Phase 1 of GCCA in the offing?

"PGMA to prioritize pay hike of government workers next year". This is the banner headline posted in the Philippine Government portal, gov.ph. The news feature further states that the President would "send the proposed measure to Congress as soon as the legislators return from their holiday furlough".

This is quite a bit confusing considering that a bill, H.B. 5918, has already been filed with the House of Representatives. I made a post on this last Dec. 14th. It seems Malacanang will deviate from the original version of the proposed pay hike which is the product of a study conducted by both the CSC and DBM, and will resort instead to a 10% across-the-board increase.

What prompted Malacanang to propose an alternative pay hike proposal? Time is of the essence. Congress will resume session about 2nd week of January and may last for probably only a month. Considering the many pending pieces of legislation on its calendar, among them, the 2007 national budget - there's not enough time to act on the proposed GCCA. So Malacanang is proposing an easier-to-pass version that is more acceptable to rank-and-file employees. Anyway, the proposed across-the-board increase can just be treated as initial implementation of the omnibus compensation package.

I'll keep everyone posted.

Old habits don't die!

It seems Congress is at it again: promising one thing and doing another. As early as November, the respective Chair of the Appropriations and Finance Committees of the House and Senate were exuding with confidence that the Php 1.126-T 2007 national budget will be passed before the christmas recess.

What the House and Senate have done so far was to pass the budget measure with their separate versions and toss it to the bicameral conference committee to reconcile the differences. But today, December 22nd is the last day of the session before the legislators adjourn for a month long christmas break and the budget has not gone past the bicameral conference committee. The latest deliberation of committee members turned out to be deadlock on certain expenditure items like the DepEd's Php4-B Food for School Program which the Senate wants realign to hiring of more teachers.

So the specter of operating on a re-enacted budget comes January 2007 is again looming, and while both Chairmen, Senator Drilon for the Senate and Cong. Salceda for the House, remain hopeful that the budget will be ratified when Congress resumes session in January 2007 - the scepticism that this year's experience of the government operating on a re-enacted for the whole year will again be repeated.

The GCCA: Seeking to address distortions and inequality in pay?

I have been receiving inquiries lately by e-mails, text messages and phone calls on the status of SSL 3. For the record, SSL 3 refers to the Proposed Government Compensation and Classification Act or GCCA. The proposed salary measure is with the House of Representative and denominated as House Bill No. 5918. It was introduced by Congressmen Joey Salceda and Francis Nepomuceno. Latest information about the GCCA can be obtained from the House website and that the House Appropriations Committee has formed a technical working composed of the committee members, CSC, DBM and COA to "study the merit of a key reform measure aimed at providing a new salary structure for government employees to narrow the disparity in salaries of civil service workers and those in the private sector".

The draft GCCA can be downloaded from the CSC website. But for the sake of those who have not gotten a copy or have not read the bill, here's a summary of my presentation during the December 5th Year-end Seminar of Local Budget Officers:

Omnibus Job Classification and Compensation system (OJCCS). This is the heart of the GCCA which shall jointly be formulated by the CSC and DBM. The OJCCS shall:

- promote internal equity among government employees, taking into consideration the principle of "equal pay for work of equal value"; and that differences in pay are subject to compensable factors;

- give due regard to external equity by considering prevailing market rates for work in medium sized private enterprises; pay rates are modest in keeping with fiscal realities;

- use performance as basis for merit increases, promotions, and incentives;

- easy to administer and responsive to current challenges; simple denomination of jobs; and subject to periodic review.

This is going to be on installment basis, so please bear with me.

LBOs' Year-end Seminar was a success!

I congratulate the Iloilo MBOs Association for successfully hosting this year's year end seminar. Thus far, it is the biggest in term of participants - about 210, some coming from the accounting and treasury groups.

On the technical side, the participants were able to take a second look on how to prepare the local budget matrix, cash program, and performance evaluation. They also had the opportunity to resolve with COA certain issues related to their role in obligation and disbursements. It was unfortunate that Secretary Andaya was not able to come. He was supposed to join the President for a cabinet meeeting and consultation here in Iloilo City. But the Secretary's no-show did not dampen the enthusiasm of the participants. I had to pitch in to give them a glimpse of what the proposed Government Compensation and Classification System is all about.

The presentation of each provincial association during the fellowship night was a revelation and a show-off of hidden talents. But the Iloilo MBOs' version of Kris Aquino's "Deal or No Deal" hosted by Ramie Madero of Pavia stole the whole show. Everybody had a hearty laugh.

