Press Release
May 24, 2006


Senate Minority Leader Aquilino Q. Pimentel, Jr. (PDP-Laban) today said there is nothing to crow about the Arroyo administrations boastful claim that it has been spending below programmed level if the effect is reduced delivery of essential economic and social services and lower economic growth.

Pimentel cited official data showing that the narrowing of the national governments budget deficit has been mainly done through underspending, along with the increased income of the Bureau of Treasury (BTr).

He decried that real spending for basic economic and social services has declined although education, health, infrastructure, research and development are all essential for long-term growth.

But all these public services have been sacrificed to make the fiscal balance look good to please the creditors and the credit-rating agencies, Pimentel said.

Worse, much money has been diverted and wasted to buy the loyalty of politicians and to court support for President Gloria Macapagal-Arroyos political survival.

The minority leader stressed these points at the forum entitled In Search of Reforms for Long-Term Growth and Prosperity sponsored by the Business World and Action for Economic Reforms.

Pimentel said the P17.6 billion budget surplus for April this year as reported by finance and budget authorities was meaningless because it resulted more from underspending than from actual increase in revenues.

If the government has been spending less than expected, he said this was also because of the delayed approval of the 2006 national budget, resulting in non-implementation of new projects. The budget surplus for April looked an abnormal thing since the tax collection of the Bureau of Internal Revenue was P7.2 billion short of the collection target for the month, he observed.

Pimentel said that although revenue collection went up in fiscal year 2005 in relation to 2004, the actual collection of BIR and Bureau of Customs fell below the target. The BIR collected P542.1 billion, which was below the goal of P546.9 billion while the BoC collected P154.1 billion, which was below the P156.7 billion.

What offset the BIR-BoC collection shortfall was the increase of the earnings of the Bureau of Treasury to P70.6 billion or P34.1 billion more than the target.

But then this suggests that banks would rather place their money in treasury notes than lend to producers, Pimentel said.

Official figures revealed that the government spent P962.2 billion last year, less than what was programmed, P967.7 billion.

Pimentel said the underspending for economic and social services looks more worrisome in the light of the declining capability and competitiveness of the Philippines in various fields as shown in the recently-released World Competitiveness Yearbook, published by the Switzerland-based International Institute for Management Development.

In the 2006 ranking of 61 countries surveyed by the Yearbook, the Philippines was ranked last on basic infrastructure, 58th on scientific infrastructure, 57th on education, 53rd on health environment and 37th on technological infrastructure.

Pimentel bewailed that the Philippines landed at the bottom of the survey of the Yearbook in the following areas:

1. Last on pupil-teacher ratio for secondary education.

2. Second to last on total health expenditure in proportion to gross domestic product.

3. Second to last on total expenditure for research and development as a proportion of the GDP.

We are not yet out of the woods. We may have had positive growth rates in the past few years, but they do not necessarily translate into long-term growth, much less prosperity for all, Pimentel said.

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