Pamilya and transform it into a disabilities and old age pension scheme would mean the health and educational outcomes noted recently by the World Bank (lower incidence of malnutrition and stunting, which if unchecked become irreversible and cause long-term learning difficulties) would not be maintained. That to my mind is not productivity enhancing.

Finally, just a quick note on the Kasambahay Bill. JV claims to have been one of its “principal authors”, but a search on the website of the House of Representatives shows only one bill sponsored jointly by Diosdado and Gloria Macapagal Arroyo. It was actually Jinggoy Estrada who sponsored the bill in the Senate. I wonder then what JV’s contribution was to the measure.

Overall comments:

Joseph Victor Estrada is following in the footsteps of his father and half-brother by promoting policies that they have championed and the career path they have taken. The way his policy statements are crafted, it sounds like he has very specific measures in mind. Then again, he might only be posturing. Even with the vagueness of his policy statements though, there are deep reasons to be concerned.

Pander-o-meter: 4 out of 5

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Juan Ponce Enrile, Jr (NPC-UNA): the congressman of Cagayan is lifting a page from his father’s playbook by using consumer rights and protection issues to anchor his electoral base in his first senate run. His dad used the high cost of electricity as the defining issue of his candidacy in 2004, and Jack as he is fondly called plans to use food security as his platform. He makes use of the slogan, “Murang pagkain, maraming pagkain”(affordable and abundant food) as the catchphrase of his campaign, but what does it actually mean?

The Food for Filipinos First Bill he co-authored with Walden Bello of Akbayan in the lower house seeks to create a national food requirement plan through the Department of Agriculture, re-organise the National Food Authority into a corporation that would ensure sufficient food is secured for domestic consumption, protect agricultural and fishing zones, promote agricultural education, training and credit, and improve the competitiveness of local produce by eliminating subsidies and enforcing anti-dumping and anti-smuggling measures with respect to food products.

My critique:

The package is perhaps one of the most comprehensive set of reforms in the agricultural sector to ever be proposed in the house. Walden Bello who has been a strident anti-globalisation activist and proponent of agro-industrial development has forged an unlikely alliance with Jack Enrile to sponsor this bill (who would have thought we would be mentioning both their names in the same sentence?). If Jack makes it to the senate, he has promised to advance it there.

Overall comments:

The Aquino government is already working towards making the country self-sufficient in rice production and its aim is for us to be a net exporter of rice before its term ends. The proposal of Bello and Enrile would apply the same principle across all agricultural sectors and institutionalise its application. This is a positive step and a long overdue one in my view.

Despite his motto sounding rather pie-in-the-sky-ish (sorry for the pun), Jack has actually done his homework here in determining a legislative priority with strong reform credentials. Much of this, it might be argued, could have been influenced by his co-author, the esteemed scholar, Walden Bello, but that is beside the point. The fact of the matter is, he has made a commitment towards enacting it, and that is what counts.

Pander-o-meter: 1.5 out of 5

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Up next: Gregorio Honasan, Ernesto Maceda and Juan Miguel Zubiri.

Budget 2013: The Bottomline

If the State of the Nation Address of the president is meant to rally the country behind him, the budget statement is meant to inspire confidence in markets both financial and political.

As far as this year’s budget statement goes, does it draw confidence from its intended audience? Who are the winners and losers? This being an election year (the midterm elections are scheduled for May 2013), are there any red flags or curious things to watch out for?

Let us first examine the figures.

Beginning with the bit aimed at financial markets, the government with its fiscal program for 2013 seeks to spend just over two trillion pesos, a jump of about 160 billion or 9.9% from 1.84 trillion in 2012. This level of expenditure will be financed by revenues that are expected to rise from 1.6 trillion in 2012 to 1.8 trillion in 2013, a growth of 14%, and borrowing or deficit spending that is set to go down from 280 billion to 240 billion in the same period, a decline of about 14%.

