IBON: Ayuda budgets slashed amid false claims of recovery

August 27, 2022

by IBON Foundation

Research group IBON hit huge budget cuts in ayuda which the Marcos Jr administration is justifying by claiming full recovery. The group said that the 2023 proposed national budget defunds social protection even if millions still suffer the aftershocks of the Duterte government’s harsh pandemic lockdowns and as economic rebound fades. A well-designed and substantially funded social protection can ease this suffering and also stimulate economic growth, said IBON.

Finance secretary Benjamin Diokno said that “ayuda in relation to the pandemic is a waste of funds” and should be discontinued because the economy has “fully recovered”. IBON said that Diokno’s statement means to justify the insensitive Php49.1 billion or 8.7% cut in social protection in the Marcos Jr administration’s proposed 2023 national government budget. The social protection budget falls from Php561.3 billion in 2022 to Php512.3 billion in 2023, both of which are far smaller than the Php650.8 billion in 2020 at the height of lockdowns.

The biggest cuts are in the social protection budgets for families and children (cut by Php20.3 billion or 45.9%), unemployment (Php10.8 billion, 33.9%), housing (Php2.6 billion, 56.2%), and social protection not elsewhere classified (Php24.1 billion, 9%). There were smaller cuts in the budgets for survivors (Php401.2 million) and research and development (Php41.6 million).

These huge cuts were not off-set by minor increases in other items – conditional cash transfers (increased by Php7.9 billion or 7.4%), conflict-affected areas (Php913.7 million, 34.4%), old age (Php236.4 million, 0.9%), socially excluded (Php55.2 million), and sickness and disability (Php6.6 million).

Among the agencies seeing budget cuts are the National Commission of Senior Citizens (by 52.3%) and the anti-poverty agencies National Anti-Poverty Commission (by 17.2%) and the Presidential Commission for the Urban Poor (by 3.8%).

IBON said slashing funds for social protection despite the unresolved pandemic and economic crisis shows the Marcos Jr administration’s insensitivity to millions of Filipinos in distress and its deliberate intent to ignore the country’s glaring problems. The group stressed that the economic managers’ claim of full recovery is empty, citing the slowing economy and collapsed livelihoods of millions of ordinary Filipinos.

In the second quarter of 2022, growth in gross domestic product (GDP) slowed to 7.4% year-on-year and even contracted by 0.1% quarter-to-quarter which indicates the rebound fading and recovery weakening. Household spending in particular contracted by 2.7%, quarter-to-quarter, repressed by the country’s poor jobs situation, falling incomes and rising poverty. The central bank also reported seven out of 10 Filipino households, or some 18.8 million, without savings during this period.

Philippine unemployment is the worst in Southeast Asia at 6% and job informality is rampant at 42.6 percent. More poor Filipinos were recorded in 2021. Inflation was high at 6.4% in July and will stay high in the coming months. The National Capital Region (NCR) minimum wage is the highest in the country but still merely 51.5% of IBON’s estimated family living wage of Php1,107. These highlight the urgency of expanding, not slashing, social protection, IBON said.

The group reiterated its proposal for a Php1.5-trillion expansionary fiscal policy to uplift millions of Filipino families, arrest economic distress and spur economic recovery. This includes emergency cash subsidies for 18 million poor and low-income families, immediate wage relief for workers, support for local producers and small businesses, financial assistance for informal earners health and education support, and funding cash-for-work programs.

IBON said that well-designed ayuda that will start to improve the situation of millions of Filipinos is both urgent and necessary and is not a waste of funds as the Marcos Jr administration claims. ###