Finalist-PhilBlogAwards 2010

Finalist-PhilBlogAwards 2010
Finalist for society, politics, history blogs



Friday, July 02, 2010


Erle Frayne D. Argonza

I wish so much to write notes about the planet and all the world’s regions, but I surely find it so irresistible to write reflections about my own country. I’m sure my friends and readers will understand this, me being a patriotic lover of my country and people despite our collective imperfections.

That said, let me focus this time around on the matter of budget. We have a new presidency, a new set of leaders from national to local levels, and I don’t want to miss out on delivering unsolicited advises to our new government concerning budgets.

By the end of this year 2010 our Gross Domestic Product or GDP will hit P8.25 Trillion more or less (it was P7.67 Trillion in 2009). That’s roughly U.S. $183 Billion (nominal value). Add the $18 Billion forecast Net Factor Income from Abroad or NFIA (read: overseas remittances), and the total figure yields $201 Billion.

$201 Billion national income is a 2nd World or ‘middle income’ country level of wealth. Let us stick to the figure and level so we won’t get detracted by the Gordian knots of discourse. This being so, the Filipinos deserve to see their state funded at 2nd World level and not any level otherwise.

Let us, for the sake of minimalist discourse, peg an annual budget at 30% of the GNP. The 30%-50% figure is known in scientific parlance as ‘critical mass’. To simplify our discourse, a ‘critical mass’ of budget will provide ample space for fiscal maneuverability, fund social services in fat sums, build more infrastructures, and pay up for state debts.

Any budget that is below ‘critical mass’ is direly undernourished, even as it could jeopardize our way to development ‘maturity’ and higher incomes for our households by 2016. Remember, we can no longer go back to the days of austerity that kept us mired in poor country status for a long time, so let’s better spend—with the expectation that spending will stimulate other sectors to grow.

The budget allocation for this year is a measly P1.5 Trillion. Measly in that it only grew by P100 Billion, or 7.14% from the P1.4 Trillion budget of 2009. A budget, to make sense and impact, must grow by at least 10% ever year.

30% of GNP means that our budget should not be lower than $60 Billion to qualify as ‘middle income’ country budget. Using the P45.50 to the dollar as our conversion rate, the expected budget should be Philippine P2.73 Trillions. That indexical calculation instantly renders RP’s 2010 budgetary appropriation short of P1 Trillion to make sense and impact at all.

Another unsolicited advise is that education, my favorite sector being an educator (teacher & social scientist), should get the largest share of the pie. And this should be at least 5% of the GNP. Let me stress that the benchmark should be GNP and not GDP since the latter unjustly leaves out the overseas workers & entrepreneurs in the equation.

The annual budget for education should therefore be at least U.S. $10 Billion, or Philippine P455 Billions. Contrast that figure to the P150 Billion allocated for education in the 2010 budgetary appropriation, and one can easily see why Philippine education is mired in cesspools.

The P455 Billions could be split up into the following: P250 Billions for primary education, and P205 for tertiary education. The total figures don’t include yet those budgets allocated by local governments for education, which when added to national appropriations could yield a figure much higher—at past 7% of GNP—appropriated for education alone.

Where to get the funds is another question for that matter. Let the question be tossed to the legislature, treasury/finance departments, and central bank to settle. It is important that I have delivered the message here very clearly: that a second world economy must affix budgets at figures befitting a 2nd world budget.

[Philippines, 30 June 2010]



Allen Juego said...

Thanks for this piece. I was clarified about where RP stands and what should be its budget.

Ramsay Solis said...

Noynoy should have been relegated to the background as an inutile leader. He couldnt even oversee the prosperity of farm workers in his estate, what biz has he to oversee the prosperity of poor folks in the country?

Chad Cadalig said...

I still think that my country is a mere 3rd world country. Thanks for the clarifications made by Prof. Erle in his writings, I am made to understand why we need to go 2nd world budget.