2021 budget hold-up to block pandemic recovery
MANILA, Philippines — The likelihood that next year’s budget will get delayed have spawned concerns the economy’s rebound from the pandemic will get derailed, no thanks to infighting among President Rodrigo Duterte’s allies in Congress.
In a text message on Wednesday, Acting Socioeconomic Planning Secretary Karl Kendrick Chua said “a reenacted budget will not help in our recovery program.”
A reenacted budget happens when a new national outlay is not enacted by January 1 of each year, which in effect forces the government to spend using an old budget from previous year. This, in turn, means new programs not found in the old spending plan will not get funded until the new budget is passed.
Such a scenario already happened twice under the Duterte administration in 2019 and this year, although the latter hardly had an impact because the outlay was only 6 days delayed. Last year’s case, however, saw the budget delayed by three and a half months, effectively denying the economy and people of critical public programs.
Now, as Duterte’s allies fight over speakership of the Lower House which suspended budget hearings until November 16, businessmen fear a repeat of 2019 could be looming.
“We hope that the suspension will not delay the passage of the 2021 budget, which is even more critical now given the need to mitigate the impact of the current crisis,” Francis Lim, president of the Management Association of the Philippines, a business group, said in a statement.
The repercussions of a budget hold-up can be severe. On paper, economic growth slowed to 5.6% year-on-year last year which state officials and analysts partly blamed to the inability of government to spend on infrastructure and social programs without a new budget in effect.
In reality, taxpayers end up at the losing end whenever the budget is not passed on time. During the 2019 budget impasse, Finance Secretary Carlos Dominguez III said government underspent by P1.01 billion daily without the new outlay in place, an amount that could have otherwise funded programs like cash transfers and building of schools early in the year.
Dominguez did not reply to request for comment on the latest budget issues.
“Let’s keep our fingers crossed that this sad situation will not repeat itself, otherwise our country’s economic recovery from the pandemic will be delayed to the further prejudice of our people,” Lim said. — Prinz Magtulis
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