Friday, November 24, 2006 Gov't 'over-appropriating' for debt interest payments: lawmaker
SENATOR Ralph Recto called for the reduction of at least P4.4 billion in the 2007 national budget saying that the P318.1 billion allocation for interest payments was "premised on a faulty assumption."
Recto said the foreign component of the debt service fund in the P1.1 trillion national budget for next year was computed using a US$1 to P53 exchange rate above the projected average for the year.
At Wednesday's close, the peso was trading at P49.99 to the greenback consistent with analysts' projection that good fiscal numbers of the government would keep the local currency from breaching the P50 to a US dollar level next year.
The government is scheduled to pay its foreign creditors US$2.209 billion in interest next year.
By using a P53 to a US dollar exchange rate, the amount earmarked for this in the national budget is P117.06 billion, Recto said.
But by adopting a lower P51 to the US$1 exchange rate, interest payments on foreign liabilities will go down to P112.6 billion, he added.
"This will free up P4.4 billion in non-productive expense for social services. I am recommending that this be used to augment health programs of the government. If our fiscal health is improving then our people's health should not be far behind," Recto said.
Per capita spending for health next year, based on National Government spending, is a measly P162, he pointed out.
In addition to the P117.06 billion for interest payments on foreign debt, the government has set aside P201.12 billion for interest payments on its domestic debt, bringing total interest payments to P318.18 billion next year.
That allocation -- automatically appropriated and exempt from congressional scrutiny - is nearly 30 percent of the trillion-peso plus national budget for 2007, Recto said.
Recto said economic managers deliberately adopt a "conservative, unrealistic" foreign exchange rate in drawing up interest payments "so how to spend the ensuing savings becomes the sole prerogative of the executive branch."
He noted the recent claim of economic managers that almost P25 billion has been "saved" in debt payments in the first ten months of the year alone.
"Better for Congress to determine where the excess interest payments should go now than leave that task to the executive branch, which the Constitution does not empower to do so. This bad habit of 'over-appropriating' for debt service should be stopped," Recto said. (CPB/Sunnex)
