Second Meeting of the
Legislative-Executive Development Advisory Council
10:20 a.m. - 1:00 p.m., 08 November 1999
State Dining Room, Malacañan

 SUMMARY OF DISCUSSIONS AND AGREEMENTS

 Presiding Officer

             With the Honorable Executive Secretary Ronaldo Zamora presiding, the LEDAC meet­ing was called to order at 10:20 a.m. Director General Felipe Medalla led the opening prayer.

 Attendance

 The following officials attended the meeting:

 A.        Executive Branch

  1.                  Her Excellency, Vice-President Gloria Macapagal Arroyo

2.                  Executive Secretary Ronaldo B. Zamora (OES)

3.         Secretary Felipe M. Medalla (NEDA)

4.         Secretary Benjamin E. Diokno (DBM)

5.         Secretary Edgardo S. Espiritu (DOF)

6.         Secretary Jose T. Pardo (DTI)

7.         Secretary Orlando S. Mercado (DND)

8.         Secretary Leonora V. De Jesus (PMS)

9.         Secretary Jose Jaime C. Policarpio (PLLO)

10.       Secretary Edgardo J. Angara (DA)

11.       Secretary Rodolfo T. Reyes (OPS)    

12.       Undersecretary Mario Roño (DENR)

13.       Assistant Secretary Renato P. Santiago (DILG)

B.         Senate

  14.              Senate President Pro Tempore John R. Osmeña

15.              Senate Majority Floorleader Franklin M. Drilon

16.              Senate Minority Floorleader Teofisto T. Guingona

17.              Senator Francisco S. Tatad

18.              Senator Juan Ponce-Enrile

19.              Senator Anna Dominique Coseteng

20.              Senator Loren Legarda Leviste

 C.                 House of Representatives

   21.              Speaker Manuel B. Villar

22.              Deputy Speaker Daisy Avance-Fuentes

23.              Deputy Speaker Eduardo R. Gullas

24.              Deputy Speaker Alfredo E. Abueg

25.              House Majority Floor Leader Manuel A. Roxas III

26.              House Minority Floor Leader Feliciano R. Belmonte, Jr.

27.              Congressman Gilberto M. Duavit

28.              Congressman Ralph G. Recto

 D.                 Local Government Units

 29.       Executive Director Sandra T. Paredes (League of Provinces)

 E.         Other Officials

30.       Undersecretary Demetrio L. Ignacio (OP-PMS)

31.       Undersecretary Rodrigo P. Castelo (DOF)

32.       Dep. Dir.-Gen. Raphael Perpetuo M. Lotilla (NEDA)

33.       Undersecretary Salvacion Z. Perez (PLLO)

 34.       Assistant Secretary Laura Pascua (DBM)

 35.       Director General Romulo L. Neri (CPBO)

 36.       Deputy Director-General Rodolfo V. Vicera (CPBO)

 37.       Director Ronald R. Golding (Senate PSG)

 38.       Director Irah Ruth B. Borinaga (Senate PSG)

 39.       Director Bernardino E. Sayo (PLLO)

 40.       Director Margarita R. Songco (NEDA)

 41.       Director Victoria V. Quimbo (NEDA)

 42.       Director Nora Oliveros (DBM)

 43.       Director Rogelio Ormilon (Senate)

 44.       Director Antonio De Guzman, Jr. (Senate)

 45.       OIC.  Scholastica D. Cororaton (NEDA)

 46.       HEA Victor Emmanuel S. Dato (NEDA)

 47.       HEA Nelson A. Victorino (PLLO)

F.         NEDA/LEDAC Secretariat

                    48.              Director Eugenio R. B. Inocentes III

49.              Mr. Aureo P. Castro

50.              Mr. Archimedes C. Lazaro

51.              Mr. Jose Ma. J. Palabrica

52.              Mr. Ricardo R. Sunico

53.              Ms. Myrna N. Cacpal

54.              Ms. Marlene M. Vegafria

55.              Atty. Anthony Achilles L. Mandap

56.              Mr. Leody Barcelon

57.              Mr. Arnel C. Salva

58.              Ms. Eileen Caliente

59.              Mr Ildefonso P. Santillan, Jr.

 G.        PLLO

                60.       Ms. Evelyn Ruiz

                61.       Ms. Irene Afortunado

                62.       Mr. Melchizedek Manalo

 H.                 PMS

 63.        Mr. Severino Del Rosario

 64.        Mr. Rudy Funclara

 65.        Mr. Rey Mira

 I.          Other Staffs

                66.       Atty.Dalisay San Jose (Off. of  Sen. Pres.)

                67.       Atty Raul L. Lambino (Off. of Sen. Legarda) 

                68.       Ms. Susan T. Bulan (CPBO)

                69.       Ms. Jean Encinas Franco (Senate PSG)

                70.       Mr. Jose L. Correa (Palace)

                71.       Mr. Wilmor Panambo (DBM) 

                72.       Mr. Renato Apostol (DBM)

                73.       Ms. Ma. Lucrecia R. Mir (Off. of Sen. Legarda)

Agenda

             The meeting had the following agenda:

