‘Swift budget okay to signal RP normalcy’

Cebu Rep. Eduardo Gullas urged his colleagues in the House of Representatives to speedily approve the proposed P1-trillion 2006 budget, saying its early approval would signal "normalcy and economic stability."

He made the appeal hours before the chamber was scheduled to begin much-delayed floor debates on the budget. The House is at least three months behind schedule in its budget-approval timetable.

"More than ever, Congress has to promptly approve the budget. This is imperative for us to send across the message that, notwithstanding the political infighting, the country is conducting business as usual, and that our economic fundamentals remain durable," Gullas said.

"We have to demonstrate to global investors that government is bent on vigorously pursuing disciplined spending and other fiscal reforms, and that we will not allow the reversal of recently achieved gains," he said.

He added that the enactment of this year’s budget "is definitely one uncertainty less, at least in the economic front."

He noted that credit ratings agencies have warned concerned officials that the nation’s political troubles could prompt them to review their positive outlook for the country.

Last month, Standard & Poor’s and Fitch Ratings Ltd. upgraded their outlook on the country from negative to stable. A favorable rating reduces the country’s cost of borrowing funds.

Because of the failure of Congress to approve the 2006 budget before 2005 ended, the government is now operating on the basis of the reenacted P907-billion 2005 outlay.

Some senators are claiming that Malacañang has been purposely delaying the approval of the budget measure so that President Arroyo would continue allocating funds based on the reenacted outlay, which she could theoretically use as her pork barrel.

They suspect that the Palace wants to use the recycled outlay to fund its Cha-cha (Charter change) initiative since there is no money in the 2006 budget for the constitutional rewriting undertaking.

There is an upside to the recycled 2005 spending authority. Since it is lower by about P100 billion, the government would have to reduce its borrowings by that much to finance this year’s budget deficit, which is projected to reach P125 billion.

It also means that congressional pork barrel allocations would be kept at their reduced levels of P40 million per House member and P120 million per senator. There are efforts to restore these funds to their previous level of P70 million for each congressman and P200 million for each senator.

Some congressmen defend the restoration as a "dividend" from the expanded value-added tax, saying they should reap the benefits of their imposition of higher taxes on the people.