Briones proposes way to wipe out deficit

Former National Treasurer Leonor Briones told the Arroyo administration that it had over P300 billion in accounts receivable that it could collect to virtually eliminate its budget deficit, before the government resorts to withdrawing basic services.

Speaking at the Kapihan sa Sulo forum yesterday, Briones said the tight rein on government expenditures was beginning to take its toll on the delivery of basic services such as health, education and social work.

On the other hand, former Socioeconomic Planning Secretary Felipe Medalla said government spending was not enough to meet the needs of the economy, saying that "the little that is spent is not well spent."

Economists have been expressing alarm over the rise in the budget deficit, primarily because the budget gap was not due to excessive government spending but because of the decline in revenue collection.

This meant that there was no economic multiplier in the equation since the government was already spending less and less on basic services and development programs while revenues continued to slide.

Budget Secretary Emilia Boncodin admitted that the deficit was indeed a problem of revenue collection but declined to give an estimate of how bad the deficit would be for the whole of 2002. "The number is anybody’s guess at this point," she said.

Government had already overshot its deficit target in only seven months, posting a deficit of P133 billion in January to July. Since then, the Arroyo administration has been theoretically funded purely by borrowing.

Boncodin said the government would review the P300-billion accounts receivables that Briones had pointed out. She said it was still guesswork whether any of this amount is actually collectible.

Boncodin explained that government’s account receivables differed radically from that of the private sector’s which only needs to collect on its accounts. She said some of the accounts receivables may be only from one government agency to another which will not translate into actual revenues.

Medalla and Briones supported the growing clamor for government to allow for a budget deficit that is significantly higher than the P130-billion cap set for the year to support economic growth.

"We are a country with a long history of a budget deficit and people don’t have an idea of when it will end. The perception now is it’s hard to push programs such as steamlining the bureaucracy or raise taxes to improve government finances because it’s two years before an election," Medalla said.

"The question is are we controlling the deficit by sacrificing the future [economic growth] because government then becomes the obstacle for a more prosperous Philippines," Medalla added.

Briones estimates the budget deficit to run up to as high as P158 billion, based on the P5 billion monthly deficit recorded by the government. Medalla’s estimate was higher, saying that the number could go up to as much as P190 billion given that the historical monthly deficit was P13 billion.