     I.                    FOR ADOPTION/APPROVAL

 A.        Highlights of the Previous Meeting 

II.                 FOR INFORMATION 

                                    A.        Angat Pinoy 2004: The Medium-Term Philippine Development Plan                       

                        III.       FOR DISCUSSION 

A.         Status and Updates on the LEDAC Common Legislative Agenda         

B.         Outlook on the Proposed 2000 Budget 

                        III.       OTHER MATTERS  

                        IV.       DOCUMENTS DISTRIBUTED DURING THE MEETING 

                                   A.         Highlights of the First LEDAC meeting

B.                 Executive Summary of the Angat Pinoy 2004: Medium-Term Philippine Development Plan, 1999-2004

C.                 Summary Update of the LEDAC Common Legislative Agenda

D.                 Outlook of the 2000 Budget

E.                  The President’s Legislative Agenda of the Second State of the Nation Address 

I.          CALL TO ORDER 

1.1              After calling to order the Second LEDAC meeting under the Estrada Administration, Executive Secretary Ronaldo B. Zamora conveyed the President’s apologies to the Council for his absence due to ill health. The President did express his wish for the meeting to proceed in his absence. Secretary Zamora then requested the NEDA Director-General Felipe Medalla to lead the opening  prayer. 

1.2              Secretary Zamora read the President’s welcoming address: 

“This meeting of the LEDAC comes at a very important time in our country’s history.  In the previous LEDAC meeting, I declared war on poverty. It has been nine months since that meeting and the war rages on. The fight will be long and hard. As I see your faces in this hall, I am encouraged by your presence and support.  

The LEDAC provides an opportunity for the members of the Legislative and Executive branches of government to meet and find common ground for the sustained development of the nation and the betterment of our people in our continuing war against poverty. I hope that this meeting will bolster our collective commitment to develop our people’s lives and to empower our them.” 

1.3       Secretary Zamora also called the Council’s attention to the following bills which the Executive branch urgently need to provide support its’ pro-poor and pro-market programs as well as to generate resources for government:  

1.      Power Sector Reform Bill;

2.      Security Regulations Enforcement BILL;

3.      Amendment to the General Banking Act;

4.      Rationalization of Fiscal Incentives Bill; and,

5.      Retail Trade Liberalization Bill. 

II.                 ADOPTION OF THE HIGHLIGHTS OF THE PREVIOUS MEETING. 

2.1      The first order of business was the adoption of the highlights of the First LEDAC meeting. Secretary Zamora asked the body if there were comments or for a motion to adopt the minutes. Secretary Medalla moved for the adoption of the minutes. There being no objections, the minutes of the First LEDAC meeting were adopted by the body. 

III.       FOR INFORMATION 

3.0                   Angat Pinoy 2004 the Medium-Term Philippine Development Plan, 1999-2004 

3.1       Secretary Medalla prefaced the video presentation by explaining that the video is a thirteen minute documentary which gives a broad overview of the pro-poor pro-market development strategies of the Plan which are expected to lead to sustained development growth with equity. 

3.2              After the video presentation, Secretary Medalla informed the Council that the MTPDP is a very straightforward plan which focuses on a basic broad based development philosophy. To achieve broad-based growth, public spending would focus on basic infrastructure and social services. If this is sustained, poverty would be greatly reduced by the end of the President’s term. He also noted that the two (2) previous plans were not endorsed by Congress. He stressed that the executive branch needs congressional support for the plan or its basic philosophy and priorities. 

3.3              Representative Gullas, Deputy Speaker of the House, suggested that rural electrification be emphasized as a development strategy. Specifically, he highlighted the synergy between rural electrification and education, e.g. energized public schools, could generate rural-based development and growth.. 

3.4              Secretary Medalla stated that Representative Gullas’ suggestion is consistent with the MTPDP and may be considered in the Power Development Program of the Department of Energy (DOE) 

3.5              Representative Gullas also suggested that the President consider to be more visible in his support for MTPDP. He appreciates, though, that the President had mentioned his support for the MTPDP in his television show and in statements to the press. He suggested that the President’s support be further sustained to show his clear support for the MTPDP. 

