Reenacted budget to cut growth

Reenacting the 2018 national budget for next year will not only slow down economic growth as government spending gets reduced but also lead to job losses and push hundreds of thousands to poverty.

Department of Budget and Management (DBM) estimates showed that expenditures in 2019 would be cut by a total of P219.8 billion if a reenacted budget would be spent instead of passing the proposed P3.757-trillion cash-based appropriations for 2019.

In particular, disbursements for personnel services would be reduced by P54.4 billion; maintenance and other operating expenses (MOOE) by P14.3 billion; subsidies by P28.3 billion; and capital outlays by P122.9 billion.

Based on estimates of the state planning agency National Economic and Development Authority (Neda), this reduction in government spending would result in lower gross domestic product (GDP) growth such that economic expansion would be 1.1-2.3 percentage points below the lower end of the 2019 target range of 7-8 percent.

According to Neda, GDP growth would be only 4.7-5.9 percent next year if the national government would operate under a reenacted budget.

In turn, slower economic growth falling behind 6 percent would lead to job losses as well as many Filipinos becoming poor.

“It is estimated that employment could be reduced by as much as 600,000 if the budget is reenacted in 2019. Among the sectors to be affected are: construction, public administration and defense, wholesale and retail trade, land transport and education,” a document obtained by reporters on Monday read.

“It is estimated that 200,000-400,000 individuals will be pushed into poverty as a result of contraction [in budget],” it added.

Even as the Senate is still deliberating on the 2019 budget proposal in its last session week while both chambers are looking into alleged insertions of “pork,” Finance Secretary Carlos Dominguez III said he believed it was “quite remote to have a reenacted budget.”

“A reenacted budget is certainly not ideal because new projects cannot be embarked upon and old projects cannot be carried forward. So we just hope Congress can catch up,” Dominguez said.

Budget Secretary Benjamin E. Diokno earlier urged Congress to fulfill “duty first before leisure” so that they could pass the budget before year-end.

“They have until the end of the year, Dec. 31. They can work holidays, you know. In the United States they work on Saturdays and Sundays,” Diokno said last month.

“Remember, for the last three years we submitted the budget on the day of the Sona [State of the Nation Address], [even as] the Constitution says 30 days after [Sona] just to give them time to work on the budget,” the budget chief had noted.

Diokno had been firm that the Duterte administration would not operate under a reenacted budget.