MANILA, Philippines—President Aquino’s economic team on Thursday came under fire in the Senate over its “fixation” on reducing the budget deficit at the expense of public spending and economic growth.
Led by Finance Secretary Cesar Purisima, the team was put on the defensive at the Senate budget hearing over the slowdown in the economy in the last quarter.
The quarter’s 3.4-percent growth rate missed the government’s target and was partly blamed on Malacañang’s cautious approach to spending, especially on infrastructure.
If it was any consolation, the limited spending translated to a lower budget deficit, which stood at P17.23 billion – much lower than the expected P152.13-billion deficit – from January to June this year.
“Are you more fixated on reducing the deficit rather than pushing growth and creating more jobs?” Senator Edgardo Angara asked Purisima.
“In our drive to reduce our deficit – which to me is not unreasonably high even at 3 percent of GDP (gross domestic product) – we are really sacrificing, not just economic growth, but the lives of the people,” Angara said.
He told Purisima: “Don’t have the tunnel vision of just simply reducing the deficit … we ought to strike a balance between reducing our deficit and debt and, at the same time, not constricting our economy and creating incomes and jobs for our people.”
Purisima said the goal was to get the country out of a “vicious cycle” characterized by increases in the budget deficit, debt and interest expense while decreasing “the space for social investments in the budget.”
“Our task is to increase the space in the budget for social investments so that poverty could be reduced and the economy could grow faster,” he said.
Purisima faced the Senate committee on finance to defend his department’s proposed P11.5-billion budget for next year. The outlay could reach P22.6 billion if it would include an increase in allocations for tax refunds.
Purisima promised the senators the administration, particularly the Department of Public Works and Highways, would expedite public spending in the remainder of the year.
Sen. Ralph Recto, ways and means committee chairman, said the economy should grow by 6 percent in the third and fourth quarters “to attain a 5-percent (growth) for the full year.”
“That seems a very high ambition,” said Angara, noting that the government was behind by around 60 percent in infrastructure spending in the first half of the year.
“So how do you wish to record that 6-percent growth rate in the second semester?” he asked Purisima, who replied that the DPWH was “on track” to spend P80 billion on infrastructure.
“The DPWH has already accelerated (its) spending to a level of about P20 billion a month,” he said.
But Angara cut him short, saying in Filipino: “That’s not true, Mr. Secretary, that’s not true.”
Recalling the Senate hearing on the DPWH budget, Angara noted that the agency’s officials merely said they “intend to accelerate spending.” He said that as of July or August, the DPWH had spent only P16 billion out of its P90-billion fund for infrastructure.