Politics

Budget spending raises objections

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la prensa

Martín Torrijos0

The government's 2009 budget, which the National Assembly approved on Thursday, is 57.6 percent higher than the spending plan put forth by President Martín Torrijos in 2005, his first year in office.

That year, government spending increased only 3.1 percent from the previous year, and the budget totaled $6.1 billion. But since that first year if fiscal austerity, the government's spending has increased dramatically, fueled by increasing revenues from a variety of sectors.

Next year, the government expects to collect $1.4 billion in direct taxes, almost three times the amount collected in 2005. Opposition members have pointed out that even though revenue has increased, the government has still continued to run budget deficits, mainly because costs have continued to rise at the same pace as revenue.

Minister of Economy and Finances Héctor Alexander has justified the increases in state benefits by arguing that, in the midst of an inflationary spiral, the government was forced to take emergency measures to compensate for the loss of purchasing power for government employees and retirees.

The minister also emphasized that, although the government's personnel costs have grown, they have actually decreased when compared as a percentage of total revenue. “In 2004, 42 percent of income was spent on payroll, in 2007 it dropped to 27 percent, and in 2009 it will be even lower,” he said. Alexander makes the same argument when it comes to the public debt, which has gone up nominally since September 2004, but which has decreased as compared to the country's gross domestic product (GDP.) In 2004, the debt was 71 percent of the GDP, but now it is 47 percent.

But that figure rings hollow with the opposition.

“We do not believe that figure to be indicative of the responsible management of public finances,” several opposition members stated. “The ratio of debt to GDP has fallen only because the GDP has risen sharply, not because the debt has decreased.”

The opposition report warns of excesses in budget areas that are not necessary, especially considering that the economy will slow next year because of the global economic crisis and the recession that has afflicted many of the world's major economies.

They suggested reducing costs such as travel allowances, consultancies, rental cars and the refurbishment of the president's residence.

The Assembly has not proposed any such cuts, and even added spending to Torrijos's budget, increasing the allotment for the judiciary.