Budget delay due to row over pork slows down growth
Squabbles between the Senate and the House of Representatives over pork insertions that delayed the approval of the P3.7-trillion budget for 2019 cut gross domestic product (GDP) growth to 5.6 percent in the first three months, the lowest in four years, according to the country’s chief economist.
“As we have forewarned repeatedly, the reenacted budget would sharply slow the pace of economic growth,” Socioeconomic Planning Secretary Ernesto Pernia said at a press conference on Thursday.
The latest figure in GDP growth is slower than the more than 6 percent expansion over the 14 previous quarters, data from the Philippine Statistics Authority (PSA) showed.
GDP is the value of goods produced and services rendered.
President Duterte signed the 2019 budget only on April 15 after he vetoed P95.3 billion in projects, pork insertions of lawmakers, that were not among his administration’s priorities.
But the damage had been done.
A number of newly hired teachers of the Department of Education (DepEd) did not receive payment for up to three months, forcing them to borrow money from relatives and to take on second jobs.
One of them, Jane, who asked that her real name not be used, started as a substitute teacher in 2018, and was not been paid until March.
“I took up education and wanted to teach because I believed it would pave the way for a good life for me and my family,” she said.
Without receiving any compensation for her work, Jane said she had to borrow money so she could support herself and her three children.
“The budget officer of DepEd Cebu told us that those hired in 2019 will not yet receive salaries since the release of the national budget by the DBM (Department of Budget Management) was also delayed,” said Antonia Lim, president of Alliance of Concerned Teachers in Central Visayas.
Public construction deals
Had this year’s budget been implemented on time, the economy would have grown by up to 6.6 percent in the first quarter, Pernia said.
Given less funds under the 2018 budget, government spending growth slowed to 7.4 percent in January-March, down from 13.6 percent a year ago.
Pernia said public construction contracted by 8.6 percent.
“For instance, the Department of the Interior and Local Government’s construction of police stations and purchase of new equipment and the Department of Education’s repair and rehabilitation of schoolbuildings were severely hampered,” he said.
Finance Secretary Carlos Dominguez III, head of the administration’s economic team, earlier said the government underspent over P1 billion on public goods and services daily when it operated under a reenacted budget.
It did not help that the Commission on Elections (Comelec) had been slow to act on the economic team’s request to exempt from the election ban 145 big-ticket national projects on top of the 603 Department of Public Works and Highways (DPWH)-led projects.
Dominguez said state spending fell by some P75 billion in the three-month period, which meant lost opportunity to fund new infrastructure projects—a setback aggravated by the public works ban this election campaign period.
Asked by the Inquirer if the House was to blame, Pernia replied: “Your question answered itself.”
Senate President Vicente Sotto III said the Senate should not be blamed for the delayed approval of the 2019 budget.
The House, he said, was late in transmitting the budget bill to the Senate and the measure was riddled with “unconstitutional realignments.”
The Senate and the House bickered over changes that the latter introduced in the measure after ratification of the bicameral conference committee report. The revisions were not allowed under the Constitution, the Senate said.
It was only after Sotto decided to sign the ratified version that the impasse was broken, but he made an annotation objecting to the postratification changes and urging the President to veto the items.
Pernia said he was hopeful that the country could still achieve its growth target for 2019, especially as the implementation of major projects would go on full swing after the elections while inflation eases and the economy harvests the fruits of the credit rating upgrade awarded by S&P.
He likened the economy to the country’s favorite sport. “Basketball games can still be won with second-half performance,” he said.
Target still achievable
The Management Association of the Philippines (MAP) acknowledged that the slow growth in the first quarter showed the impact of politics on the economy.
MAP president Riza Mantaring cited other contributory factors. “[W]e are still feeling the impact of higher inflation in previous quarters, resulting in domestic consumption slowing down.”
She noted weaker trade and agricultural production.
Nabil Francis, president of the European Chamber of the Commerce of the Philippines, said high private consumption due to the easing of inflation and election spending were expected to offset the slow growth.
John Forbes, senior adviser of the American Chamber of Commerce of the Philippines, said the latest figure was not a concern but the drop in the country’s exports. —WITH A REPORT FROM LEILA B. SALAVERRIA
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