IV.       For Discussion 

4.0       Status and Updates on the LEDAC Common Legislative Agenda 

4.1              Secretary Policarpio, Head of the Presidential Legislative Liaison Office (PLLO), presented the policies and directions included in the 1999 State of the Nation Address  (SONA) and results during the recess of Congress. 

Measures that have Completed the Legislative Process 

(a)    Concurrence to the General Amnesty Proclamation – Presented to the President. 

(b)   Postponement of the ARMM Elections – Enacted into law as RAs 8746 and 8753.

(c)    Amendment to the Special Economic Zones Act -   Enacted into Law as RA 8748.

(d)   Clean Air Act  - Enacted into law as RA 8749.

(e)    Mandatory use of Safety Belts Act – Enacted into law as RA 8750.

(f)     Countervailing Duties (Domestic Industry Protection Act) - Enacted into Law as RA 8751.

(g)    Amendments to Anti-Dumping Act  - Enacted into Law as RA 8752.

(h)    Incentives to MNCs Regional Headquarters – Presented to the President.

Measures that are Pending in Plenary Session

(i)      Devolution of the PNP to LGUs Bill  In the House of Representatives - HB 6888 (CR 211) For Second reading the House.  In the Senate - Approved on Third reading by the Senate. Congressmen who were formerly local government officials are opposing the bill.

(j)     Securities Regulation Enforcement Bill  In the House of Representatives, HB  4015 (CR 401) Second reading (Period of Sponsorship). In the Senate, Approved on Third reading in the Senate

(k)    Amendments to the General Banking Act – In the House of Representatives, HB 6814 (CR 206) Second Reading (period of Interpellation). In the Senate, SB 1519 (CR 29) Second reading (period of Interpellation)

(l)      Power Sector Reform Bill – In the House of Representatives, HB 4579 (Omnibus Power sector Reform Bill) in Second reading (pending period of Sponsorship). In the Senate, Approved on Third Reading: SB 1620 (CR 60) (Transmission), Approved on Second Reading: SB 1621 (CR 61) (DOE), On Second Reading (Period of Sponsorship):SB 1622 (CR 62) (ERB). It was noted that the difficulties are expected to arise in the Bicameral Conference due to differences in legislation, i.e. House Omnibus Bill versus Senate Multiple Bills.

(m)     Anti Racketeering Bill (ERAPS) – In the House of Representatives, HB 5216 (CR 22) on Second reading (Period of Interpellation), In the Senate, 3 bills pending in Committee (SB Nos. 1323, 133, 458)  

(n)    Amendment of the 1954 Retail Trade Act – In the House of Representatives, HB 7602 ( CR 314) For Second Reading . In the Senate, SB 153 ( CR41)  Second Reading (Period of Interpellation)

Measures that are Pending in Committee

(o)   Pre-Need Plans Code - Both Senate and House versions are pending at the Committee-level. Voluminous documentary requirements for codification are constraining quick Committee work. 

(p)   Amendment to the Central Bank Act - Both Senate and House versions are pending at the Committee-level. 3 contentious issues have been identified, to wit: BSP tax exempt status,BSP exemption from the Salary Standardization Law, Exemption of the BSP Governor from the Confirmation process. 

CLA Statistical Summary

(as of 05 November 1999) 

Enacted into Law       ……………….. 7

Remaining for Processing   …………. 9 

 4.2              In addition, Secretary Policarpio informed the Council that the President has certified a new anti-trust bill which Senator Ponce-Enrile filed in the Senate. 

4.3              To supplement Secretary Policarpio’s report, Senator Drilon informed the body that the Senate plans to prioritize its focus on three (3) bills non-budget as it needs to focus on Budget deliberations starting December 1999. The Senate would have only thirteen session days for regular legislation prior to taking up the budget. The three (3) bills are as follows : (1) General Banking Act, (2) ERB Charter; and  (3) Amendment of the Retail Trade Act. All the bills are in Third Reading of Interpellation stage. These bills would shortly be in the period of amendments. Senator Drilon, however, could not predict how soon these measures  would be passed although the Senate plans to vote on these measures by the end of November 1999.  

4.4              With regard to other components of the power sector reform bill, the Generating Companies (GENCO) committee report has been finished and the GENCO bill will be up for sponsorship in the next two (2) weeks. The Trust Liability Fund Component Bill that would handle stranded costs is still being considered by the committee. The amendment to the DOE (Senate Bill 1621) would be voted on today. The Senate is also going to pass the Amendment of the Professional Regulatory Commission (PRC) Bill and the Public Employment Service Office (PESO) Bill, both of which are not part of the CLA.  

