An administration lawmaker, Rep. Eduardo Gullas, is seeking a bold amendment to the Constitution that would mandate the national government to subsist on a balanced budget.
Gullas said a Charter amendment should be introduced, requiring the government to keep a balanced budget every year, except in cases of national emergencies or when the country is at war.
He likened government to a family that must learn to live within its means. "A household that routinely spends beyond its means is bound to get into deep financial trouble," he warned.
"We have to end deficit-spending as soon as possible. It is regressive and simply not sustainable," Gullas said in a press statement.
A mandatory balanced budget means that each year, the President would have to submit a proposed national budget that could be fully financed by government income, the Cebu lawmaker said.
"Congress will also have no choice but to pass a budget that is fully funded by internally generated revenue," he added.
Gullas lamented that from 1998 to 2004, government incurred an average annual deficit of R179 billion, or a cumulative R1.25-trillion deficit over seven years.
This year, government is expected to further post a R180-billion deficit. Next year, the proposed R1.053-trillion budget assumes a R125-billion spending-revenue gap.
"This means government will have incurred a staggering R1.56-trillion aggregate deficit over nine years," Gullas said. "This further means that over the same period, government will have incurred R1.56 trillion in new debt obligations to cover the deficit."
He said the new debt obligations do not include new borrowing contracted to service government’s outstanding debt stock, which stood at R3.9 trillion as of end June.
"Government is in a vicious cycle. Due to aggressive borrowing to finance the deficit, interest rates are rising. This, in turn, has further aggravated government’s financial problems, as more spending is required to cover larger interest payments," Gullas said.
Next year alone, he noted that 36 percent of all government income would be used to cover interest payments on the public debt.
Last week, the International Monetary Fund (IMF) said the Philippine government may not be able to balance its budget as planned by 2010.
In a report, the IMF executive board said government simply does not have the means to raise enough revenue to balance the budget. (Edmer F. Panesa)
