Press Release
December 4, 2006

Palace told : Ditch lower deficit, spend more for storm rehab
Whats use of raves from Standard and Poors if relief will get bad reviews from the survivors and the poor - Recto

Government was to told that it would be heartless for it to scrimp on Reming relief just so it could meet a lower deficit target for the year.

Sen. Ralph Recto urged President Arroyo to ditch her economic teams P105 billion to P115 billion deficit target for 2006 and settle for a P120 billion deficit, a move that would free at least P5 billion for rehabilitation of areas hit by three recent typhoons.

In this time of national grief, I dont think we should please the likes of Moodys at the expense of the people of Mayon, Recto said, referring to the credit rating agency whose sought-after recommendation affect pricing of government bonds.

The bragging rights we would like to have is the one that can be directed at our people, and not to an analyst tracking our debt inside a cubicle in a building on Wall Street, he said.

What cannot be disputed is that government has money to spare, Recto said, which he credited to the combination of new taxes and no budget, referring to the scuttling of the 2006 budget which forced the government to adhere to a lower spending ceiling.

In interest payments alone, we were supposed to pay P239 billion in the first eight months, but we only shelled out P221.4 billion, so there was savings of about P17 billion, and thats only for the period up to August, Recto pointed out.

He said Pres. Arroyo's economic managers themselves admitted that government has a spending room of P237 billion in the last two months of the year, but hinted they wont spend all of this so government can post a deficit lower than the programmed P125 billion.

Whats the use of getting raves from Standard and Poors when our relief efforts will get bad reviews from the survivors and the poor? he said, again referring to another credit ratings provider.

If the government is serious in spending more in the last two months of the year to make up for its underspending in the first 10 months, then it should pour money in areas that need it most those that Milenyo, Paeng and Reming had hit, he said.

Recto said funds spent for repairing public works in storm-damaged areas should not be seen as savings foregone but as an investment for future fiscal stability because if you dont help the people back on their feet now, they wont be able to pay their taxes in the future.

After all, what will be spent in Bicol is a pittance compared to what the region pays in taxes, he said.

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