Gov’t provides P93.6-B add’l funding for low-income families

The Arroyo administration has laid out a P93.6-billion additional funding for low-income families but it would have to borrow P75 billion more from foreign donors to fund the program.

The program would include a P2-billion dole out for low-income families — actual cash transfers that Finance officials said are meant to help them cope with rising oil and food prices.

Finance Secretary Margarito B. Teves said yesterday the support program would partly come from an P18-billion incremental revenues that the government expects to raise from taxes on oil and oil products.

Because oil prices had gone up significantly higher than expected, the collections from the value-added tax on oil and oil products are also expected to generate an additional P18.6 billion.

Teves said, however, that the rest of the program would have to be financed out of additional loans from bilateral and multilateral sources of official development assistance (ODA).

This year, the government had laid out a $1.5-billion ODA borrowing program which Teves said the government could easily adjust since ODA funds are significantly cheaper than commercial loans from either the foreign or the local market.

According to Teves, however, the Arroyo administration would still keep its budget deficit this year to less than one percent of gross domestic product (GDP).

“The government also remains committed to its revenue target of P1.24 trillion this year to ensure that there are enough resources to support the programmed expenditures,” Teves said.

“We must emphasize that the revenues from both tax and non-tax sources are critical to support increased levels of spending and sustain a high level of economic growth,” he added.

Teves said the government had already collected an additional P4 billion from the VAT on oil in January to April and the fund had been allocated for this program which would be supplemented and expanded by subsequent funding.

Teves said P2 billion of the P4 billion already on hand would be spent on cash transfers to poor families and P1 billion for scholarship grants and interest-free loans to poor students.

The last billion, Teves said, would be for demand-side management programs like the conversion into energy-efficient light bulbs and providing low interest loans to jeepney drivers who wish to convert their engines into the cheaper and more environment-friendly LPG-fired engines.

Teves said the P93-billion program would increase the government’s budget deficit this year to P75 billion but said this was necessary spending considering the external factors that were largely unexpected and beyond the control of economic planners.

Postponing the plan to balance the budget meant the Arroyo administration would have to increase its foreign and domestic borrowing to sustain both its public spending and debt servicing.

Economic planners said the government did not want to cut back on spending at a time when the US recession was slowing down the economy and public spending for pump-priming would be critical.

Budget Undersecretary Laura Pascua told reporters that the Arroyo administration would be preparing for a budget deficit for the next two years and balancing the budget would have to take a backseat to pump-priming the economy.