Secretary Andaya’s bold budgeting will benefit Filipinos in every aspect of public life INTERVIEW

Education, transportation and infrastructure will all benefit greatly from additional tax revenues.

fter years of running deficits, the Philippine government is targeting a balanced budget this year, at the same time increasing spending on both education and transportation infrastructure, thanks mostly to reforms to value-added tax which were carried out during 2005 and 2006.

President Gloria Macapagal-Arroyo wants to show Filipinos that the extra money they’re paying in taxes is being put to good use, and will help improve their lives and those of their children by preparing them better for work and by making the economy more efficient on a world scale.

“The message we are trying to send to the people is this: we need to be more competitive in the global economy,” says Rolando G. Andaya, Jr., Secretary of Budget and Management. “To do this we need to be better educated, be healthier and socially prepared, we need more infrastructure to attract more investors and improve the overall state of economic activities in the country.”

Part of the 176.5 billion pesos the government plans to spend on education this year will be used to hire 10,000 new teachers, buy 35.5 million new textbooks, set up 920 computer laboratories and build 10,472 classrooms.

Funding for scholarships will benefit 67,665 students and about 1 billion pesos will be used for more training for science, mathematics and English teachers. The budget also includes increased funding to help 3.5 million underprivileged pre-school and elementary school students through the expanded Food for School program.

Improving the country’s transportation system will also bring benefits to families and companies alike, making it easier for children to get to school, for farmers and fisherman to get their merchandise to markets and for businesses to move their products around the country.

Spending by the Department of Public Works and Highways and by the Department of Transportation and Communications was increased by 50% in 2008. This money will be used to build and improve roads and highways around the country, extend the railway system in Metro Manila and build new ports and airports. One road-building program is intended specifically to improve roads between farm areas and markets.

Filipinos will directly benefit from a series of new Doppler weather radar facilities that will be built around the country to give earlier warning about storms that can endanger lives and crops, and the electricity network will be extended to the country’s rural barangays.

The government has also implemented a program dividing the country into a series of “super regions” intended to make the most efficient use of government resources to increase economic development and promote private investment.

The idea of the regions is to group together contiguous areas and look at their development on a broader scale, according to Mr. Andaya. One of the advantages of that approach is that it permits a more efficient use of government resources by grouping together investments across agencies while attract private investment to the various regions.

“These super regions offer boundless opportunities to spread and multiply development across the entire country,” says President Macapagal-Arroyo. Much of the increase in spending comes from the VAT reforms, which added 100 billion pesos in tax revenue in 2006.

“People find it difficult to accept the need for new taxes,” explains Mr. Andaya. “With the 2008 budget, the people will better appreciate their contribution through payment of new taxes, as the budget represents social payback. The 2008 budget is a catalog of reimbursements for our people’s sacrifices, their taxes. More infrastructures and increased social services through education and health spending are being made available by the additional funds from these new taxes. ”

The government has also benefited from lower finance costs, as the rise of the peso against the dollar has reduced interest payments on debt. Reforms to the budgeting and spending process in recent years have made it more efficient and transparent, and have also freed up more funding for important programs.