Expressed as a share of GDP (the value of all goods produced within the country), expenditures will rise from 16% of GDP in 2011 to 16.9% in 2013. Revenues are also set to rise from 14% of GDP to 14.9%. The deficit is set to go down from 2.6% of GDP in 2011 to 2% in 2013.

Relative to the budget position of rich countries, the fiscal program in the Philippines is sure to inspire confidence in bond markets as the deficit-to-GDP ratio will be less than half that in the OECD whose deficit-to-GDP ratios averaged 6.3% in 2011 and are projected to be 4.2% in 2013.

Given that the government’s total debt-to-GDP ratio went down to just under 51% in the first quarter of 2012, it is likely that it might go down further to below 50%, which would be crucial in gaining the coveted investment grade rating from credit agencies. Compared to the rich countries of the OECD whose debt-to-GDP ratios averaged 97% in 2010, the Philippine public sector looks a lot more solvent indeed.

So now let us turn to political markets and see how next year’s budget seems to fare. It is worth comparing budgeted levels in 2013 to that of previous election cycles. Back in 2010, expenditure levels were exactly at the same level compared to what they are proposed to be in 2013—that is, they were 16.9% of GDP. The same goes for 2007, the last time mid-term elections were held.

Incidentally in that year, the budget was practically balanced. Had the global financial crisis not followed, the government might have been achieving surpluses afterwards. It was the stimulus spending of subsequent years combined with weaker revenues that caused the government to incur deficits which have carried over until today. In 2004, a presidential election year, the expenditure to GDP level was at its highest over the past decade at 17.5%.

So is next year’s budget an election budget? Is it geared to win or buy votes for the administration? On the face of it, it would seem that the spending rate is at par with other election years. The 2004, 2007 and 2010 election spending by the Arroyo government earned the ire of the then opposition for what they said were blatant attempts to divert money into the ruling party’s campaign kitty. So could the same thing happening again?

First let us have a look at where the money is meant to go. The profiles of the 2012 and 2013 budgets are shown below. We can clearly see from this that from year to year, the structure hardly changes although next year’s budget goes up by 240 billion pesos. The shares of spending for defence (14%), debt (17%), and general expenses (17%) are down by one percentage point each from their 2012 ratios. Meanwhile the share received by social services goes up by 1% point to 35% and that of economic services (transport and public works) by 2% points to 26%.

The ‘doughnut’ chart shows how the additional spending is split across portfolios. Social services receive the biggest increase with an additional 85 billion pesos allocated on top of its budget this year of 613 billion pesos. Economic services receive the next biggest share of about 72 billion on top of the 439 billion from 2012. General services get 26 billion more on top of its current 320 billion, while defence gets an additional 3 billion above its current 87 billion. Net lending (currently at 23 billion) and debt repayments (at 333 billion) each go up by 4 billion and 1 billion respectively.

In terms of which departments get the largest growth in their budgets, the Department of Education sees the biggest growth of 54 billion pesos. Public Works follows with 27 billion. Third comes the Department of Interior and Local Government with 21 billion followed by National Defence with 14 billion. The Department of Agriculture comes in fifth with an additional 13 billion followed by the Health with 11 billion. Rounding out the final four are Finance with 9.6 billion, Social Welfare with 7.4 billion, Environment with 6.2 billion and Transport with 2.4 billion.

The president announced in his SONA that his administration would seek to clear the backlog of classrooms to provide sufficient facilities to public school pupils. This was in line with the K-12 reform which increased the years of secondary school by two while providing universal kindergarten classes at the primary level. It appears that his budget delivers on that.

He also announced the completion of repairs for all paved roads nationally. The procurement of guns for police and of modern equipment for the armed forces also featured in the SONA. The same goes for the improvement of irrigation for agriculture and health coverage of the government insurance system. The Pantawid Pamilya continues to be ramped up which is evident in the figures, and the same can be said of community based forest protection. Finally, the task of getting NAIA-1 refitted and NAIA-3 operational was raised.

