Alternative Budget Initiative Consortium on the possible budget veto and calibrated fund release

Below is the press release issued by the organizations under the Alternative Budget Initiative Consortium this afternoon in a press conference at Sulo Hotel in Quezon City. BusinessWorld, PCIJ, dzAR and QC-based photojournalists covered the event. The panel, facilitated by FDC secretary-general Milo Tanchuling, includes Prof. Leonor Briones of Social Watch Philippines and FDC president Walden Bello.

PRESS RELEASE
Alternative Budget Initiative Consortium
Contact persons:
Prof. Leonor Briones, Social Watch Philippines, @ 0917-535-9884
Milo Tanchuling, Freedom from Debt Coalition, @ 0920-9018711

FOR IMMEDIATE RELEASE
31 January 2008

Alternative Budget Group, Legislators Say NO to Budget Veto and Calibrated Fund Release, Call for Swift Approval of the 2008 General Appropriations by Arroyo

In a firm belief that social development is a pressing concern of the country, the Alternative Budget Initiative convened by Social Watch-Philippines (SWP), and legislators warn against a possible veto or calibrated fund release by the president of the 2008 General Appropriations. This is in reaction to disagreeable statements from government officials on the insertions and realignments, as well as reduction in interest payments on debt made by the House and Senate on the budget.

“Members of the Alternative Budget Initiative (ABI) are saying NO to the planned veto or calibrated fund release by the administration. While the budget is not perfect, it responds to the public demand that allocations for education, health, agriculture, environment and other Millennium Development Goals (MDGs) be increased. The 2008 budget approved by the House and Senate is likewise historic as the process allowed participation from civil society,” said Prof. Leonor Briones, convenor of Social Watch-Philippines and spokesperson of ABI.

Rep. Edcel Lagman, chairperson of the House Committee on Appropriations further stressed that the veto has no basis because nothing in the budget violates any laws nor will result in unbalancing it.

“The total amount of P1.227 trillion originally proposed by the Executive remains the same. The challenge is for the revenue collection agencies to fulfill their targets and not incur shortfalls,” Lagman stressed.

The debt watchdog Freedom from Debt Coalition (FDC) further denies that the reduction interest payment is illegal.

“The reduction came from correcting the calculation of interest on foreign debt which was originally based on Ph48-49 per dollar, deferment of loans because they are their tainted or have not been utilized properly, and allocations for future borrowings. It is about time that Congress responds to the challenge against the practice of indiscriminate and blind-eye payment of debts to favor the needs of the people,” said FDC President Walden Bello.

The ABI also warns that the option of “calibrating” expenditures can be an excuse for limiting releases to those who oppose the excesses of the administration. Releases to preferred areas can be accelerated and those for opposition areas “calibrated” as these have happened in the past already. Any delay in the release of funds to MDG-related programs will only defeat the original purpose of Congress to provide more resources for social development and to give much needed services to the people.

Further, the civil society groups reiterate its proposal to lawmakers to pursue transparency and accountability in the budget through the creation of monitoring mechanisms in the House and Senate. Likewise, the group called for institutionalization of the resolution adopted by the House on November 20,2007 authored by Representatives Lorenzo “Erin” Tanada III and Teofisto “TG “ Guingona III. Allowing people participation in the annual budget deliberations should be passed into law.

“We recognize the support and cooperation of minority legislators from both Houses of Congress and progressive lawmakers from the administration led by Appropriations Committee Chair Edcel Lagman. Their willingness to work with civil society is a major step in the long journey towards a responsive and people-oriented legislature. The challenge now is for the President to swiftly approve the budget proposal for the realization of these gains,” ended Prof. Briones. ###

FDC In The News: On Sec. Andaya’s statement on the 2008 NG budget

Radio interview over dwAD
30 January 2008, 6:20 – 7:00 PM

FDC secretary general Milo Tanchuling was interviewed by university professor and The Daily Tribune columnist Ka Mentong Laurel in his radio program over dwAD. Sir Milo discussed FDC’s position regarding the statement issued by Budget Secretary Rolando Andaya Jr. on the debt service cuts in the 2008 national government budget made by both the House of Representatives and the Senate and realigned to various agencies and social services sector.

Our reaction to Sec. Andaya’s statement on the 2008 NG budget came out as part of the banner story of BusinessMirror today. Philippine Daily Inquirer also published our press release today (page 2).

Philippine Daily Inquirer
31 January 2008, Page A2
http://newsinfo.inquirer.net/breakingnews/nation/view/20080130-115810/Budget-chief-hit-over-debt-service

Budget chief hit over debt service
By Jerome Aning

MANILA, Philippines — The Freedom from Debt Coalition on Wednesday took budget secretary Rolando Andaya Jr. to task for saying that the debt service cuts made by lawmakers in the 2008 national budget was contrary to law and to the government’s bid for a balanced budget this year.

FDC secretary general Milo Tanchuling said that Andaya was “deceiving” the public when he said the entire P25.9-billion cut in the interest payment allocations was a violation of the automatic debt service provision in the Revised Administrative Code of 1987.

