By Ben O. de Vera, Christine O. Avendaño, Marlon Ramos, August 16 2018; Philippine Daily Inquirer

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President Rodrigo Duterte has stepped in to break a deadlock between the Department of Budget and Management (DBM) and the House of Representatives on his P3.76-trillion proposed cash-based budget for 2019.

House Majority Leader Rolando Andaya Jr. said on Wednesday that the President met with him and Speaker Gloria Macapagal-Arroyo on Tuesday night for a discussion of the congressmen’s concerns about the cash-based system adopted by the DBM in drawing up next year’s budget.

Preferring the old obligation-based system, the House suspended hearings on the 2019 budget last week to give the executive time to make “necessary changes” to the President’s proposed spending program.

Budget Secretary Benjamin Diokno, who on Tuesday declared the cash-based system nonnegotiable, was not in the meeting at Malacañang.

‘Compromise’ reached

Diokno told Inquirer reporters and editors on Tuesday morning that the executive branch was ready for a reenacted 2018 budget if the House would insist on the obligation-based system, which would increase the proposed 2019 budget and expand the programmed 3.2-percent deficit.

“There has been a compromise reached with the DBM, which I personally suggested to [Diokno] and at this point in time, it seems that that would happen,” Andaya told reporters.

He said the President agreed that state agencies may be given up to 18 months to use their funds instead of the one-year limit in the DBM’s proposal.

The President, he said, also promised to reinstate billions of pesos slashed from the budgets of the health and education sectors.

Presidential spokesperson Harry Roque confirmed the meeting between the President and the House leaders, saying the President had told the lawmakers that he would talk to Diokno and Finance Secretary Carlos Dominguez III to see if a compromise could be reached to avoid a reenacted budget.

Deficit not negotiable

“[H]e said he [would] meet with Dominguez and Diokno [on Wednesday afternoon] to see if there could be a compromise between them and the congressmen,” Roque said in a radio interview.

At a news conference on Wednesday, Diokno reiterated that a bigger budget deficit, which the House wanted, would lead to interest rate hikes and put the Philippines’ investment grade credit ratings at risk.

“We cannot agree to higher spending without them (legislators) identifying the source of funding. So the [programmed] 3.2-percent deficit, if they want, for example, to increase it to 4 percent, that’s sending a signal to the international community—our [credit rating] may be downgraded, which means higher interest rates for everybody,” Diokno said.

“And that’s not good for the economy. We’re very careful. That 3.2-percent [deficit] is not negotiable,” he added.

For 2019, the administration is aiming for a fiscal deficit of P624.4 billion, equivalent to 3.2 percent of gross domestic product, as the administration wants to accelerate its ambitious “Build, Build, Build” infrastructure program.

Finance Secretary Dominguez, however, told a news forum on Wednesday that the executive branch would “continue to listen to the concerns of the House.”

Malacañang has no problem with the Senate, which has decided to back the DBM on cash-based budgeting system.