Budgeting: A Tool for Reforms

Last Saturday (Dec. 2nd), I had the rare opportunity to speak before the class on the masteral program of the Ateneo School of Government. The students all 24 of them are officials and employees of Iloilo City, three of whom are Sangguniang Panlungsod members - Kagawads Jed Mabilog, Ely Estante and Armand Parcon.

The class was mainly handled by my former Boss, retired Usec. Cynthia Castel. My topic was about "Budgeting as Tool for Reforms". I began my presentation with brief and practical descriptions of what budgeting is. That it is a document containing words and figures with price tags attached; a prediction linking financial resources and human behavior. Usually, there is a tendency on the part of department heads to "satisfice" (to borrow the term popularized by Aaron Wildavsky), meaning "satisfy and suffice" that is, if they can't get all the funding that they want, they must as well get all that they can.

Budgeting is also contract between the local chief executive, sanggunian and local finance committee on one hand; and the department heads on the other. The former promise to produce the money to finance the planned expenditures under specified conditions, and the latter commit to implement the programs and projects or deliver the services to the public. I also underscored the reality that budgeting is at the heart of the political process, and that it records the struggle between the executive branch and local legislature over control of funds, over whose preferences will prevail. While this seems to be a democratic form of check and balance as enunciated in the Local Government Code, its effect if no agreement is reached between both branches of government, is detrimental undermining socio-economic development at the local level. Of course this situation does not only happen in LGUs. We have, in the past several years, witnessed this impasse between the Executive branch and Congress, eventually leading to a re-enacted budget, underspending and under delivery of basic services.

The challenge that I posed to the students is how they would reconcile the kind of budgeting that we are pushing (basically, performance budgeting) with political budgeting. The extent to which performance based budgeting will succeed in LGUs would depend on whether or not politicians care about outcomes and outputs. More of my lecture will be posted next time.

December 4-6 is ALBO 6 Year-end Seminar

Tomorrow (December 4th) is the start of a 3-day year-end seminar of the Association of Local Budget Officers in Region VI. Venue is at the newly refurbished Coral Ballroom of Punta Villa Resort, Iloilo City.

Day 1 of this culminating seminar will be devoted to the refresher on the new allotment system to be implemented starting January, 2007. A coaching-workshop on the preparation of the local budget matrix and allotment release order will be conducted by the DBM RO 6 staff. A follow through session on the preparation of cash program and cash flow analysis will also be part of the technical session.

On the 2nd day, a review of the mechanics of the performance evaluation system to be undertaken by the local finance committee of each LGU; and the updates on COA rules are the two main topics. In the afternoon, we are expecting that Secretary Andaya will join the LBOs right after the cabinet meeting here in the city - for a dialogue and update on the proposed Government Compensation and Classification Act (GCCA) as well as the Internal Revenue Allotment. In the evening, the LBOs will hold their traditional fellowship night and christmas party. Each provincial association is expected to render a christmas number, and the LBO retirees for the year will be honored.

Activities for the 3rd day will be abbreviated as most participants, as usual, is in a hurry to go home. But the year-end affair will not be complete without the association meeting in a general assembly to discuss their concerns and plan out for the year ahead.

IMBOA, the host association promises that this 3-day seminar will be more memorable and fulfilling than the previous ones.

CSC Forum, the final cut

Sounds like a movie sequel but it is not. This final installment of my presentation was intended to prick or tickle the imagination and creativity of personnel involved in the operation of LOEs on how to enhance the revenue generating capacities of their enterprises.

Funding sources. There are only two main sources that LOEs can operate on namely, their own internally-generated income from user fees or charges like rental of stalls, market tickets, sale of medicines, occupancy fees for patients, etc.; and subsidy or advances from the General Fund. Normally, the latter constitutes the biggest source of operational fund. Guimaras Provincial Hospital for example, is heavily dependent on this subsidy, constituting 79% of its operating budget. LGUs can also request financial assistance from their legislator's Priority Development Assistance Fund (PDAF) or other special purpose funds in the GAA. The capitation fund from PhilHealth can also be a potential source to augment the operational needs of hospitals. Loans from GFIs or DOF's LOGOFIND can likewise be resorted to. Aklan has tapped the LOGOFIND to finance the construction of its multi-storey hospital building. Bond flotation similar to the one initially done for the Caticlan and Boracay Jetty Port can also be replicated by other LGUs. Build-Operate-Transfer scheme and its variants as well as Lease-to-Own scheme can be a potential funding sources for capital expenditures.

