2008 Budget

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President Gloria Macapagal Arroyo and the department of budget and management have submitted to the House of Representatives a budget proposal for 2008, which is scheduled to be reviewed and approved before the end of 2007.

The proposed national budget of P1.227trn ($24bn) is 8% higher than the 2007 budget and, according to Arroyo, the first balanced budget in over 10 years as the expenditures will be totally supported by internal revenues.

Arroyo stated that the 2008 budget,"signifies my administration's commitment to sustain our growth momentum towards eventual economic takeoff."

Arroyo also made it very clear that greater investment in the five so-called Super Regions - North Luzon, Luzon Urban Beltway, Central Philippines, Mindanao and the Cyber Corridors - is most needed to achieve that goal.

"These super regions offer boundless opportunities to spread and multiply development across the entire country. The Super Region is our blueprint for building a future. The budget will sustain major infrastructure projects in all Super Regions."

Indeed, the 2008 budget has allocated P116bn for infrastructure projects, up from P94.6bn in 2007. The department of public highway and the department of transportation and communication will receive P75.31bn and P14.97bn respectfully, representing 77.8% of total infrastructure outlays. The rest will be divided up between various programmes including improving the digital infrastructure of schools through the provision of computers, servers and workstations.

In additional to infrastructure, Arroyo has made social services a priority, in particular education. Of the 30.6% of the budget allocated to social services, 14.82% will be dedicated to education.

"We are investing in education to provide the necessary public good that is key to private investments. Building our human resources through education is our primary response to the worldwide plea for poverty reduction and a better quality of life for all. Education, to raise the quality of our public school system remains a top priority in my development agenda. It will continue to receive the highest allocation among the items in the social services sector," said Arroyo.

"The department of education will receive a budget of P146bn, so far the biggest among all the departments of the government," Margarito B. Teves, the finance secretary, told the local media. This represents an increase of P8.6bn compared to 2007.

Although the government has declared education a priority, San Juan Rep. Ronaldo Zamora, the opposition leader in the House of Representatives, questioned whether education is actually receiving the attention it deserves.
"Education is the number one priority in the budget but that's clearly not true anymore because a quarter of the budget is being spent on interest payments," said Zamora.

"People, not the creditors, matter. For example, in health, the government is allocating only 1%. This is very small. In education, the government is allocating P146bn, which is only 12% of the budget. In Vietnam, the [education] budget is 22%," said Nacionalista Party-United Opposition Representative Teofisto Guingona III of Bukidnon."

In fact, under the proposed 2008 budget, over 24% has been dedicated towards debt services (interest payments), representing the largest particular expenditure.

The DBM has also come under fire for failing to include a number of highly publicised government contracts in the budget. The most talked about being a $330m deal that was signed with Chinese IT firm ZTE Corporation to build a national broadband network and a $400m Cyber Education Project with the Chinese government to provide satellite technology, which delivers educational services.

Rolando Andaya, the budget secretary, explained that he has not received any documentation on either of the contracts and therefore had no need to reflect them in the budget.

Speaking specifically about the Cyber Education Programme, he said, "I have likewise read about this project in the newspaper, but from the department of budget abd management standpoint, there is no loan package to talk about. Nor any basis to have it reflected in the 2008 budget under the department of education."

Andaya's answer fails to address the concerns of the Opposition Party and leaves everyone wondering where the money will come from in order to pay these contracts. Including those figures in the budget would leave the administration hard pressed to achieve a balanced budget in 2008.

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