Posted on 2004

Sen. Manuel B. Villar's Sponsorship Speech
on the FY 2004 National Budget

Mr. President:

      Today I rise to endorse, for the consideration and approval of this Chamber, an indispensable tool in shaking off the economic lethargy that shackles our nation, preventing us from leaping forward in this global age.

      Yet a tool is precisely just that, Mr. President --- a mere instrument. Those who hold the tool are the ones who have the power to decide either to use it in building a strong edifice that can withstand the vicissitudes of nation building or it will simply be a mere facade devoid of a solid foundation.

      As the chamber vested by the Constitution with the power of the purse, Congress holds the responsibility of honing a national budget that can either put us on the right track towards development or veer us away from it.

      Yet there are a lot of factors, internal and external, that impinge upon our efforts to craft a budget that can truly be used as a tool for nation building. These past years, we have been faced with an unmanageable public deficit that further puts a strain on our dwindling tax effort. No less than our Chief Executive lamented the fact that our country's tax effort has declined from 17% of GDP in 1997 to 12.3% last year, roughly near 1% of GDP a year or a loss of about P30 billion a year. Political uncertainties like the July 27 Oakwood incident and concerns related to the upcoming national elections also becloud our national horizon, stifling growth and investment that would have provided strong impetus to our economy. Neither can we isolate our country from the uncertainties in the global and regional environments that will impact on our domestic concerns like the debilitating effects of the SARS menace in Asia and reduced economic activity due to the threat of terrorism.

The President's Budget

      Cognizant of the glaring need to rein in government spending, President Gloria Macapagal-Arroyo submitted to Congress a proposed national budget of P864.8 billion for fiscal year 2004. The increase in the proposed budget is minimal, merely 6.6% in nominal terms. Statistics from the Department of Budget and Management shows that excluding interest, the nominal increase of the FY 2004 budget would be a mere 2.1% while in real terms, it would even be lower than the FY 2003 budget by 1.9%.

      As a whole, the allocation for the national government agencies will have a negligible increase of only 2.2%, while the growth in allocation to local government units will slow down from 4.2% in 2003 to 1.7% next year. Out of the P53.3 billion over-all net increase, a whopping P40.8 billion comprises the increase in interest payments for 2004. Indeed, we have a tight budget this year... another barebones budget. It is lean and mean. Lean because it is just enough to help us get by, and mean because it is an unkind budget. There is hardly any room to move about. 

      To mitigate the adverse impact of the tight budget constraints on the delivery of basic services to the public, the President's budget has allowed national government agencies to retain incomes they can generate in excess of their targets. Other novel features of the President's budget include the matching of non-recurring expenses against temporary income sources such as the Marcos wealth, the rationalized budget of State Universities and Colleges, the P1 billion fund to address the acute classroom shortage and another P1 billion for the hiring of new teachers. 

      This year being an election year, the proposed budget allocated P4.53 billion for the Commission on Elections, P3.027 billion of which will be utilized for the holding of the FY 2004 National and Local Elections. A total of P98.4 million was also earmarked for the conduct of elections in the Autonomous Region in Muslim Mindanao and P100 million for the implementation of the Absentee Voting Law.

House Bill No. 6385

      Contributing to the delay in the passage of the FY 2004 budget, Mr. President, is the fact that the Senate received the General Appropriations Bill from the House of Representatives only last December 18, a month later than usual and just before our Christmas recess. 

      The General Appropriations Bill cut the President's Budget by a net amount of P5.369 billion, from P575.838 billion to P570.469 billion in Total New Appropriations. The cut represents the amount included in the Supplemental Budget that the House of Representatives passed last year which includes P2.2 billion from the Department of National Defense for the last tranche of their salary adjustment, while P3.027 billion was from the Commission on Elections representing the budget for the conduct of the national elections. 

The Senate Amendments

      Upon the resumption of sessions this month, the Senate Committee on Finance started to firm up its proposed amendments to the House Bill. 

      On the whole, Mr. President, our amendments resulted to an increase of P6,505,509,000 which was partly offset by a decrease of P4,889,693,000. This resulted, Mr. President, to a net increase of P1,615,816,000, bringing the budget, as per the Senate Version, to P572,084,998,000 in terms of Total New Appropriations. This will translate, Mr. President, to Total Obligations of P861,010,510,000.


  President's Budget House Bill No. 6385 Senate Version
New Appropriations 575,838,067 570,469,182 572,084,998
Unprogrammed Appropriations (24,610,108) (24,610,108) (24,610,108)
Programmed New Appropriations 551,227,959 545,859,074 547,474,890
Automatic Appropriations 313,535,620 313,535,620 313,535,620
Supplemental Appropriations   5,368,885  
TOTAL OBLIGATIONS 864,763,579 864,763,579 861,010,510

      Mr. President, the following are the salient features of our amendments. 

  • We are restoring the P5.369 billion carved out by the House from the proposed annual appropriations which was passed under House Bill No. 6568 as Supplemental Appropriation, in anticipation of the delay in the approval of the General Appropriations Bill. This is broken down as follows:
  • Upgrading of Salaries amounting to P2.2 billion for the Armed Forces of the Philippines, P113.5 million for the Philippine Coast Guard and P8.46 million for the National Mapping and Resource Information Agency (NAMRIA)
  • For the conduct of the 2004 National Elections, P3.027 billion.
  • We are also restoring the P500 million cut made by the House for the School building Program which is intended to address the acute classroom shortage in some areas.
  • We are also providing P50 million for the Armed Forces' Off base Housing Program.

    Mr. President, a substantial cut of P3.738 billion was also deducted from the Department of Public Works and Highways, representing reduced allocation for foreign assisted projects that could not be fully absorbed by the department.

      Mr. President, several Special Provisions were also proposed for inclusion in the budget. Most of these provisions consist of the Use of Income, specifically for Department of Foreign Affairs, Livestock Development Council, Office of the Solicitor General, National Printing Office, National Maritime Polytechnic, National Defense College of the Philippines, and the Department of Labor. For the Department of Foreign Affairs, a provision on the Retention and Use of Excess Income to augment its Building Fund and current appropriations was proposed.

      With these amendments, Mr. President, we now yield to the collective judgment of this august chamber, in the hope that the General Appropriations Bill, as amended by your Committee, be approved.

      Thank you.

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