The decision came following a marathon meeting at Malacañang. The President and her Cabinet conceded that the P790 billion-budget proposal originally prepared by the Department of Budget and Management (DBM) would not be enough to cover the programmed expenditures for the administration’s thrust of building a "strong Republic."
In her State of the Nation Address (SONA) last July 22, Mrs. Arroyo told Congress she would rather that the budget be re-allocated for the government’s total war against criminality.
The re-allocation would be focused on the Philippine National Police (PNP), the country’s chief law enforcement agency.
In her report to the President, Budget Secretary Emilia Boncodin said the final budget proposal for 2003 would be ready for submission to Congress in the second week of August.
She said the proposed P800.7-billion budget would be supported by a projected revenue collection of P640.6 billion.
In an official statement released after the Cabinet meeting, the DBM said the proposed budget for 2003 "conforms with the priorities laid down by the President in her SONA," including the peace and order campaign, elimination of graft and corruption, poverty alleviation, and provision of basic public services.
"They should present to us a realistic budget. Otherwise, we will be in deeper trouble next year," said Rep. Rolando Andaya Jr., whose committee is the panel that writes the annual appropriations law.
Andaya conveyed his appeal to Budget Secretary Boncodin.
He said the administration should make sure that it can support its budget proposal with revenues so the government won’t have to grapple with the problem of a ballooning budget deficit that it faces this year.
He said as of last May, the deficit has soared to P107 billion, 83 percent of the full-year target of P130 billion.
The budget gap widened because of the failure of the Bureau of Internal Revenue and the Bureau of Customs to meet their collection targets, he said.
Given the dismal performance of the two principal revenue raisers of the government, Andaya urged finance and budget officials to review their 2003 revenue goals.
A deficit situation is where the government spends more than what it earns. As of last May, the administration spent P107 billion more than what it collected in taxes, fees and other income.
The budget gap is funded through local and foreign borrowings. Treasury officials have resorted to the sale of small treasury bonds to raise funds, enabling them to reject tenders by banks for treasury bills that carry higher interest rates. They have thus been successful so far in keeping interest rates down.
Because of the soaring deficit, the peso-exchange rate has deteriorated to about P51.50 to the dollar.
The failure of the BIR to meet its revenue target has prompted several congressmen to call for the relief of Commissioner Rene Banez. As of last count, BIR’s shortfall was more than P27 billion.
House sources told The STAR yesterday that Boncodin has actually presented a draft budget proposal in a Cabinet meeting two weeks ago. Her draft incorporates lower revenue targets and a budget deficit that is lower than this year’s P130 billion.
But Mrs. Arroyo reportedly returned Boncodin’s proposal because she wanted a deficit of about P138 billion.
Andaya said he expects the Palace to submit the 2003 budget to the House in mid-August. – With Jess Diaz