So in terms of this budget being meant to win votes at the next election, if the president intends to show that his administration’s ticket deserves the support of the electorate on the basis of his government’s delivery of promises, this budget might be seen as a way to address that.

Other notable things about this coming year’s proposed budget include: an increase of the capital outlays for the compensation of land owners under the Comprehensive Agrarian Reform Program with Reforms by 100% from 2.5 billion pesos in 2012 to 5 billion in 2013; a similar increase of subsidies to government owned and controlled corporations by about 114% from 20 to 42 billion pesos; and a ten billion peso fund to provide performance based bonuses to civil servants.

The increased CARPeR funding is in line with the government’s target of completing land distribution by 2014 when the program ends. The increased subsidies to GOCCs and bonuses to government executives is a curious thing given how the president earlier decried the massive waste incurred by these firms which led to a ballooning of subsidy paid to them and the bonuses executives paid themselves as their firms suffered losses. I could be proven wrong, but it appears that the same could be occurring here.

It would be interesting to see just where these subsidies are going and how successful the bonus scheme is in its first year. Allowing government agencies to take a hit financially could be a way of avoiding the political fallout if fees and other charges were otherwise increased to cover the cost of service delivery adequately. In this sense, one might characterize this increased support to GOCCs as pandering to the electorate.

The question then becomes what the government intends to do after the elections. Will it seek to claw back some of these losses by increasing fees and charges to what they ought to be? In that sense, shouldn’t the administration be up front with the public instead rather than try to deceive them? The budget statement is silent on these matters despite the glaring deterioration that seems apparent among GOCCs.

At the end of the day however budgets do very little to give incumbent governments a boost, at least a lasting one. Previous budgets under the Arroyo presidency prove this point. Despite the massive infrastructure program and social insurance expansion undertaken from 2007 to 2010, very little improvement in its standing with the public occurred.

The fact of the matter is expanding the budget is fine for as long as the economy keeps growing briskly. Both financial and political markets will accept that the government has to do its part in maintaining the country’s growth trajectory. For as long as revenues are able to keep up with the expanded services, that is.

And this will be the biggest challenge moving forward. In the past, government revenues have not kept pace with growth in the economy. This was due to a range of factors, from technical smuggling of petroleum products, to the non-indexation of sin taxes, to the erosion of the revenue base by granting tax exemptions to targeted voter and interest groups.

This is where the administration could break with tradition: if it makes signing up to new tax measures a condition for its support to allied parties in Congress. That way it becomes less a marriage of convenience and one of principled politics. Candidates under the ruling coalition or alliance should be asked to commit, to sign an agreement to that effect.

Although the budget for 2013 won’t depend on new revenue measures like the mining tax, sin tax indexation and rationalization of fiscal incentives, future budgets and the fulfilment of the president’s agenda towards the latter half of his term will. It is incumbent upon the president to now forge a fiscal compact that guarantees his social contract with the Filipino people. How successful he is in doing this in an election year will prove just how skillful a leader he is.

Effective and pro-poor budgeting

Former Undersecretary Ernesto Ordonez shows the way to ensure that growth in the agriculture budget means better prospects for farmers.

Effective and pro-poor budgeting

By Ernesto M. Ordonez

(First published in the Philippine Daily Inquirer, August 19th, 2011)

Agriculture Secretary Proceso Alcala should be congratulated for seeing through the 54-percent increase in the Department of Agriculture’s 2012 budget, which the executive branch proposed to Congress. This was a welcome turnaround from last year’s proposal of a 12-percent decrease.

However, we must ensure that the budgeting of this money is done wisely.

Last August 17, the first Congressional hearing on the budget was conducted. We recommend that a Return on Investment (ROI) approach be used to optimize the final budget configuration.

A simple way to explain ROI is to measure the benefit return derived from a given cost (investment). When we apply this ROI approach, we will also consider return based not only on economic but also social equity considerations. However, it is always desirable to compute the financial viability of government intervention.

Below are two areas where the ROI approach may be applied, requiring a realignment in the DA’s budget.

