At a meeting of the Development Budget Coordinating Council (DBCC) last week, Budget Secretary Rolando Andaya Jr. and Socio-economic Planning Secretary Romulo Neri said they reached a consensus not to reduce the government’s gross domestic product (GDP) projections of 5.5 percent to 6.2 percent.
The DBCC held a meeting after Congress failed to pass the proposed General Appropriations Act (GAA) due to senators’ refusal to restore the P64 billion cut on the proposed budget for 2006.
The cut was mostly on new items perceived by opposition lawmakers as President Arroyo’s pork barrel.
"We will not scale down, our growth may not have to be totally budget-driven," Neri said in an interview with The STAR.
Earlier, Neri expressed apprehension that GDP forecasts could be downgraded if the government would operate under a reduced budget. The government has been operating on a reenacted budget since January.
"We have some proposals to achieve our targets that we just have to fine-tune," Neri said.
Andaya and Neri however warned that operating on a constricting P907.56 billion 2005 reenacted budget would make it difficult for the government to achieve its growth targets.
But with exports and agriculture remaining "vigorous," economic managers hope forecast growth can still be achieved, Neri said.
Andaya, on the other hand, said the government is facing a dilemma of sorts.
Even though the government looked like it would operate on a smaller budget, it actually continues to enjoy an inflow of revenues from new taxes and from intensified collections, he said.
The government’s restrained spending in the past has also helped strengthen the country’s fiscal position.
Andaya said the challenge now is how to spend more money under a limited budgetary allocation.
"The problem now is to spend as much as we can. Considering we have higher revenues, we have to pump prime the economy because we must keep our spending at par with our development programs," Andaya told The STAR.
He said Malacañang is looking for ways to spend more despite constraints "within the bounds of the law," like releasing more funds through government financial institutions to fund more vital pump priming projects like irrigation.
Andaya and Neri, however, refused to divulge more details of the spending program because it has to be finalized first.
The Arroyo administration earlier committed to balance the budget by 2010 but with improving revenues, the government might be able to wipe out the deficit by 2008, economic managers said.
Andaya, however, said the executive branch remains optimistic that the proposed budget could still be approved. "Something might be worked out," he said.
Meanwhile, Presidential Adviser for Political Affairs Gabriel Claudio said the Senate and the House could still meet on the resumption of the third and final regular session on July 24 or even during the current recess.
"The benefits of a new budget especially for providing sustained infrastructure and mechanisms for generating jobs and livelihood and investments can still not be overlooked," Claudio said.
"All is not lost. With greater open-mindedness and sense of urgency, passing the budget can still be done," he added.