‘Duterte’s hands tied by Aquino’s budget ‘reforms’

Briones said the Duterte administration may be forced to repeat what Aquino did: wheel and deal, and transfer funds for its pet programs.


MANILA – The economic team of incoming President Rodrigo Duterte may be forced to make do with a tight fiscal space in its first two years, as the Aquino administration leaves it with little funds for new development programs.

This, in a nutshell, is one of the biggest worries aired in a press conference recently by Prof. Leonor Magtolis Briones, former National Treasurer and convener of budget watchdog, Social Watch Philippines.

Contrary to what the Department of Budget Management (DBM) claimed when it announced that much of the budget for 2016 is still there, it is most likely “simot na” (emptied out), according to Briones. She said the funds had already been released to government agencies as per the Aquino administration’s “so-called reforms.”

Briones said the Duterte administration may be forced to repeat what Aquino did: wheel and deal, and transfer funds for its pet programs.

Reacting to DBM Secretary Butch Abad’s statement that much of the budget is still available, she said the Aquino administration should conduct an inventory of the budget to see how much indeed remains. As a result of the Aquino administration’s budget reforms, Briones said funds are immediately being released to government agencies early in the year.

She explained that due to Aquino’s “reforms,” programs are considered funded already, or the funds are immediately released to its implementing agencies, once the General Appropriations Act is approved.

“The DBM itself has said fiscal space is only about P400 billion for 2016,” Briones said, adding that such an amount is very small. She said fiscal space is just as tight in 2017, at just around P500 billion according to her sources at DBM.

Tight fiscal space means there is precious narrow room between what the government is getting from current taxation and what it needs to spend.

This means that if Duterte has new programs to implement, or a new development plan, his administration would have little source of funds. They would need to translate their new plan into a proposed budget as soon as possible, said Briones. But the macroeconomic assumptions that are already in place even for the 2017 budget, she said, are based on the Aquino administration’s programs.

Will Duterte be forced to raise taxes, or continue the prevailing regressive mode of taxation? Or will he back down on his anti-pork promises?

According to IBON, a non-government think-tank, there is a populist – though justified – demand to lessen the tax burden on a few million middle class income taxpayers. But when the group considered Duterte’s initial eight-point economic agenda, it noted that “progressivity” in the tax system is misconstrued as mere inflation indexing, rather than the raising of direct taxes on the rich and big corporations and reducing direct and indirect taxes on the poor.

Duterte will be inaugurated as president on June 30. Three weeks after that would be his first State of the Nation Address, and his expected submission of proposed national budget to Congress. (https://www.bulatlat.com)

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