For irrigation, the current proposal is to increase the budget from P11.7 billion to P26.8 billion. AF 2025 Rice Cluster coordinator Emil Javier believes the National Irrigation Authority (NIA) does not have the absorptive capacity to get the proper returns from these large investments. There have been many reports of possible inefficiency and even corruption in the past. There is also no comprehensive evaluation report of recent irrigation budget use. Therefore, Javier recommends P20 billion instead. To get the best ROI for this amount, we recommend two steps.

The first is to decide on what kind of irrigation should get priority. Whether one spends the money on rehabilitation of an existing but non-performing irrigation system or installing a brand-new one, the benefit of added harvest for the year is the same.

We know of irrigation rehabilitation projects costing P60,000 a hectare, while a new irrigation system may cost more than P1.3 million per hectare. It is clear that each irrigation system should be subjected to an ROI evaluation.

The second step is to help ensure that the promised returns are delivered. These investments should not be lost to incompetent supervision or corruption.

Rolando Dy, AF 2025 Commercial Crops coordinator, recommends that the Philippine Coconut Authority budget should be increased from P693 million to P2 billion. The additional amount should go to fertilization and intercropping.

Fertilization costs only P3,500 per hectare a year. After eight years, the P24,000 fertilization investment will give a cumulative return of P200,000—more than 14 times the investment.

As for intercropping, Cocoa Foundation’s Josephine Ramos said intercropping cacao would yield an annual average return of more than 90 percent in the first eight years, and more than 200 percent ROI for each succeeding year.

According to AF 2025 Fisheries coordinator Arsenio Tanchuling, similar high ROIs can be found in the additional P1 billion budget increase which he recommends for the fisheries sector.

AF 2025 Fruits and Vegetables coordinator Roberto Amores said the same for the P1 billion increase which he suggested, on top of the current P1.1 billion for this important sector.

Given the threat of climate change, Philippine Crop Insurance Corp. (PCIC) president Jovito Bernabe recommends a doubling of PCIC’s proposed budget to P400 million, which will cover only 10 percent of its target population.

In all these interventions, financial long-run sustainability with adequate ROIs should be required.

More examples are trading centers (bagsakan), which have a proposed P911 million budget, and farm-to-market roads, which have a budget of P5 billion.

The locations and financial structuring of these projects should yield the required ROIs. Thus, they will not become dole-outs and projects of unscrupulous politicians.

The 54-percent DA budget increase can turn from good to bad news if the funds are improperly spent.

We recommend that social and economic ROIs be calculated for each proposed government intervention. This way, the ROI approach can help ensure an effective and pro-poor DA budget for 2012.

(The author is chairman of Agriwatch, former secretary for presidential flagship programs and projects, and former undersecretary for Agriculture, and Trade and Industry. For inquiries and suggestions, e-mail [email protected] or telefax [02] 8522112.)

Aquino gov't aims to reduce deficit-to-GDP to 2%

Aquino gov’t aims to reduce deficit-to-GDP to 2%
By Lala Rimando
abs-cbnNEWS.com

MANILA, Philippines – The Aquino administration wants to bring down the country’s budget deficit to 2% of gross domestic product (GDP) in the next 3 years, Budget Secretary Florencio Abad said Thursday.

The budget shortfall is forecast to reach P325 billion or 3.9% of GDP this year.

“We want to bring down deficit-to-GDP ratio to 2% starting 2013 from 3.9% now,” Abad told reporters at the sidelines of the Public-Private Partnership Conference in Pasay City.

“We are making renewed commitment to fiscal responsibility,” he added.

The deficit hit P259.8 billion in the first 9 months, already 80% of the 2010 ceiling.

Abad said the budget gap will not exceed the full-year target as the government tightens spending and shores up revenue collection.

“We will make sure that deficit will be within or below the P325-billion target,” he said.

The Aquino government, who took office in June, earlier said it would improve revenues by enforcing existing tax laws and cracking down on tax evasion and smuggling.

