Just under a bridge in Muñoz, Quezon City, right beside a filthy canal, this family of five partakes in a simple lunch on Tuesday, September 7, 2010. (Photo by LJ PASION)

Manila, Philippines — Seventy percent of Filipinos subsist on a P42 daily budget.

Senator Edgardo J. Angara, citing a World Bank study, bared this on Tuesday as he expressed reservations over the proposed P1.645-trillion budget for 2011 which he said is not practical.

“My main concern about the overall budget framework is that it is not responding to the basic, economic, and social problems of our country,” said Angara who formerly headed the Senate’s Finance Committee.

Angara said the budget proposal “simply did not address the fundamental needs of the country” as he is hoping that fiscal allocations would respond to address the public’s basic needs.

The Senate on Monday started deliberations on the proposed 2011 budget which contains P711.5 billion of automatic appropriations.

The budget includes P357.1 billion worth of debt service and interest payments, P286.9 billion for Internal Revenue Allotment (IRA), and P22.4 billion for government contribution for employees’ retirement and life insurance premiums.

Senator Franklin Drilon had said the government’s main thrust is to pay interests and amortization amounting to P357.1 billion which it is mandated to do under the appropriations law.

But Angara said the government should not concern itself much with taming the country’s deficit and should instead appropriate funds directed on addressing economic and social concerns.

"About 70 percent of our people live on 42 pesos a day, and about 4,000 families are hungry. That’s a very serious problem. It’s not just simply lack of economic growth, but what we have is a jobless growth which widens the income gap even more,” Angara said.

“We should concern ourselves not so much with taming our deficit. Instead we should remind ourselves that our goal is to grow our country, and enhance the income and living standards of our people through job creation,” he added.

Angara further questioned why the government seems to be pulling out stimulus programs right in the middle of a steady recovery in the midst of a global financial crisis.

“What is the comparative figure for Southeast Asia? Their debt-to-GDP ratio is even higher than ours but they are more progressive because they are using public spending to stimulate growth in their economy. Why are we suddenly pulling out stimulus right in the middle of a steady, gradual recovery of our economy? It’s as if we assume we have already achieved full recovery, which we have not. I question that kind of judgment,” said Angara.

There is also a need for government to design a hunger mitigation program and to identify the demographics of the country’s poor.

“It seems as if there is not much of this proposed budget put into agriculture and food. And because food production is underinvested, food prices will rise in the next five years. On the other hand, a 1 percent increase in agriculture production transmits to almost 1.2 percent in farmers’ income, or reduction of farmers’ poverty,” said Angara.

Meanwhile, the amount for interest payments proposed in the 2011 national budget may have been overstated by as much as P7.7 billion, but such excess cannot be rechanneled to social services following the Budget department’s unprecedented move to shield debt service from congressional review, Senator Ralph Recto said.

One of the effects of the new policy to take out automatic appropriations items from the national budget that Congress will approve is that automatic appropriations “are presumed to be 100-percent correct and thus cannot be changed,” Recto said.

“Automatic appropriations are now clothed with the cloak of infallibility. The new dictum it seems is that automatic appropriations are automatically correct that they are beyond scrutiny and possibly correction by Congress,” Recto said.

To bolster his view, Recto illustrated how the policy to declare off-limits to congressional scrutiny 47 percent of the P1.645 trillion budget will impact on next year’s interest payments on the government’s foreign debt.

Recto said the government has set aside P357 billion for interest payments, of which P120.8 billion will be used to service foreign obligations.

The P120.8 billion, however, was premised on a P47:$1 exchange rate, “a high assumption, in the light of emerging consensus among banks that the peso could strengthen to at least 43 to a dollar next year.”

According to the senator, Standard Chartered forecast the peso to reach P43 against the US dollar by end of 2011 while HSBC and Goldman Sachs are more bullish, predicting the peso to surge to 42.50 and 42, respectively.

Recto said adopting a P45: $1 exchange rate would reduce interest payment allocation from P120.8 billion to P115.7 billion, or a difference of P5.1 billion, and a P44:$1 benchmark would further twhittle it to P113.2, which would free up P7.7 billion for “productive expenditures.” (With a report by Rolly Carandang)