Press Release
March 31, 2009

P67-B DEFICIT NOT DUE TO PUMP-PRIMING EXPENDITURES
CHIZ: GOV'T STIMULUS PLAN A MIRAGE

Opposition Senator Chiz Escudero yesterday described the government's P330-billion stimulus plan as nothing more than a "mirage," as the country's budget deficit for the first two months of the year stood at P67 billion.

"The stimulus plan has not caused economic expansion except perhaps to shoot the deficit through the roof. What cannot be denied is that stimulus spending is done in spurts while deficit spending has surged," Escudero said.

The senator issued the statement to dispute the government's explanation that the deficit swelled to P67 billion because of "increased pump-priming expenditures" under the Economic Resiliency Plan (ERP).

He said that it was not true that the 60-day deficit ballooned due to accelerated spending, adding that the government exceeded its programmed expenditures for January and February by a mere P1.6 billion, or from a little over P226 billion to P228 billion.

Less the P1.6 billion, Escudero said the deficit is attributable to revenue shortfalls.

"So this leads to one indisputable conclusion: the much vaunted pump-priming is a mirage, a Powerpoint illusion. The government did not overspend, it undercollected," he said.

Escudero said that granted that P226 billion has been released to agencies, only a fraction of this is for capital outlays.

"Of the funds earmarked for capital outlays, only a miniscule portion has been sank into the ground because disbursement should not be equated with actual spending as there is yawning time gap between the two," he explained.

"But the best argument why the spin that the P67 billion was due to expenditure front-loading does not fly, lies on the ERP itself. Many economists including an Ateneo teacher's pet himself, have said that only a sixth of the P330-billion package can be considered new spending," Escudero said.

He said most of these new spending are off-budget items, like the hike in Philhealth benefits.

"If it were a dough; the ERP was lathered with so much yeast that the result is a bread made fluffy by air," Escudero said.

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