Noy slashes own intel fund by P184 million

Noy slashes own intel fund by P184 million
By Delon Porcalla
The Philippine Star

MANILA, Philippines – In line with his administration’s austerity measures, President Aquino has decided to cut the intelligence budget of the Office of the President for next year by P184 million, from P4.259 billion  to P4.075 billion.

“This is consistent with our belt-tightening efforts and our desire to cut unprogrammed, unaudited fund sources in the spirit of transparency and fiscal discipline,” said Secretary Herminio Coloma of the Presidential Communications Office for Operations.

Executive Secretary Paquito Ochoa Jr. recommended the cost-cutting measure.

He said it was the same budget that was approved by the appropriations committee at the House of Representatives, which is headed by Mr. Aquino’s ally, Cavite Rep. Joseph Emilio Abaya.

In a statement, Ochoa said the Office of the President (OP) has also realigned the money from the Palace intelligence funds and the Presidential Anti-Organized Crime Commission to cover the funding requirements of two new offices.

He said the proposed 2011 national budget for maintenance, operating and other expenses has been reduced by P163.9 million, with professional services getting the biggest cut of P152.7 million.

Ochoa added that there is also a cutback of expenses for printing, advertising, travel and representation allowances.

“Addressing our growing deficit will require a team effort on the part of all government offices, as we all have to use our resources wisely, and the President’s office is doing its share by cutting back on various expenses,” he said.

Last August, Senate President Juan Ponce Enrile urged the President to give up his office’s intelligence funds, first introduced during the time of deposed President Joseph Estrada in 1998.

Coloma said they were open to such a proposal.

The 2009 national budget under former president and now Pampanga Rep. Gloria Macapagal-Arroyo allocated P538.4 million to an office called the Presidential Anti-Crime Commission (PACC).

Enrile suggested that for the Aquino administration to have a cost-effective government, the President could give up his intelligence fund and distribute the money to other agencies instead.

He said the OP had no allocation for an intelligence fund until former President Estrada formed the Presidential Anti-organized Crime Task Force (PAOCTF) with a budget of P400 million a year more than a decade ago.

After Estrada was ousted in 2001, his successor Mrs. Arroyo abolished the PAOCTF but retained the intelligence fund amounting to hundreds of millions of pesos.

“The Office of the President is not entitled to intelligence funds because it is a user of intelligence and not a gathering unit for intelligence,” Enrile said in an interview aired over radio station dzBB.

Enrile said an intelligence fund could not be used for personal benefit.

“Only those agencies involved in security should get intelligence funds,” he added.

Enrile proposed that Congress allocate intelligence funds only to the military, police, National Bureau of Investigation, Bureau of Immigration, and National Intelligence Coordinating Agency.

He said the Department of the Interior and Local Government, Office of the Vice President, government-owned and -controlled corporations, and government financial institutions should not get the funds.

Achieving MDG goals to require over P400 billion for 2012-2015

Achieving MDG goals to require over P400 billion for 2012-2015
Business World Online

THE GOVERNMENT needs to spend around half a trillion pesos from 2012 to 2015 if the Millennium Development Goals (MDGs) are to be met before the end of President Benigno C. Aquino III’s term, the Budget department yesterday said.

Budget Assistant Secretary Luz M. Cantor, speaking at a national MDG congress, said agencies involved in the implementation of the UN-sponsored objectives needed P486.55 billion to hit a 2015 deadline.

The estimate, which does not include allocations under next year’s national budget, was based on submissions by the Health, Social Welfare, Environment, Agrarian Reform, Finance and Public Works departments; People’s Credit and Finance Corp. (PCFC); Philippine Ports Authority (PPA); National Food Authority (NFA); and the Philippine Commission on Women (PCW).

Not yet included is the amount needed by the Education department.

The Social Welfare department accounts for the bulk: P343.02 billion for implementing projects related to MDG 1 or the eradication of extreme poverty and hunger. Other agencies involved in meeting this goal include the Agrarian Reform department which has sought P32.7 billion; PCFC, P7.88 billion; Finance department, P500 million; PPA, P167 million; and the NFA, P65 million.

