Government unfazed by impact of US-Iraq war on budget

Despite its budget deficit woes, the government said yesterday it is not worried about the impact of the Iraq war on the national budget, saying there is at least P2.1 billion in calamity and contingency funds that can use in case of an emergency.

The full-year deficit is expected to reach P202 billion this year but budget officials said the government has enough funds to support war claims should a war erupt between the US and Iraq.

Budget Secretary Emilia Boncodin said the government’s calamity fund and contingency fund under the Office of the President remain untouched this year and could be used for the requirements of returning overseas Filipino workers who might be displaced by the Middle East war.

"So far there are no claims against the funds yet but we are ready," she said.

According to Boncodin, there was at least P200 million left over from last year under the calamity fund and P100 million for the contingency fund. This money was rolled over into both facilities on top of the annual P800-million automatic allocation under the national budget.

"That’s why we are not so worried because we know we have the funds in case we will need it in case a war erupts in Iraq," Boncodin said.

The Arroyo administration is scheduled to unveil its contingency plans today in anticipation of a war between the US and Iraq.

The Bangko Sentral ng Pilipinas (BSP) has already opened a special rediscounting facility for OFWs who might need bridge financing when they return to flee the war.

The Monetary Board (MB) also allowed the Bangko Sentral ng Pilipinas (BSP) to accept currencies of Kuwait, Iraq, Israel and Turkey from OFWs who want to convert these to pesos if a war erupts in the Middle East.

At present, only Iraqi currency is not directly convertible to dollars, but Buena-ventura said the MB is planning for the contingent possibility that other currencies might also cease to be convertible.

"Chances are, most of our OFWs are already holding dollars but in case of war, some of them might be left with currencies that are no longer convertible," Buena-ventura said. "We want to be prepared in case the war breaks out and disrupts banking and remittance services."

Remittances from Middle East OFWs account for 10 to 15 percent of total OFW remittances. – Des Ferriols