Government dole-outs are not solutions

FROM FAR AND NEAR - Ruben Almendras - The Freeman

On top of the “pantawid sa pamilya” poverty assistance, and the dole-outs and subsidies during the COVID-19 pandemic, there have been new/additional financial assistance to disaster victims, senior citizens/PWD benefits, grants to those over 80 years old, free tuition, and other cash gifts to Filipino citizens. Senators, congressmen, governors, mayors and other politicians have been at the forefront physically handing out the cash/in-kind dole-outs for the main and social media photo-ops. Knowing the ulterior motives of these politicians in aid of re-election, there was a proposal to prohibit their presence in any DSWD aid distribution, which were not implemented or followed by the politicians.

Almost all countries, especially developing countries with sizable below poverty population have “safety nets”, that provide outright financial support for the poorest of their citizens. Especially during the pandemic and disasters, these were justifiable and many governments over-borrowed and incurred fiscal deficits to support these dole-outs and subsidies, to prevent food shortages, medical fatalities and extreme poverty which could lead to political and social problems. Coming out of the pandemic in 2022, it was time for governments and politicians to review/re-assess the cost/benefit equation of all these dole-outs/subsidies, to determine the sustainability of these programs. The medium and long-term implications of these programs on government revenues, budgetary expenses, economic growth, governance, and democracy have to be studied and forecasted to determine which of them can be continued.

The Philippine government budget for 2024 is ?5.768 trillion. ?1.1 trillion of this is borrowed as government revenues are expected to be some ?4.6 trillion, bringing government debt to over ?13 trillion which is 61% of GDP. Not exactly a healthy fiscal/financial picture but livable depending on our government’s ability to improve the situation. ?2.183 trillion or 38% of the budget goes to social services which is where all the dole-outs and subsidies are sourced. Debt service which are payments for the principals and interests of government borrowings is at ?670 billion which eats 12% of the budget.

The dole-outs and direct subsidies are as follows: Pantawid-?112.8 billion, senior citizens pension-?49.8 billion, families in distress-?20 billion, OFW repatriation-?9.7 billion, TUPAD-?12.9 billion, grant in aid-?8.3 billion. All these total ?213.4 billion. On top of these are health subsidies which are; PhilHealth subsidy-?101.5 billion, health facilities enhancement program-?23 billion, medical assistance to indigent/incapacitated patients-?22.3 billion, public health emergency benefits-?20 billion and education assistance and subsidies-?41 billion. Overall total will be ?421.2 billion in dole-out/subsidies from the national government. If we add the dole-outs/subsidies from the local governments which are estimated to be ?80 billion, then 10% of government expenditures are given as dole-outs and subsidies, all of them borrowed money.

To avoid adverse economic and financial effects on the country, the Philippine GDP has to grow at least 8% annually to reduce borrowings and budget deficits, and contain inflation. These means sustaining consumer demand while increasing domestic and foreign investments, while reducing the tax burden. This can be done by reducing corruption and practicing good governance, which is a challenge given the present administration and our family dynasty politicians.

In a free enterprise economic system, be it in a democracy or autocracy, containing/limiting dole-outs is important in fostering initiative and work ethics which are needed in advancing science and technology for progress, and raising living standards. Scanning the world for economically, socially, and politically problematic countries, a major source of their problems are the magnitude of government dole-outs/subsidies that their people are getting from their governments. Think Nigeria, Sudan, Beirut, Myanmar, Sri Lanka, Cambodia, Haiti, et al.

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