Conservative ’03 budget agreed on

President Arroyo and leaders of Congress have agreed on a "conservative" national budget for next year but no decision on the total amount has yet been reached.

During a meeting of the Legislative-Executive Development Advisory Council (LEDAC) at Malacañang yesterday, Mrs. Arroyo asked congressional leaders to give her economic managers until Aug. 22 to submit the proposed P800.7-billion national budget.

Under the Constitution, the President must submit the budget within one month after delivering her State of the Nation Address before a joint session of Congress.

Press Secretary Ignacio Bunye told reporters yesterday Mrs. Arroyo is inclined to adopt the "growth-oriented" proposed national budget and go for a higher deficit.

"The President said ‘We should not be fixated towards the budget deficit figures.’ So in effect, she is inclined for possible, she will go for the growth target rather than limit ourselves to the budget deficit target," he said.

"That seems to be the indication. The President gave instructions to really extend the deadline on the very last day which probably means let’s give us more time to really discuss whether we should go for growth target or deficit target," Bunye said.

He said "two schools of thought" had emerged during yesterday’s LEDAC deliberations at Malacañang.

"One school of thought wants the President to revise the present target as far as deficit-spending and go instead for higher growth," he said

"The second school of thought was for the Arroyo administration to stick to the original target of P138 billion as (contained) in the budget bill for next year,"

Bunye said Albay Rep. Jose Salceda, Mrs. Arroyo’s former student at Ateneo de Manila University, was one of those who argued in favor of higher deficit spending.

"Essentially, the debate went if we stick to the budget deficit ceiling which is shown in proposed budget, then we would be in fact, satisfying our international creditors or the international financial community," he said.

"But what would that achieve? We might be controlling our expenses when we might need to spend now. So if we control expenses for the sake of controlling international criteria, we might not be growing," Bunye said.

Budget and Management Secretary Emilia Boncodin said she told the legislators there would be no new tax bills to support the planned deficit spending.

"So at the LEDAC, they said: ‘Okay, that’s good.’," she said. "But that doesn’t mean that we will not exert efforts to raise more revenue. We will still increase our revenue but if that materializes, then we can add to our expenditures."

Boncodin said next year’s proposed budget has "conservative estimates and assumptions" contrary to perceptions that the targets are unrealistic and unattainable.

"In fact, the (legislators) were the ones asking us why it was so," she said. "Because we do not want to be accused again of being too optimistic about the revenue projection. And then the President said we will exhaust the deadline to ensure that the budget is well-crafted."

Boncodin said she impressed upon the legislators that the government could finance additional expenses through privatization or sale of idle assets.

"Or if there are new (revenue) measures that are enacted, then that’s where we expand our spending," she said.

Boncodin said tax revenue comprise 13.5 percent of the projected gross domestic product in the proposed national budget, the same level as this year’s.

"In pesos, that’s P460 billion and this year, the tax to GDP ratio estimate is 14.3, which is, we were hoping for an improvement, because of that shortfall we have this year," she said. "So we have conservative revenue projection next year."

Senate President Franklin Drilon said they had a long debate on whether the government should have an "expansionary budget" focused on growth rather than deficit.

"‘And the President would want to have time to review this policy option and has availed to the fullest of the period allowed under the Constitution to submit the budget," he said.

"And at that time, we will examine it on how it looks like. This is a preliminary briefing on the shape of the budget but the President has not yet decided on whether or not we should expand the deficit and test ourselves as against the growth targets rather than the deficit targets."