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.



Latest results of the Family Income and Expenditure Survey (FIES) indicate that Filipino families are getting poorer. But while this could be partially compensated by increasing public expenditures for social services, resources are being diverted to debt servicing or lost to corruption.

According to IBON executive editor Rosario Bella Guzman , corruption results in loss of government revenues going to private pockets that could have been used to provide the poor of basic social services.

The ZTE’s reported of US$130 million-overprice (roughly P5.9 billion), for example, could have been used to increase the subsidy of government hospitals catering to indigent patients. Guzman said that the overprice is enough to provide for the operating costs of the Philippine General Hospital (PGH) for five years, serving 70,000 indigent outpatients per year.

She added that the amount can also hire 2,889 public school teachers and pay for their salary for one year. The Department of Education estimated the backlog of teachers at 2,733.

Guzman said the unabated corruption allegations against the Arroyo administration are made even more scandalous because of the worsening poverty and income inequality in the country. Based from the 2006 FIES and government’s family living wage, poverty increased to 86% in 2006 from 82% in 2003