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By Chino S. Leyco, Reporter
The government’s major priority projects are
under threat of being shelved this year, as authorities divert money
to efforts averting a rice crisis, a former Cabinet official said.
“In the event of [a] budget crunch, usually
items in the budget that are sacrificed are the projects, [because]
they can be postponed,” former Budget Secretary Benjamin Diokno
said late Thursday during an interview on the television cable
channel ANC.
The government has some P113 billion allotted
for capital outlays this year.
To lessen the government’s losses on rice,
Diokno said the state-run National Food Authority (NFA) should
increase its current rice price of P18.25 per kilo, adding that the
issue is a long-term problem requiring a long-term solution.
“This is not a problem that can be solved in
the next two, three planting seasons. As I said, it is structural.
The supply side has changed. There are more people to feed, and
price of inputs has simply gone up,” he explained.
“The next two years will be a bumpy ride,”
Diokno added.
He warned that because people realized that the
government cannot sustain the P18.25 price for its subsidized rice,
they are queuing up everyday to stock up on the staple grain. Diokno
added that the Agriculture department’s decision to raise the
limit of how much a person can buy to five kilos from three kilos
will “speed up” the depletion of the NFA’s supply.
Increasing the price of the
government-subsidized rice will signal to farmers that they should
plant more the next planting season and should encourage traders to
release their stocks, Diokno said.
Based on the current world price of rice, he
estimates the government will lose about P40 billion to P60 billion
to subsidies, or about 1.3 percent of the economy as measured by the
gross domestic product (GDP). GDP is the total value of all final
goods and services produced in the country within a year.
With the crisis, it will be more difficult for
the Finance department to balance the budget this year, Diokno said.
That’s because government spending increases, and worse, the
Bureaus of Internal Revenue and of Customs are likely to miss their
collection targets because of the global economic slowdown.
The two bureaus fell short of their collection
targets last year, but government was able to offset the shortfall
by selling state assets, earning more than P90 billion.
Diokno added that government should not worry
about a possible credit downgrade by the international rating
agencies. They seem confident about the Philippines, as evidenced by
the completion of the government’s programmed $500-million
international bond offering in February 2008, he said.
“I think [the downgrade] should be the last
worry of the government at this point.”
“I think the crisis in our meal is much worse
that any possible downgrade or failure to upgrade. Their
[government’s] first priority is to secure the required rice to
fill up the gap,” he said.
Every year, the population swells by two
million, Diokno said. Having more mouths to feed coupled with a
slow-growing agricultural output “is a formula for disaster.
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