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.