“Only P5 billion of this amount is covered by the automatic appropriations law on debt servicing. This P5 billion is embodied in the special provision in the ratified budget suspending interest payments on loans tainted with fraud and anomalies pending renegotiation or condonation,” Tanchuling said in a statement.

[READ MORE]

BusinessMirror
31 January 2008, Banner story
http://www.businessmirror.com.ph/01312008/headlines01.html

Economic-stimulus plan doubted
By Fernan Marasigan and Mia Gonzalez
Reporters

THE P75-billion, one-shot economic-stimulus package “approved in principle” by President Arroyo will come under further scrutiny Thursday, as her own allies in Congress and other advisers expressed increasing reservations over its wisdom.

While Budget Secretary Rolando Andaya Jr. was the first to point out its possible adverse impact on the goal to attain fiscal balance, lawmakers Wednesday said salient parts of the package were redundant while party-list representatives said it would use up so much money without substantially benefiting the poor.

After the Cabinet meeting on Tuesday, Albay Gov. Joey Salceda, the President’s trusted adviser, told reporters she had approved it in principle, subject to refinement in another Cabinet-level meeting to see how it fits into the fiscal framework. Salceda billed it as an “evacuation” plan from the “storm” expected to be spawned by a looming recession in the United States, the country’s top trading partner.

[READ MORE]

FDC In The News: On Philippine Energy Summit

In its full-page article, The Philippine Star today cited FDC’s statement regarding the summit’s objective, which it branded as “pathetically unclear.”

The Philippine Star
30 January 2008, Page 7
http://www.philstar.com/index.php?Headlines&p=49&type=2&sec=24&aid=20080129148

Headlines
Government not yet ready to commit to nuclear energy development
By Donnabelle Gatdula and Jess Diaz

The government has not made any commitment on nuclear energy development despite its invitation for officials of the International Atomic Energy Agency (IAEA) to evaluate the feasibility of commissioning the mothballed Bataan Nuclear Power Plant (BNPP), Energy Secretary Angelo Reyes said on Monday.

“I’m not ready to commit on anything other than studying it – which is vast and fast moving,” Reyes said.

He said the IAEA officials arrived in the country last Monday only to evaluate the government’s plan to revive its nuclear program, including rehabilitating the BNPP.

[READ MORE]

FDC on Sec. Andaya’s statement on the 2008 NG Budget

PRESS RELEASE
Freedom from Debt Coalition (FDC) – Philippines
11 Matimpiin St., Brgy. Pinyahan, Quezon City, Philippines
Tel. No.: (+632) 9211985 | Telefax: (+632) 9246399
Email: fdc_media@yahoo.com
Contact persons:
Milo Tanchuling, FDC secretary general, @ (+63) 920-9018711
Bobby Diciembre, FDC media bureau, @ (+63) 920-9059856

FOR IMMEDIATE RELEASE
30 January 2008

On 2008 National Government Budget
Andaya is deceiving the public—FDC

The Freedom from Debt Coalition today denounced the recent statement of Budget Secretary Rolando Andaya Jr. that the debt service cuts made by lawmakers in the 2008 national government budget and realigned to various government agencies and services is contrary to law and to the government’s bid for a balanced budget this year.

FDC Secretary General Milo Tanchuling said that Secretary Andaya is deceiving the public that the entire P25.9-billion cut in the interest payment allocations is a violation of the automatic debt service provision in the Revised Administrative Code of 1987.

“Only P5 billion of this amount is covered by the automatic appropriations law on debt servicing. This P5 billion is embodied in the special provision in the ratified budget suspending interest payments on loans tainted with fraud and anomalies pending renegotiation and/or condonation,” Tanchuling said.

P15.9 billion of the total debt service cut is a result of the weakening US dollar, while the other P5 billion is for still to be borrowed loans and issued bonds.

According to reports, Secretary Andaya said that “[i]t’s our policy to have a balanced budget this year so we will have to reckon that alignment with the existing policy. At the very least, we would have to control that kind of an expenditure. We will not spend it, even if it is provided for, for it will affect our fiscal position. . . . It’s as good as vetoing it.”

“It is lamentable that Secretary Andaya uses a deceitful information strategy all in the name of a ‘balanced budget’ while hiding the policy of underspending on much needed services just to appease credit-rating agencies as well as lending institutions,” said Tanchuling.

FDC said even some of Mrs. Gloria Macapagal Arroyo’s key economic managers do not agree on this policy. Last year, both Finance Secretary Margarito Teves and National Economic and Development Authority chief Romulo Neri recognized that underspending is a serious problem.

“We believe that debt service reduction in the 2008 budget is a strong political statement on the part of our lawmakers in reclaiming their constitutional right to the power of the purse. However, it is also a concrete victory for the social services sector as it tries to draw near the government’s backlog due to massive underspending and continuing prioritization of debt payments under the incumbency of Mrs. Arroyo,” Tanchuling said.

