Four economic managers retained

Although President Arroyo has made sweeping changes in her Cabinet, her economic advisers, who are helping her deal with the fiscal crisis, will remain intact.

Mrs. Arroyo has decided to retain Finance Secretary Juanita Amatong, Trade Secretary Cesar Purisima, Budget Secretary Emilia Boncodin and National Economic and Development Authority Director General Romulo Neri.

Presidential Spokesman and concurrent Press Secretary Ignacio Bunye Jr. said Mrs. Arroyo informed him of her decision during a luncheon she hosted for Alberto Romulo, who formally bowed out yesterday as executive secretary to head the Department of Foreign Affairs.

Mrs. Arroyo did not give any reason for retaining her team of economic advisers. She said she had told them during a meeting of the Development and Budget Coordinating Council "to evaluate the proposal to declare a state of fiscal crisis and to submit… recommendations as soon as possible."

Bunye was referring to a proposal made by financial analyst-turned-Albay Rep. Joey Salceda that Mrs. Arroyo declare a "state of fiscal crisis" that would give her authority to freeze a planned increase in the internal revenue allotment (IRA) or share of local government units in taxes collected by the national government, which they use for funding.

Salceda, who chairs the House committee on economic affairs and senior vice chairman of the committee on ways and means, has proposed that Mrs. Arroyo defer the planned increase for three years to enable the cash-strapped government to narrow the P312-billion budget deficit, allowing the government to save at least P11 billion a year.

Salceda is pushing an offer made by the country’s barangay leaders for them to forgo the barangays’ IRA share for three years.

A state of fiscal crisis declaration would enable Mrs. Arroyo to adopt the Liga ng mga Barangay’s proposal, Salceda said.

He said the proposal is more effective than his original suggestion that LGUs lend 15 percent of their IRA amounting to about P20 billion for 18 months in exchange for bonds that would mature in 2006.

Mrs. Arroyo unveiled a 10-point program aimed at easing the wrenching poverty in the country by the end of her term but analysts say her agenda could fail if her government does not ease the budget deficit.

Aside from austerity measures, Malacañang has asked Congress to pass eight priority tax bills, which the Palace says is crucial to the President’s anti-poverty program.

Mrs. Arroyo hopes to raise P80 billion from the new tax legislation.

Despite the urgency, the tax bills are running into considerable opposition from sectors wary of new taxes that might only later be mismanaged.

Salceda said that every P1 of new tax automatically creates a 40-centavo expenditure, making available only 60 centavos for deficit reduction.

Thus, if LGUs do not forgo their share, to fix a deficit of P312 billion, the country needs to raise P520 billion in new taxes which would be impossible, he said.

He said the Liga ng Mga Barangay will present its resolution to the President and Congress in the next few days. Salceda hopes city, municipal and provincial governments would follow suit. — Marichu Villanueva