Tax exemption as a Subsidy. I emphasized the fact that LGU owned enterprises are tax exempt. If these were operating as private entities, these could have been paying real property taxes and the mayor's permit and related fees, ergo, this privilege if monetized is a form of LGU subsidy.

Policy Considerations. There is a need for LGUs to take a closer look that their existing fiscal policies related to LOEs. For example, there should be a cap or conditionality on subsidy, grants or advances by limiting the utilization to deficit financing (loan payment), and meeting the cost of development projects or capital expenditures. There should likewise be policy on how much rate of return should be remitted to the General Fund once LOEs' operation is stabilized.

This complete my four-part series on LOEs. Hope my readership will find worthwhile this sharing of information.

CSC Forum, Part 3

This is not related to the topic but as a proud Pinoy, I can't help but join the euphoria of Sunday's abbreviated demolition of Eric Morales by our compatriot Manny Pacquio. So swift and precise as a surgeon was Manny's 3rd round victory that even put to shame Madam Auring's prediction that the bout was going to last 12 rounds with Manny eventually winning by a KO. Seems like Manny taught Morales a moral lesson: "A punch speaks louder than a boast".

Now back to the highlights of my presentation in that CSC forum. I emphasized that restructuring existing economic enterprises seems to be a more viable option for LGUs. By restructuring, I meant transferring and or consolidating existing enterprises under a separate organization unit - either as department, division or section under the local chief executive branch. Some desireable outcomes that can be derived from this shift are:

Shift fiscal responsibility - income generated is first applied to operation of LOEs, and funding gaps will come in the form of subsidies or advances from the General Fund to be explicitly justified.

Pinpoint accountability - financial results of operation can easily be ascertained since transactions are not co-mingled with the General fund.

Unburden the General Fund - in the long run, more funds can be channeled for other services since the General Fund is freed from
provision for large subsidies.

Provide solution to PS limitation - a big portion of the PS cost will be transferred from the General Fund to the LOE's budget.

I'll save the best for last . . . Part 4 is coming soon!

The CSC Forum, part 2

I'm okay now, the voice is back to normal thanks to Vir's (MBO of Duenas and our procurement training facilitator) advice to take a tablespoon of oregano juice extracted from fresh leaves. Tastes awful but it works!

As promised, here's the gist of my presentation on the funding source and fund utilization of LGU economic enterprise.

What it is. I first made a pitch about my own perception that treating all enterprises as economic is a misnomer because they are not there to earn money for the LGU but primarily, to deliver a service or provide a facility for the people. I prefer to call them LGU-owned Enterprises or LOEs.

What can be considered as LOEs? They can be classified into: (1) Economic Enterprises in the sense that they are created to improve production and delivery of basic goods and services for a specific market or client group. These include public markets, slaugtherhouses, sports complex, cemeteries and even hospitals; (2) Public Utilities that provide basic need or service to the general public that cannot be adequately provided by the private sector - Examples: waterworks, garbage collection, public transport, passenger terminal, and ports.

Features that characterizes LOEs. Just the more important ones: (a) a business with social objectives, combining entrepreneural skills with strong social purpose; (b) possessing a corporate culture, subject to public service administration and financial controls but operates outwardly in commercial manner; (c) separate unit in the bureaucracy; (d) have comparative advantage in the market with almost monopoly status; (e) heavily subsidized, a considerable consumer of public funds; (f) profits if any, are re-invested for improvement of facilities and operation.

Sorry, this has got to go on piece-meal. I'll post the rest next time.

CSC Forum overstretched my vocal chords!

Yesterday (Nov. 14th) I was privileged to be one of the speakers and panelists of the forum: "Challenges in the Effective Administration of Local Economic Enterprises" sponsored by the Civil Service Commission. It was quite a fruitful one but too taxing for me as I have to shuttle from Punta Villa Resort where I made an almost three hours- presentation on Module 1 of the Generic Procurement Manuals before the 200 plus participants of our last batch of procurement training - to Grand Hotel, the venue of the forum. I had only about an hour's rest between two engagements. That must have aggravated my already strained vocal chords, hence, the consequence of a hoarse voice and occasional outburst of dry cough. No regrets, anyway.

My talk was about funding sources and allocation of funds for economic enterprises owned by LGUs. Details of which will be posted next time I get enough time to write. Meanwhile, I need to be back to Punta Villa for a lecture on Alternative Modes of Procurement for Goods.