“If there is one thing the recent budget process has exposed, it is the automatic debt service provision in the Revised Administrative Code of 1987 that is anti-people and anti-development and therefore it must be repealed,” Tanchuling said. -30-

FDC on Philippine Energy Summit

PRESS STATEMENT
Freedom from Debt Coalition
11 Matimpiin St., Brgy. Pinyahan, Quezon City 1100
Tel. No.: +632 9211985; Telefax: +632 9246399
Email: fdc_media@yahoo.com

Contact persons:
Milo Tanchuling, FDC secretary-general, @ 0920-9018711
Wilson Fortaleza, FDC board member, @ 0920-9329171
Bobby Diciembre, FDC media bureau, @ 0920-9059856

FOR IMMEDIATE RELEASE
29 January 2008

To address the oil crisis, the summit must confront government’s own “fundamentals”—FDC

When the world’s oil prices hit the critical $100/barrel early this year, Mrs. Gloria Arroyo called for the holding of an energy summit to address the crisis. The first round of the series of talks in the summit is being held today at the Mall of Asia in Pasay City.

What this summit intends to achieve, however, is pathetically unclear. It is not clear whether the main concern is to address the impact of high prices of fuel and power to consumers, or to resolve the fiscal quagmires of the government. This is because prior to the summit, the government already laid down its bottom line by rejecting calls for the scrapping of the Oil Deregulation Law and the lifting of value added tax (VAT) on petroleum products. The government is also against the overhaul of Electric Power Industry Reform Act (EPIRA) and has rejected calls for the cancellation of onerous IPP contracts.

FDC believes that without confronting these basic issues, this summit will definitely end up as a mere talking shop. For this summit to become relevant to the immediate and long term interests of our people, it must go against the government’s own fundamentals.

For how can the summit address price gouging and manipulation, which is common practice of global and local oil cartels, when the government does not want to touch the International Monetary Fund (IMF) and World Bank’s deregulation policy which effectively reduced government’s role in the industry to mere “monitoring?” And how can the summit significantly reduce domestic oil prices when Mrs. Arroyo’s VAT is making local pump prices P4 higher? How can the summit reduce the cost of electricity when the government does not want to renegotiate or cancel onerous IPP contracts?

It is therefore plain double-talk for this summit to discuss high prices of oil and power when the government itself had no intention of intervening on this aspect. Perhaps the summit will merely talk of “little things” and not of fundamentals – not when Mrs. Arroyo just got fresh approval from credit rating agencies for pursuing her current policies.

There could be a hundred or more factors to cite behind the oil crisis. But while there is truth to the fear that increasing global demand for oil is surpassing the Organization of Petroleum Exporting Countries’ production capacity, the bigger truth that this industry has gone beyond the control of states and peoples is far more a serious concern because this situation limits governments’ and people’s intervention on the crisis.

Hence, this government is just fooling itself if it plans to address oil price hikes without touching on the Oil Deregulation Law. This law rendered the government inutile and the people helpless against oil price increases. Since its passage in 1998, prices of petroleum products in the country rose by more than 500 per cent. Domino impacts of high prices of oil to other products are indubitably immense.

The power industry is one. The National Power Corporation (Napocor), for instance, had allocated P33.87 billion for the needed oil supply to cover the fuel requirements of power plants for 2008. The higher the cost of oil to power plants that use oil/diesel inputs, the higher the cost of power for this particular type of plants, thus, the higher the price of electricity for the end-users. Under EPIRA, fuel costs incurred by Napocor and IPP plants are recovered automatically from the consumers. And just like oil, high cost of power pushes the costs of other products up. This is the main logic why, for a long time, oil and electricity were considered “socially-sensitive” products and thus, had been exempt from VAT.

But it was the Arroyo government all the same which imposed the 12 percent VAT on oil and power, which means that it was Mrs. Arroyo herself who made the local pump prices P4 per liter higher!

Now the government rejects the lifting of VAT on oil and power because it is afraid to lose some P40-P60 billion in actual revenue, which, as the finance department argued, will be used for social services and infrastructure expenses. What the DoF did not tell us, however, is that about 80 percent of government’s tax revenues merely go to debt payments. If only the government has the will to change its policy on debt repayments and decisively address the many loopholes in the current tax system, sufficient funds can be freed to finance social services and infrastructure projects.

VAT on oil and power is a fundamental issue that needs to be urgently addressed. FDC, which is for progressive taxation, opposes VAT because this tax system is patently unfair and unjust. VAT is a regressive tax, a pass-on tax which burden ultimately is borne by consumers at the end of the line. Imposing it on socially-sensitive products like gas and power will surely hit people alike regardless of their status in life.

Hence, removing VAT on oil and power will bring no harm to our people. In fact, justice will be served only by ending this unjust taxation. In doing so, the government will not be losing anything except its face in front of creditors which compelled the DoF in the first place to channel VAT proceeds to debt payments.

On Clean Energy

The summit is also reportedly going to tackle alternative programs for green, clean and renewable sources of energy to end the country’s dependence on imported fossil fuel. This is a good direction to pursue especially in the face of the growing problem of climate change.

But this can be done only if the government allocates more funds for these programs – which we doubt it will do if priorities are still on debt payments and programs are still done under the framework of deregulation, liberalization and privatization policies. -30-