"We should not limit ourselves to the available budget."
"We should not limit ourselves to the available budget."
As we enter the “ber” months, the busiest season of the year has come for our legislators. The annual deliberation on the national budget has always been a tedious task. However, nothing can be more difficult as tackling this year’s general appropriations. As we all know, the COVID-19 pandemic arrested national development and revenue generation from taxes and customs. Programs and projects with appropriated funds have been discontinued or suspended to yield to COVID-19 measures such as increased operational support to the health sector, social amelioration program for the poor and displaced workers, and assistance to industries affected by the pandemic. As limited as we already are with our current public spending, we are more restricted with the smaller funds that we have.
When I was in Congress, I often said that we should not limit ourselves to the available budget. We should take into consideration the time and opportunities lost when we force ourselves to work on the restricted budget allocated for our programs. For instance, in agriculture, the outputs largely depend on the production capacity of our farmers, fisherfolk, and agricultural entrepreneurs. While several factors come into play when we talk of output and productivity, the basic factor to consider, of course, is the budgetary input. The programs and projects of the Department of Agriculture have always been geared toward improving production and resiliency of the agriculture industry. Hence, we can safely say that the success of these projects and the corresponding growth rates recorded by our agriculture industry primarily rely on the available funding. Now, when the budgetary allocation of agriculture is decreased to make way for other priority programs of the government, it effectively restrains the potential growth that may be achieved by the industry in the following year.
Our budget is understandably limited. Considering this, what we can do is allow inflow of additional budget from external sources such as loans. Reports show that high-income countries such as Japan, Italy, the United States, and Singapore also have the highest national debt-to-GDP ratio in the world. These countries entered into loans for various reasons, but mainly to supplement their fiscal capacity. These developed nations are expanding and boosting their outputs on their local industries because they are maximizing their potential. Different analyses and discussions show that the foreign borrowings do not alone determine the country’s financial risk levels. There are instances where borrowing is cheaper and less adverse than imposing outright increased taxation, especially in a situation where taxation would be more burdensome to consumers and when the amount borrowed shall be used in economic stimulus measures to help large and small businesses, ailing industries, and the unemployed population.
It all boils down on where and how you invest the money—whether you raise money from loans to capitalize on quality education, infrastructure, health, public sector programs, or industry innovation. We should not be afraid to borrow to kick-start increased productivity, expansion, and development of our economic drivers for medium- and long-term growth, provided we have mechanisms to ensure sound borrowing, prudent and policy-based spending, and strict monitoring.
I hope this reaches our national government. It is high time that we looked at our financial situation this way to improve on our strengths as a nation. As per our Moody’s credit rating in July, we remained to have a stable outlook, considering our strong fiscal position in the past years. Our current debt-to-GDP ratio is, reportedly as of June 2020, at 48.1 percent, which indicates our capability to pay our debts. This is a favorable opportunity to expand our capabilities, boost productivity and revenue generation which will, in turn, also enhance debt payment in the future.