Civil society's alternative budget - will govt. bite?

Non government organizations spearheaded by former National Treasurer Leonor Briones of Social Watch Philippines are pushing for an alternative budget in lieu of the Php 1.13 T President's 2007 budget already approved by the House of Representatives and now under scrutiny by the Senate.

How does civil society's alternative budget differ with the one that government prepared particularly the DBM? In a nutshell, the civil society version merely proposes for a realignment of some Php 22.7 Billion out of the President's budget with corresponding 50% cut in Intelligence and Confidential expenses, and status quo level on the funding for Philhealth Indigents Subsidy and School Feeding Program.

The realigned funds (I'm using the term realigned from a layman's view, although technically, no realignment can yet be made since the budget is not yet approved) according to Professor Briones, shall be used "to augment appropriations for MDGs-related activities under critical sectors like education, health, agriculture and environment".

Beneficiaries of this alternative proposal are DepEd by P6.3 billion for new teaching and non teaching positions, school buildings, alternative learning system, teachers training, school’s MOOE; CHED (P882 million for scholarship; DOH by P8.5 billion for primary health care, child survival, reproductive health,etc.; Agriculture (P3.7 billion)to fund irrigation, water-resources development, farmers training, farm-to-market roads and post harvest; among others.

My own gut feel: I'm inclined to support this NGO-led initiative not just for tranparency and participatory purposes, but also for this government to provide more focus on its spending towards addressing the Millennium Development Goals (MDG). Latest survey (my post of Oct. 17th) shows that we are lagging behind in several MDG indeces.

Will the government bite? Probably a compromise can be made considering that the Senate may support the proposal. Otherwise, we are heading for another impasse and may end up with another re-enacted budget.

A gold credit card holder . . .

It's not the usual credit card like Visa or Mastercard. It's World Bank's latest ribbon pinned in the breast of the country's economic performance. "The Philippines is joining the ranks of gold credit card holder", declares Joachim von Amsberg, World Bank's country representative.

And what prompted the World Bank to confer this distinction? Mr. von Amsberg attributes this to the country's fiscal outturns and government's commitment to achieve its consolidation on target. Basically this is the same consideration that credit rating agencies like Standard and Poor, Fitch and Moody's used in upgrading our standing from negative to stable. So what else is new?

This is the catch: With this good fiscal performance, World Bank will commit more loans to the already credit-saddled Philippines. Business Mirror, in today's (Nov. 10th) issue reports that a fresh loan is in the offing from World Bank to the tune of 250 M US Dollar. That's 12.29 B in Philippine pesos using today's exchange rate of Php 49.95 to the US dollar. The advantage of the said loan is that it is not a tied loan, not much conditionality except to provide for GOP counterpart - that is, the government can use the proceeds for any purposes it may deem and free of the usual compliance to certain policy reform or structural adjustment.

2.5 per cent on a scale of 0 to 10!

The stat does not refer to the growth of our GNP nor GDP. It's the Philippines' rating on the corruption perception index (CPI) recently released by Transparency International.

To go on further, the country ranked 121st in the 2006 CPI among 163 countries worldwide - sharing the same rank with Russia, Rwanda Nepal, the Honduras, Swaliland, Benin, Gambia and Guyana. Is this something to worry about? Definitely, yes! Looking at historical records, in the 2005 survey, we ranked 117 and in 2004, the country is at number 102. Meaning we have gone down four notches this year compared to 2005, and (my golly!) 19 notches reckoned to 2004.

It seems, despite all the governance reforms put in place so far, no positive impact has been felt to combat corruption and rent-seeking activities in the bureaucracy. In the words of Senator Drilon, Senate Finance Committee Chair: "the perception index of Transparency International indicated that we are not improving at all. In fact, we are deteriorating".

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What's so special about Moody's rating?

It's all over in the major dailies! Business World reports: "Moody's lifts RP outlook to stable from negative". Business Mirror's headlines reads: "Moody's tag on RP credit now "stable". Not to be outdone, Inquirer, the country's most widely circulated newspaper posts in its Nation-Headlines: "RP credit outlook gets upgrade". But the most flattering of all the news on the credit upgrade is the one posted over the gov.ph website: "Moody's upgrade a vote of confidence for govt. economic reforms - PGMA".

