Increased Budget for Philippines’s Poor Urged Amid Global Crisis

With the worsening crisis of the US and global economy expected to further aggravate poverty in the country, independent think-tank IBON Foundation today said that it has become more crucial for government to ensure enough resources are spent for the poor.

IBON said that the Arroyo administration must start by increasing the allocation for social services in the 2009 national budget. The group criticized the allocation of 2.5% of the total budget for health; 13% for education; and 0.4% for housing as atrociously low especially in today’s environment of rapidly rising prices and greater economic uncertainty.

IBON said that the perennially low budget allocation for social services will have a deeper repercussion on the poor and vulnerable sectors as the deteriorating global economic crisis destroys more jobs and livelihood and inflates the cost of living.

Experts count slowdown in export demand, tighter flows in foreign investments and increased speculation in food and fuel prices as among the consequences of the US financial crisis and overall slump in the world economy.

With increased poverty, it becomes more urgent for government to provide sufficient social services such as health, education and housing. But the proposed budget levels obviously could not cover the expected increased demand for public schools and hospitals among others.

For the past ten years, government has been spending an amount equivalent to 2.1% of the gross domestic product (GDP) for education, way below the international standards of 5% to 6%. For health, it has been spending only 3.2% of the GDP, lower than the norm set by the World Health Organization (WHO).

IBON said that the government should at least meet these levels to alleviate the present condition in the country seen to worsen with the global crisis. To increase spending for social services, government should put a stop to burdensome payments and cut back on military spending. The proposed budget for 2008 allocates P683 billion for debt principal and interest payment, while it allocates P5 billion for AFP modernization. In contrast, government allots only P30 million for health care asssitance.

The group added the removal of regressive taxes such as the reformed value-added tax (RVAT) on oil is equally urgent to lessen the inflationary impact of the financial crisis.

The Arroyo government should also abandon its proposal for new taxes because these will further burden the Filipinos already suffering from low incomes and spiraling cost of living. IBON also urged the administration not to use the global crisis as an excuse to impose more taxes in its effort to achieve a balanced budget. (end)

IBON Foundation, Inc. is an independent development institution established in 1978 that provides research, education, publications, information work and advocacy support on socioeconomic issues.

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