Under next year’s budget, the Social Welfare department’s budget for its Pantawid Pamilyang Pilipino Program was increased to P29.2 billion from this year’s P10 billion, Ms. Cantor said. Some P21.2 billion will go to conditional cash transfers (CCTs), P2.88 billion for the Supplemental Feeding Program, P881 million for the Food for Work Program for Internally Displaced Persons and P4.2 billion for rice subsidies.

The CCTs also address MDG 2 or the achievement of universal primary education and MDG 5 or the improvement of maternal health.

The PCW, in charge of MDG 3 or the promotion of gender equality and women empowerment, proposed a P222-million budget for 2012-2015.

“Among initiatives to mainstream gender sensitivity, the national government continues to carry out measures to improve the implementation of the Gender and Development Policy which directs all government department, bureaus, offices and agencies to set aside at least 5% of their annual appropriations for projects designed to address gender and development issues,” a Budget department document states.

The Health department, in charge of MDGs 4, 5 and 6 or the reduction of child mortality, improvement of maternal health and the fight against HIV/AIDS and other diseases, respectively, said it required P79.84 billion.

The Environment department, concerned with MDG 7 or the assurance of environmental sustainability, asked for P12.68 billion while Public Works department which is also working on the goal wants P9.49 billion.

“With only five years remaining, we need to do more. Statistics show that the ’business as usual’ mindset will not contribute anything substantial…,” Socioeconomic Planning Secretary Cayetano W. Paderanga said.

Jacqueline Badcock, UN Resident Coordinator, said: “The challenge ahead is thus to sustain progress and accelerate the pace of progress on the goals that are least likely to be achieved.” — J. J. A. Cerda

DBM – “Guardian of public expenditure” to get a 19% budget cut

Malacanang
A September 28, 2010 press release prepared by the Department of Budget Management

DBM Secretary Abad: Reforms to roll-out towards “WALANG CORRUPT, WALANG MAHIRAP”

The Department of Budget and Management’s very own budget will decrease by P180.7 million or 18.8% to P780.9 million under the proposed Reform Budget of 2011. But even so, the institution vows to faithfully perform its role as “guardian of public expenditure.”

Budget and Management Secretary Florencio B. Abad even said the DBM will play a key role in fulfilling the promise of the Aquino government, which got an overwhelming mandate in the 2010 national elections, of people empowerment through honest and participative governance.

“Like other agencies, the DBM has had to postpone expenditures on many of its priority projects so funds can be freed to augment vital social and economic services. Nonetheless, we are committed to rolling-out important public expenditure management reforms in line with President Aquino’s platform of kung walang corrupt, walang mahirap,” he said.

The DBM budget decrease in 2011 is mostly due to less capital outlay for next year, to P31.62 million from P231.3 million. He said capital expenses of the department for next year will only be for budget improvement projects, particularly the purchase of information technology equipment. The budget for personnel services will also decrease to P351.3 million from P355.3 million this year.

Meanwhile, maintenance expenditures increased to P397.9 million from P375.00 million, with provisions for the internationally-acclaimed Philippine Government Electronic Procurement System (PhilGEPS). Abad said the PhilGEPS will make possible, for the very first time, electronic bidding services in procurement by the 1st quarter of next year.

Abad added “we welcome this public debate on the national budget, and even the criticisms. This only means that the people, more than ever, recognize the national budget as important to their lives and that they want to take part in this process. I hope this public discourse is not just seasonal, and that it is maintained even after Congress approves the budget,” he said.

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Arroyo spreads news in New York about her admin's feats

Arroyo spreads news in New York about her admin’s feats
AMITA LEGASPI
GMANews.TV

“Start spreading the news…” that’s how Liza Minelli’s 1977 song “New York, New York” goes.

That’s what former President and incumbent Pampanga Rep. Gloria Macapagal Arroyo did. At two recent events in New York in the United States, Arroyo highlighted the achievements of her administration.