To borrow a line from the rock opera, Jesus Christ superstar: "what's the buzz, tell me what's happening, what's the buzz". For one, the U.S-based Moody's Investor Service, a global debt watchdog is considered the most pessimistic about the Philippines among credit rating outfits - which includes the likes of Standard & Poor's and Fitch. The last two agencies have upgraded their ratings on the Philippines earlier this year to stable ("BB-" and "BB", respectively).

Thus, Moody's "B1" rating is some sort of a vindication or as the President puts it, a vote of confidence. It's positive effect on the economy can be summed up: (a) expected to boost financial market's confidence on Philippine stocks; (b) result in lower borrowing cost for both government and private companies; (c) strengthen the peso even more.

Why the upgrade? In a statement from Singapore, Moody's Vice President Mr. Thomas Bryne said "Based on fiscal performance through the first three quarters of 2006, it seems likely that the government will readily meet its deficit reduction target for the year as a whole".

The Moody's report also cited certain challenges that the country is confronted with, thus: "the economic necessity of trying to lure investors by way of putting up infrastructure would place additional pressures on the government's budget"; the Philippine remains highly indebted compared with other countries; and political will and strong support form Congress are necessary to sustain recent accomplishment.

Will the credit rating further improve? Moody's prescribes that "there needs to be a continued significant deficit reduction and decreased reliance on external financing by the public sector".

A Country of employers, less a country of jobseekers!

That is the desired end result of House Bill 5486, authored by Rep. Lorna Silverio (third District, Bulacan) which the House of Representatives recently approved on third and final reading. The said Bill, according to the author seeks to "enhance the human and intellectual capital of the government and its employees and to make sure that every employee will be self-reliant and more productive even after their stints in the government service". It assures that even retiring employees and those retired will extended assistance should they decide to engage in business after their government service. Just hope the bill gets enacted into law in time for the implementation of rationalization plans of national agencies.

Entrepreneurship among government employees is nothing new actually. In every agency or local government unit we witness a prevalence of employees (even teachers) who double as sales agent of insurance companies, housing subdivisions, memorial parks, Time Life, Tupperware, etc., or as reseller of signature women's undies and perfumes, jewelries, longganisa, tapa and other consumables or food items. There also are employees cooperatives, credit unions and even "paluwagans" in most offices. Some highly successful like the ones in Tubungan, Iloilo and the Province of Negros Occidental.

I haven't entirely read the bill, but on surface, it merely legalizes these already existing entrepreneural activities in government offices and might encourage a hoard of other employees to follow suit - in the process, jeopardizing delivery of services to the general public and "crowd out" the private individuals or entities already engaged in similar business dealings.

To be released in 2 tranches . . .

I'm referring to the IRA differential of LGUs . Central Office has finally issued a directive on the manner of releasing the differential based on the P14.843 B IRA supplemental budget. The Memorandum, dated 31 October 2006 directs DBM ROs to (1) compute the 80%-20% IRA shares; (2) issue the corresponding NCAs for November and December; (3) release/deposit the funding checks to the account of the respective provinces, cities, municipalities and barangays on the following dates:

• November shares (50% of the differential): 80% on November 10; 20% on November 27
• December shares: (remaining 50%) : full on December 12
  
  

We hope this will dispel any negative speculation that the release of IRA differential will be withheld up to next year.

Our Mission: Plant a "BOMB"!

Sorry for the four-day hiatus. I've just been back from a three-day trainers' training in Cebu City, the other "Queen City of the South" (Iloilo City is the other and the original) - along with four other staff: Edge, Eme, Liane and Lynnie. Of course, we're not the only participants. Our counterparts in Regions 7 and 8 as well those from the five ROs in Mindanao were also around.

The 3-day sojourn in Cebu was, according to Secretary (Nonoy) Andaya, who joined us on the second day - about training us to "plant a BOMB". Don't get me wrong (or the Secretary). The "BOMB" is the acronym for Budget Operations Manual for Barangays, one of the DBM's most recent publication done primarily through the intiative of DBM RO IV-B's Director Lando Garcia. Designed to be simple, easy-to-understand, and user-friendly, this new Manual will be rolled-out to the barangays comes year 2008 - in time for the new set of barangay officials, assuming the elections will go on as scheduled.

It seeks to, in the Secretary's own words, "demolish old planning concept" by prescribing clear guidelines on how to connect development plan to the budget; and "obliterate bad budgeting practices" by supplanting it instead with a policy-driven, performance-based and participative budgeting.

