Despite improvements in the country’s fiscal position in 2003, the Arroyo administration said the austerity measures would remain in place in 2004 as the government attempts to duplicate its success and ultimately balance the budget as scheduled in 2009.
The Department of Budget and Management (DBM) said yesterday that the government would be imposing strict budget controls on its line agencies in order to sustain the last quarter slowdown in constructive cash items.
Budget undersecretary Laura B. Pascual said the DBM was imposing a 15-percent reserve on government agencies as a cushion against unforeseen spending.
Pascua said the Senate was scheduled to deliberate on the 2004 budget in January and the most critical expense would be the election-related expenses and the adjustment in the salaries and benefits of military personnel.
According to Pascua, the Development Budget Coordinating Committee (DBCC) has approved the reduction in the number of foreign assisted projects that the government will implement in 2004 to only 66 critical projects.
"We expect 2004 to be another difficult year," Pascua said. "We have to take a lot of difficult steps in order to balance the budget by 2009 as scheduled."
The austerity measures, however, would have to be implemented at a time when there is tremendous public spending pressure as the country draws towards the general elections in May.
The effort to contain the deficit also meant that government’s capital expenditures would have to give way, a strategy that both foreign donors and credit ratings agencies have repeatedly warned against since economic growth would eventually suffer and lead to another cycle of decline in revenues.