Far from being Diretso sa Tao, the 2012 budget is in reality Diretso sa Tubo. Instead of the government’s meager resources going straight to the needs of the people, taxpayers’ money will actually go straight to the pockets of creditors while creating the most favorable environment and profit-making opportunities for private business. (Photo from The Philippine Star)

First published by The Philippine Online Chronicles

In the President’s 2012 Budget Message, President Benigno S. Aquino III boldly proclaimed: “Noong nakaraang taon, tinangkilik po ninyo ang aming pakay na tahakin ang landas Tungo sa Paggugol na Matuwid. Sa paparating na taon, hinihikayat ko po kayong patuloy na sumama at lumahok sa biyaheng ito: sa pagsiguro na ang benepisyo ng Paggugol na Matuwid ay nakatutok sa ating prayoridad at Diretso sa Tao.”

Aquino also called the P1.816-trillion budget a Results-Focused Budget, with sharp focus on the so-called A Social Contract with the Filipino People, which he used as campaign platform in last year’s elections. In sum, the Social Contract and thus the proposed budget supposedly have five priorities: (1) Transparent, accountable, and participatory governance; (2) Poverty reduction and empowerment of the poor and vulnerable; (3) Rapid, inclusive, and sustained economic growth; (4) Just and lasting peace and rule of law; and (5) Integrity of environment and climate change adaptation and mitigation. The spending and efforts of the administration will purportedly focus on these five priorities.

But far from being Diretso sa Tao, the 2012 budget is in reality Diretso sa Tubo. Instead of the government’s meager resources going straight to the ever growing and urgent needs of the people, taxpayers’ money will actually go straight to the pockets of creditors while creating the most favorable environment and profit-making opportunities for private business.

Debt servicing remains top priority

In hyping the budget, Aquino declared that a substantial portion of it – about 20.3% or P368.8 billion – will be spent directly on programs for poverty reduction and empowerment of the poor. Of this amount, the Pantawid Pamilyang Pilipino Program (4Ps) accounts for a considerable share with P39.5 billion. Another major portion comes from the P61.9 billion allocated for public education sector’s scholarship programs, financial assistance programs, training programs, hiring of additional teachers, construction and rehabilitation of facilities, procurement of textbooks, and support to State Universities and Colleges (SUCs). It also allotted P44.4 billion for undertakings meant to achieve the health targets under the Millennium Development Goals (MDGs). There’s also the P5.6 billion intended for the resettlement of families residing along danger areas and families affected by calamities and so-called “slum upgrading.”

While Aquino and his budget officials try to paint these numbers as impressive, the truth is they still pale in comparison to the huge amount of public money that will again go to debt servicing in 2012. The P368.8 billion is just a little higher than the P333.1 billion in Interest Payments in the proposed budget. Including the Principal Amortization (P405.5 billion), Debt Service Expenditures for 2012 will reach P738.6 billion, or more than twice the P368.8 billion that Aquino said will directly go to the poor and marginalized sectors. To further illustrate how big the budget is for debt servicing, the total Debt Service Expenditures is also much larger than the combined P575.8-billion Social Services budget that includes Education (P308.9 billion); Social Security, Welfare, and Employment (P104.5 billion); Health (P49.9 billion); Housing and Community Development (P7.1 billion); Land Distribution (P2.5 billion); and Other Social Services and Subsidy to Local Government Units (P102.9 billion).

Aquino, in his first year in office, has already proven to creditors that his administration is a reliable and good borrower, even better than his immediate predecessor. From July 2010 to July 2011, Aquino has shelled out P735.6 billion for debt servicing. This translates to about P61.3 billion on a per month basis, or P13.1 billion bigger than the monthly debt servicing under the Arroyo administration (from January 2001 to June 2010). Furthermore, from July 2010 to May 2011 (latest available data), Aquino’s debt servicing is equivalent to 46.6% of government expenditures (including its principal payments), as compared to Arroyo’s 41.5 percent.

Facilitating more privatization of infrastructure and services

It is true that debt servicing will decline in the 2012 budget while increases will be made in Social Services and Economic Services. The P1.816-trillion budget is higher than the present budget of P1.645 trillion by P171 billion, with the budget for Social Services going up by P54.3 billion (from P521.5 billion to P575.8 billion) and Economic Services increasing by P77 billion (from P361.9 billion to P438.9 billion). The budget for Defense will also go up by P11.6 billion (from P101.5 billion to P113.1 billion), General Public Services, by P44 billion (from P288.1 billion to P332.1 billion), and Net Lending, P8 billion (from P15 billion to P23 billion). Interest Payments, on the other hand, will go down by P24 billion (from P357.1 billion to P333.1 billion). In terms of percentage share, Economic Services will improve by two points (22 to 24%) and Interest Payments will slide by the same amount (20 to 18%), while the expenditure program of the rest of the sectors will maintain their share – Social Services (32%), Defense (6%), General Public Services (18%), and Net Lending (1%).

As pointed out, however, debt servicing will continue to be the single biggest expenditure item in the 2012 budget despite its decline both in absolute terms and as a percentage of the total. Furthermore, aside from the increase in quantity, it is also important to examine the quality of the increases. The budget increase in Social Services and Economic Services are deceiving because they do not guarantee improved access and better quality of life for the people. In reality, the increases are meant to facilitate the privatization of infrastructure development and social services in the country in line with Aquino’s centerpiece program – the Public-Private Partnership (PPP). (Read more about the PPP here and here) As the President said in his budget message, after introducing PPP through the 2011 budget as an innovative way to address the perennial lack of funds for infrastructure, the government will not only sustain it but even expand to include social services.

For the 2012 budget, Aquino is proposing P22.1 billion as counterpart funding from the national government for various infrastructure and capital outlay support for the PPP initiatives of the Department of Public Works and Highways (DPWH), Department of Agriculture (DA), Department of Transportation and Communications (DOTC), Department of Health (DOH), and Department of Education (DepEd).

(To be continued)