Quite a tall order and sounds like we're really serious in reforming budget management down to the basic unit of our governance. But will it work for the barangays? That will be our formidable task - us DBM trainers. But we're not alone in this endeavor. Our other attendant task is to train regional trainers in every city and municipality composed of local finance committee members (budget officer, planning and development coordinator, treasurer) and accountants. We're expected to carry out the regional training by January next year.

There were several other revelations the Secretary mentioned during our dialogue with him. I'll post this in the days to come. Abangan . . .

IRA is no longer erratic . . .

To fast track the implementation of R.A. 9358, the P46.4 B supplemental budget (to take effect 15 days after publication), the DBM has recently released the final computation of the Internal Revenue Allotment (IRA) of LGUs. The final figure adjusts the share of LGUs based on the P166.466 B total IRA.

The final computation sent to us via email shows the share of LGUs (including barangays) in Region VI amounting to P14.373 B, the third highest among the regions nationwide. Here's a synopsis of the computation: Negros Occ. has joined the billionaire's row and the only one in the region with a share of P1.057 B, at second place is Iloilo province with P805.849 M followed by Capiz, P431.309 M; Antique - P371.811 M; Aklan - P337.673 M; and Guimaras - P183.174 M. Among cities, Bacolod has the biggest share with P426.723 M. Kabankalan moves to second place at P386.638 M dislodging Iloilo which slid to third with a share of P359.427 M.

For municipalities, Cauayan in southern Negros tops the list with a share of P88.051 M followed by its northern counterpart, Calatrava at P 74.702 M and Hinigaran also in Negros Occ. at third spot formP59.351 M. Among 42 municipalities in Ioilo, Lambunao is on top with P56.029 M while Oton, the most populous town at second place with P51.720 M. In Aklan, the Ati-atihan country, the capital town of Kalibo has the biggest share with P49.378 M; Ibajay is far second at P39.901 M. In the Binirayan province of Antique, Sibalom (where one can find "rafflesia", the world's biggest flower) - ranks number one with P47.708 M; its neighbor, San Remigio is at second place with P43.026 M and San Jose, the capital town is surprisingly at third place at P40.146 M.

Moving on to Capiz, the sea food capital of the Philippines (guess what, I'm also doubling as a tourist promoter), Tapaz, a sometimes hard-to-reach town is numero uno with a share of P58.362 M and at far second is its neighbor, Jamindan with P47.538 M. In the oil-spilled province of Guimaras, Buenavista is on top among five municipalities with a share of P40.533 M, while the second biggest share goes to Jordan, the capital town for P33.668 M.

I won't dwell on the barangays as there are about 4,046 of them. The details of the computation will soon be posted at the regional office web site: www.dbmro6.org.

I almost forgot, with the passage of RA 9358, LGUs are assured of their final shares regardless of whether or not there is an approved GAA. Section 4 of the said law provides that the IRA is now treated as automatic appropriation. I'll discuss this on my subsequent post.

Expecting the expected, but how soon . . .

When do we get our IRA differentials? This is the stereo-type question I repeatedly receive from LGUs either on phone calls, physical contact, text messages or even on e-mails. Sounds like the waiting may soon be over. Reliable source - although not yet official (no Memo yet received from CO), points to the likelihood that 50% of the IRA differential of P 14.8 B, which is the amount appropriated in the recently approved P46-4 B supplemental budget - will be released in November following the usual 80%-20% scheme. The remaining 50% will be released in December. It looks like LGUs are heading for a windfall in the next two remaining months of the year. Hence, they should be able to finance gaps in service delivery; implement more infra projects; and grant those unimplemented employees' benefits.

For the ordinary employees the IRA windfall would mean implementation of the P1,ooo AdCom which should have taken effect January 1st, and perhaps, a bigger extra cash gift by year-end.

Just to assure that the programmed release of IRA differential is not a rumor, here are a few text messages I've received over the weekend: "gud AM Gov. supplemental budget, manner of release, 50% Nov. as ff. 80% - 1st week, 4th week 20%; remaining balance one tym release, n dec. FYI". Here's the response from CO: "Ur info r correct as to amt n sched of release adv merry xmas". Will keep you posted through this blog.

Big Business' "must-have" Resolutions . .

In response to World Bank's synthesis of the Philippine economy (my post of 10/19), the Philippine Business Council (PBC) will present to the President during the closing of the 32nd PBC annual meeting - three (3) sets of resolutions. PCCI President Donald Dee categorize the resolutions into "must have"; "nice to have" and "wish we could have".

