Of budget and development

For the first time the national expenditure program has hit the trillion peso mark. At P1.053 trillion the budget for CY 2006 is the biggest so far ever cranked out by Congress. Can we afford it?

We cannot. In the last several decades we have not been able to come up with a balanced budget. Year after year we have been spending more money than we can generate incurring deficits by the billions of dollars. This year, for example, the expected deficit is estimated to be P180 billion, rather an improvement over the last two years when the deficits over-shot the P200 billion marks. How do we cover the shortfall? By borrowing from international monetary organizations.

Presently our foreign debt stands at 55.3 billion dollars. At P56 per dollar this translates to 3, 096.8 trillion pesos! To pay this debt how much are we obliged to pay next year? It is, hold your breath, P721 billion! Or almost P2 billion a day! Compare this to our budget next year and you get an idea how little is left to take care of our financial needs in that period.

This huge foreign debt is largely responsible for the continued erosion of our peso. After World War II, the peso stood at 2 per dollar. A few years later the rate went up to P6, then P8 (sometime in early 1970s), then P20 or more in 1980s. In the early 1990s the dollar was still pegged in the vicinity of P35, but our money continued to decline in value until at presents. Yet the reverse trend seems unlikely, what with the continuing rise of oil prices.

The diminishing value of the peso is an indication that despite heavy borrowing our socio-economic development has not kept pace with our debts. Utilized properly, every dollar we borrowed could have improved our productivity thereby strengthening our exports vis-à-vis our imports and strengthening too our dollar reserve. With a vigorous economy our dollar cache (calculated at $16.052 at present) would have been sufficient to service the needs of local industries and entrepreneurship ventures thus beefing up further the economy. But this is not happening. What is happening is the opposite: Because of political turmoil abetted by skyrocketing oil prices foreign or local investments are in a doldrum and this has severely smothered the economy. Now we are getting an anemic peso.

And when the peso weakens, everybody suffers. But the ordinary citizen gets the severest wallop because a weak peso means higher prices for basic commodities. How can the peso be strengthened? It's easy to say it, but difficult to accomplish. First, strengthen the economy through an aggressive development program to stimulate small and large scale industries. Next, drive would-be investors crazy with no-nonsense incentives. Then unmask the grafters and give them a kick in the ass. And don't forget the BIR and BOC, but jail the tax cheats, smugglers, and "areglo" artists. Most of all, go easy with the expenditure program. We should not spend P330.5 billion for salaries next year as proposed. Nor should we waste P6.5 billion for the pork barrel of congressmen and senators.

Such moves require of course a gutsy, crusading leadership at the top. No politics. Just plain homespun common sense. Just a dogged desire to do the right thing. And the willingness to come out of it all sans mansions and secret bank accounts.

With such leadership there won't be an endless political infighting, nor a "Hello Garci" spectacle, nor an impeachment hassle. Unity would be a pervasive phenomenon in all corners of the country. Trust and confidence would be a palpable thing in the atmosphere of power centers, and the opposition would cease being congenital obstructionists.

But since such messiah of a leader is not yet among us, we should get used to the musical chair of also-run leaderships in a country that's fast becoming the "land of the orient's poor". Who will lead us to the land of milk and honey? The answer is in our heart.