Aquino finds national budget 'depleted'

The Philippine president, Benigno Aquino, makes his first 'state of the nation' address to an audience that expects much.

epa02260181 Filipino workers put up a logo of the House of Representatives in Quezon City, east of Manila, Philippines 25 July 2010. President Benigno Aquino III, son of the late president Corazon Aquino, is set to deliver on 26 July his first State of the Nation Address (SONA) to the country at the House of Representatives at the opening of the 15th Congress less than a month since taking his oath of office.  EPA/ROLEX DELA PENA *** Local Caption ***  02260181.jpg
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MANILA // The Philippine president, Benigno Aquino, will deliver his first state of the nation address today to a country struggling in a weak economy but full of expectations for a better future. Just three weeks after he was sworn in as president of this nation of 92 million he is riding a wave of popularity with a approval rating of 88 per cent, according to a recent survey by Social Weather Stations, a Manila-based social survey institute.

His predecessor, Gloria Macapagal Arroyo, who is now a congresswoman, will be noticeably absent from the joint session of both houses for the address in which Mr Aquino is expected to highlight the shortcomings during her nine years as president. Mrs Arroyo is in Hong Kong with her husband, who is there to receive a check-up for a heart condition. Mr Aquino's advisers were still working on the draft of the 30- to 45-minute speech yesterday with some wanting the president to focus on the next six years while others on what he is going to do now to fix the country's problems.

The television network ABS-CBN yesterday reported the findings of a survey of what Filipinos wanted to hear in today's address. Most said they want the president to talk about improving job security, ending corruption and enhancing health and education services. Mr Aquino told journalists on Friday that the national budget his administration had inherited from the Mrs Arroyo was virtually "depleted".

"I'm not comfortable with what is left," he said. The Arroyo administration had budgeted 1.54 trillion pesos (Dh119 billion) in spending for the 2010-2011 financial year but less than 500bn pesos are left. Of the 500bn pesos that are left, 300bn pesos have already been allocated, he said. "The work ahead will not be easy over the next few years. Nearly all the funds intended for use over the next few months have been stolen," he said.

Writing in the BusinessWorld newspaper on Wednesday, Ben Diokno, an economist with the University of the Philippines, said: "It is easier to win an election than to run a government. "President Aquino probably realises by now that with the state the country's finances are in he can't deliver on many of the promises he made during the campaign. And the Filipino people who voted him president are waiting with great anticipation the choices he is going to take and his vision for the Philippines, the people and its economy over the next six years."

During the campaign Mr Aquino promised to modernise the education system and add an extra two years on the basic education programme, taking it from 10 to 12 years in line with most Asian countries. He promised to provide health insurance for every Filipino, modernise the country's decrepit armed forces, fight corruption and rebuild the crumbling infrastructure. All big-ticket items that left many economists asking: where is the money going to come from?

A team from the International Monetary Fund (IMF) visited the Philippines this month and advised the government to focus on getting its "fiscal house in order". The IMF's assistant director in the Asia Pacific region, Vivek Arora, said during a press conference last week that the government "needs to strengthen its tax collection in order to resuscitate its revenues. In addition it will need to broaden the tax base and reform excise taxes".

One of Mr Aquino's promises during the election was "no new taxes". "President Aquino has to take bold measures. He has to put the country's fiscal house in order, mend a divided nation into one, and restore the people's trust in government and hope in the country's future," Mr Diokno wrote. He said the Aquino administration also faces the double-edged sword of poverty (more than 50 per cent of the population lives on less than a dollar a day) and joblessness in which one in three workers are either unemployed or underemployed.

A former foreign diplomat and long-term resident of the Philippines, who spoke on condition of anonymity, said: "The president promised a lot during the election. Some 42 per cent of the population voted for him and he has a trust rating in excess of 80 per cent. Tomorrow the nation will be waiting to hear exactly how he is going to deliver those promises. But at the same time, the country has far more serious problems than his predecessor ever shared with the public.

"Power is just one that comes to mind. There has been no new investment in power for years. Many parts of the country are experiencing regular blackouts for hours. There are high levels of poverty, and there have been incidents of wholesale theft by people in power." Lloydon Bautista, a political economy professor at Manila's University of Asia and the Pacific, was quoted recently saying that Mr Aquino's popularity or trust is very high now but "he has three months to show how he will fight corruption and demonstrate how he can deliver basic services ? if not his popularity will fall".

"These are issues that affect the public and he has to confront them," Mr Bautista said.