The resolutions were focussed on infrastructure development, tax and reducing the cost of doing business. Under the "must haves", businessmen identified 20 priority concerns, mostly infrastructures. Let's dwell on this:

• transparency in procurement of infrastructure projects through open and competitive bidding (thought GPRA is already in place);
• on energy - reducing the cost of electricity by reducing EVAT on fuel from 12% to 5% and transmission cost by 30%; repeal of Electric Power Industry Reform Act;
  
• on airports - extending the "open sky policy" to other airports of the country, in the process, declaring airports like Subic-Clark, Laoag, Puerto Princesa, Davao, Cebu, Laguindingan and our own in Iloilo as open for international routes and as regional hubs;
• on seaports - privatization and modernization of North Harbor; fasttracking bidding of Batangas International port;
• on roads and highways - DPWH to enter into MOA with private proponents of toll road projects; resolution of road-right of way problems;
• on water - fasttracking of passage of bill strengthening the Water Resources Board;
• on agriculture - intensifying hybrid rice and corn program; giving preferential sugar tariff rates for producers and exporters;
• on taxation - retention of incentives to all export-oriented enterprises including income tax holidays, etc;
• on good governance - DOF to fast track implementation of the Lateral Attrition Law and streamlining of Customs Systems and procedures to facilitate trade; DTI to streamline procedures and reduce charges for business licenses.
  

There are several others that may warrant disclosure in this post but will reserve these next time. My fervent hope is for the national leadership to heed this business call. This is the only country we have. We live and die here - so let's go for it!

Are we heading for economic take-off?

World Bank says it's possible by 2010 . . but government should heed this prescription: "restore the country's international credibility by sending a strong policy signal" that will improve the climate for business and investments. Mr. von Armsberg, World Bank country representive urged the government to follow the rule of law, enforce contracts, pursue deregulation, and reduce transaction costs and red tape.

As it stands now, the Philippines is at the tail end (buntot) behind its ASEAN neighbors in attracting foreign direct investments (FDI). Of the $37.14 B FDI that went to Southeast Asia, last year, the Philippines garnered only a measly $1.13 B, Vietnam took $2 B, while Thailand and Malaysia $4 B each. The oftenly repeated litany of investment constraints attributing to this measly performance are: macroeconomic instability, corruption, poor electricity, high tax rates, uncertain regulatory policies, crime, and stringent labor laws.

To top it all, here's some mind-boggling yet real statistics: our average GDP annual growth is a little over 1% between 1966 to 2004, while the rest of East Asia was at nearly 6%. Our economic growth is fuelled mainly by OFW remittances and household consumption rather than by investment and productivity. We are Asia's second most active issuer of sovereign debt after Japan. Wow! "Blessed are the young for they shall inherit the national debt." We ranked number 83 in Human Development Index (HDI) with a score of .753. The World Competitiveness Yearbook ranks us 61st in the provision for basic infrastructures; 57th in Education; and 53rd in health services - out of 61 countries. Need to know more? The 2006 World Economic Forum report places the Philippines 77th in terms of competitiveness, while the International Finance Corporation put us 126th out of 175 countries in being business friendly. Singapore is No. 1, Malaysia and Thailand - 18th and 25th, respectively.

Let's not be carried away by negativism and desperation. Our consolation - we still retain the distinction as the texting capital of the world with an average of 1-B SMS a day. We have 28-M mobile phone subscribers, 96% of which use prepaid cards. Most recently, the Britain-based New Economic Foundation places us as the 17th "Happiest country" in the world.

An alarming reality!

The latest ADB-UN joint report on the 2006 Millennium Development Goals (MDG) progress in Asia and the Pacific showed that our dear old "Pinas" is miserably lagging behind other countries. The said report lumped the Philippines along with such third world countries as Bangladesh, Indonesia, Mongolia, Myanmar, Pakistan and Papua New Guinea as having failed to progress with respect to a number of MDG targets.

Specifically, the report disclosed that the Philippines is "regressing" in terms of reducing the number of underweight children, raising the proportion of primary pupils reaching Grade Five, and in targets for forest cover, carbon emissions and access to clean water in urban areas.

On the other hand, the report also revealed that the country "is on track to cutting the number of people living on $1 a day and increasing the net enrolment ratio in primary education. It is also expected to meet the goals on HIV prevalence and on proportion of population with access to an improved sanitation in urban and rural areas." Goals on the primary completion rate; ratio of girls to boys in primary, secondary and tertiary education, and the under-five and infant mortality rate, among others, have already been met.

