Proposed Budget Allots Twice More for Debt Interest Payments

Jun. 22, 2006

MANILA — Despite the presidents claims that education is a priority of her administration, the 2006 proposed budget, which is still being deliberated at the bicameral committee, allocates more than double for debt payment of interest than for social services.

For 2006, the Arroyo administration has allocated some P340 billion for debt service payments of interest, more than twice what it has allocated for education (P146.5 billion), health (P13.7 billion) and housing (P2.8 billion).

Allocations for education and other social services have also continually declined during President Arroyos five-and-a-half years in office. Trends from 2001 to 2006 show that the share of education to the total budget has fallen from 17.4% to 13.9%; health, from 1.9% to 1.3%; and housing from 0.4% to 0.3 percent.

Furthermore, in real terms education and health spending have actually declined. Compared to 2001 levels, real spending on education under the proposed 2006 national budget will be 4.5% lower and that of health, 19.2% lower.

Conversely the share of debt service payments for interest to total expenditures increased by 9.4 percentage points between 2001 and 2004, compared with an increase of only 8.8 percentage points between 1997 and 2001. As of end-February, total outstanding national government debt has already reached P3.96 trillion, a 66% increase from P2.38 trillion in 2001.

Aside from the budget for interest payment, the administration has allocated for this year a further P382 billion for principal repayments of national government debt, which is not reflected in the national budget. If this is factored in, total spending for debt repayments will be 5 times that of education spending, 53 times that of health spending, and 262 times that of housing spending.

Total debt service payments has risen almost three-fold from P274.4 billion in 2001 to an allocated P721.7 billion in 2006. This means that for what the government spends in debt service for just one day (some P2 billion), it can already meet the projected classroom shortage of almost 5,000 this school year.

Thus, while the Arroyo administration may not have created the crisis in social services, its budgetary priorities show it has certainly not done anything to improve it. (Ibon)

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