Taunted in the Philippines for corruption issues, Arroyo found two international venues — the Clinton Global Initiative (CGI) conference and the Important Dinner for Women — to cite her administration’s achievements, especially for women.

Arroyo attended the two international gatherings from September 20 to 22. Arroyo’s classmate, former US President Bill Clinton, and Queen Rania Al-Abdullah of Jordan invited her to these events.

Both events focused on addressing women issues related to the Millenium Development Goals (MDGs).

The MDGs are eight international development goals that all 192 United Nations member states, and at least 23 international organizations, have agreed to achieve by the year 2015.

These goals include:
(1) Eradicating extreme poverty and hunger;
(2) Achieving universal primary education;
(3) Promoting gender equality and empowering women;
(4) Reducing child mortality rate;
(5) Improving maternal health;
(6) Combating HIV/AIDS, malaria, and other diseases;
(7) Ensuring environmental sustainability, and
(8) Developing a global partnership for development.

Presenter of commitments

In the 5th CGI conference, Arroyo was the “presenter of commitments” on enhanced education for about one million girls.

In a press release, Elena Bautista-Horn, Arroyo’s spokesperson, said the “commitment” was shared by Barclays (a financial services institution), Goldman Sachs (a global investment banking and securities firm) and Room to Read (a non-profit organization based in the US).

Women empowerment

During the 5th Important Dinner for Women, Arroyo was a discussant on the lagging targets on women empowerment and maternal deaths.

The discussion was participated in by Netherlands Prime minister Emily de Jongh-elnage, and Ida Odinga, wife of Kenya’s Prime Minister, among others.

During the event, the former president shared her administration’s accomplishments.

Arroyo said the country was among the world’s top in providing economic opportunities for women. She said the 2006-2007 global entrepreneurship monitor noted that the Philippines was the only in the country in the world where the women are more active in starting business than men.

She added there was a significant increase of women in the labor force, with 49% of all women now working, topping gender equality among managers, professional and technical workers.

Arroyo admin’s achievements

Arroyo also cited that the Philippines has been at the top of the ranking of developing countries in the World Economic Forum’s “global gender gap index” for four consecutive years. She added that the Philippines also has the highest ranking in Asia.

Arroyo further said the government tops in gender equality among legislators and senior officials, adding that women dominate civil service at the technical level.

“The Philippines continues to be the top performer in gender equality in literacy rate and enrollment in primary, secondary and tertiary education. The country also tops gender equality on life expentancy with women outliving men,” the former President said.

She also said that her administration also made landmark legislations for women, such as the enactment of the Magna Carta for Women, a comprehensive women’s human rights law that seeks to eliminate discrimination against women.

The magna carta seeks to recognize, protect, fulfill and promote the rights of Filipino women, particularly those in the marginalized sector.

She also cited the Anti-Violence against Women and the Trafficking Persons Act of 2003, recognizing that women are the number one victims of human trafficking.

Empowerment of women

She said the Philippines is the only country that automatically appropriates 5% of its annual budget for the empowerment of Filipino women.

Yet, like many other countries, the Philippines faces the difficult challenge of reducing maternal mortality from 160/100,000 in 2009 to 55/100,000 in 2015, she said.

Arroyo said maternal deaths affect not only women empowerment but also the promotion of an intact family unit, the breeding ground of an individual’s values and direction for the future.

She said most of maternal deaths are caused by the absence of birth experts and proper birth facilities.

Arroyo said her administration has thus made health care services more available for women. They also made pregnancy quality for public health insurance.

Arroyo also put priority to facility-based, rather than home-based delivery of babies, by upgrading the gynecological, obstetrics, and surgical services of government hospitals.

Aside from attending the two events, Arroyo also held meetings with philanthropists and non government organizations to discuss possible projects addressing the concerns of women and overseas Filipino workers. Arroyo also discussed possible infrastructure, relief, and reconstruction projects. –VVP, GMANews.TV