The GMA administration seeks to reverse this regression. Just yesterday, October 16th, the President led the launching of the "Panata Laban sa Kahirapan" (Stand Against Poverty) which concretizes the country's determination to fight poverty to keep up with its commitment with the MDG goals. But this "show of force" is a mere lip service that will mean nothing unless it is translated into increased government spending for basic services like health and education. Statistics show that the Philippines is committing a small portion of its GDP for these basic services, way below the norms or standards prescribed by international funding institutions like the World Bank.

Grameen Bank: Economics that works at the grass roots level

Congratulations to Professor Muhammad Yunus of Bangladesh for winning the Nobel Peace prize. Yunus, an economics professor is the founder of Grameen Bank (GB). He set up the Bank in 1976 as a pilot project to provide access for poor Bangladeshis. It specializes in giving out collateral-free small loans to landless, rural people to help them become self-employed. Its credit policy is based mainly on mutual trust, accountability, participation and creativity.

As posted in the Bank's website: www.grameen-info.org/bank, GB has to date, 6.61 million borrowers, 97 percent of whom are women. With 2,226 branches, GB provides services in 71,371 villages, covering more than 100 percent of the total villages in Bangladesh. Not only that, GB's operational concept has since been copied in more than 40 countries - including the Philippines. Iloilo-based "Taytay sa Kauswagan" is patterned after GB.

Prof. Yunus' microcredit program presented the world with an effective alternative to alleviate poverty - a novel economic theory that "works at the grass roots level", and is now a regular feature of economic textbooks used in many universities. Yunus was likewise conferred a similar award in 1984, by the Ramon Magsaysay Award Foundation, commonly referred to as Asia's Nobel.

Fulfilling its commitment to the Filipino people . .

After almost two weeks of marathon plenary debates, the House of Representatives has approved on third and final reading the Php1.126 trillion national budget for 2007. The money measure was done at 4:43 am, Friday, October the 13th - sounds quite a bad omen the way we Filipinos believe (hope not!) with an affirmative vote of 198, seven against and no abstention.

"Approving the spending measure is a fulfillment of our contract with our constituents who have sent us here", this was Speaker de Venecia's declaratory note shortly after the approval of the budget.

The top five departments which stand to receive the largest slice of the budget are:

1. Department of Education - P132.9-billion
2. Department of Public Works and Highways - P73.6-billion
3. Department of Interior and Local Government - P51.1-billion
4. Department of National Defense - P49.5-billion
5. Department of Agriculture, inclusive of its Agricultural and Fisheries Modernization Program component - P18.5-billion

The House-approved budget will then go to the Senate to undergo the same process. As budget t practitioners who are involved in the releases and implementation of the budget, it is our ardent hope that the 2007 budget will not suffer the same fate as that of the 2006.

Goodbye Nang Alma . . .

DBM RO 6 staff and the LBOs of Region VI mourn the demise of Mrs. Alma Lee, retired Municipal Budget of Duenas, Iloilo. She passed away last Monday, October 9th of a lingering illness at age 68. Her remains lie in state at Funeraria Somo, Iloilo City. She will be brought to her hometown in Duenas, Iloilo on Friday, October 13th. Interment will be on Sunday, October 15th.

Nang Alma as she is fondly called was a mother figure to us - always there when you need her, very thoughtful and generous - always making sure that you had your lunch or merienda whenever she's around. She will surely be missed! We're pretty sure that the generations to come while praying over her grave, will grant her tears of love and gratitude and not of better reproach. To the Lee Family, our sincere condolences!

How VAT helped the Philippine economy?

Despite the much publicized opposition, rallies and invectives hurled against the implementation of the expanded Value Added Tax (from 10% to 12%), here's some positive and encouraging observations from the CIA factbook: "the implementation of the expanded Value Added Tax (VAT) in November 2005 boosted confidence in the government's fiscal capacity and helped to strengthen the peso, which gained 5.7 percent year-on-year, making it East Asia's best performing currency in 2005. Investors and credit rating institutions will continue to look for effective implementation of the new VAT and continued improvement in the government's overall fiscal capacity in the coming year".

A Welcome Note

This Blog is intended for public servants particularly those involved in fiscal administration - revenue regeneration, expenditure allocation, credit financing, accounting and auditing, and procurement. Feel free to contribute your posts here.