4.5              In response to issues identified by Secretary Policarpio on the Amendment to the Central Bank Act, Senator Drilon explained  that the subject issues are manageable. The tax-exempt status of the BSP is a policy issue and involves only a paper transfer of government resources. He also noted that over 30 government agencies have been exempted from the Salary Standardization Law. Lastly, the issue pertaining to the confirmation of the BSP Governor had already been decided by the Supreme Court. 

Power Sector Reform Bill   

4.6              The Executive Secretary queried Senator Drilon about the component bills of the power sector restructuring bill. Secretary Zamora noted that three (3) of the five (5) bills were close to being passed by the Senate. He asked if it would possible to complete all the bills by the end of the year. 

4.7              Senator Osmeña explained that it would be difficult to expect that all of the bills could be passed by the end of the year. The Trust Liability Bill which would create a Board of Liquidators to handle the stranded costs of the power sector estimated to be in the magnitude of PhP 250 billion to 350 billion, would require careful study and more time. Senator Osmeña opined that the House Bill had underestimated the cost at PhP 150 billion. He explained that the bill would be acted upon by the Senate only after the budget debates. 

4.8              Senator Osmeña suggested that the Senate and the House counterparts meet to discuss the problems posed by the different approaches used by the two (2) chambers. The two (2) bodies would not be able to go into bicameral conference until after the Senate would have completed it’s work on the five (5) sector bills. He suggested that the House start considering the Gullas bill which corresponds to the Senate Transmission Company (TRANSCO) Bill. He noted that the British government took two (2) years to organize its TRANSCO as it is a complex process. 

4.9              Secretary Espiritu welcomed the proposal of Senator Osmeña. He noted that 50% of the government’s contingent liabilities is in the energy sector. The proposal is important in rationalizing subsequent fiscal support to the energy sector.  

4.10          Representative Gullas explained that he filed his separate bill in anticipation of the probable impasse that would result from the divergent approaches used by the two (2) Houses. While, he demurred to suggest that the House consider his bill in place of the integrated version of the House Committee on Energy, he supported the call of Senator Osmeña for a pre-bicameral conference. 

4.11          Senator Enrile stated that the TRANSCO and the GENCO Bills are the most important components of the Power Sector reform Bill. These two (2) bills are meant to reduce, if not rationalize the government’s subsidy to the power sector and to ease the country’s debt burden. He further suggested that the House also adopt this approach. 

4.12          Speaker Villar replied that he would not discuss the matter with the absence of the Chairman of the House Energy Committee. Notwithstanding, he mentioned that Chairman Fuentebella was strongly of the view that there should be only a single bill. He confirmed that the Power Restructuring Bill remains a priority measure of the House and expressed his confidence of its passage in. the House.. 

4.13          Secretary Angara requested for clarification on the differences between the House and Senate version of the bills. Senator Osmeña explained that the Senate bills covered the subjects covered in the house version in greater detail. Secretary Angara suggested that both Houses pass their bills and have the Bicameral Conference reconcile the differences. He suggested that the same approach that was applied to the Agriculture and Fisheries Modernization Act (AFMA) be employed for the Power Sector Reform Bill. The Bicameral Conference was able to reconcile the two (2) Bills that lead to the AFMA. He highlighted the need for the Power Sector Reform Bill to be enacted as soon as possible to meet our international commitments. 

4.14          Senator Osmeña indicated that the Bicameral Conference approach to resolving would mean having the Power Sector Reform Bills passed by the Bicameral Conference through the Holy Week. Secretary Zamora conveyed that the Executive Branch would prefer substantial progress or action by January 2000 if possible. Secretary Espiritu explained that passage of the power bills would result in improved credit ratings for the country and consequently, lower costs of borrowings. 

4.15          Secretary Zamora, towards the end of the discussion, recommended that the LEDAC Task Force on the Common Legislative Agenda (TF-CLA) be convened to discuss the Power Sector Reform Bill. Representative Roxas, Majority Floorleader, supported the recommendation of Secretary Zamora. 

4.16          Secretary Medalla also suggested that the Task Force meeting could take up technical issues like those of stranded costs. Senator Osmeña supported the suggestion and requested NEDA to prepare the technical briefs on the issues involving the Power Sector Reform Bill.      

4.17          After further discussion, Secretary Zamora asked Senator Drilon if mid-February would be reasonable target for the bicameral conference. It was suggested by Senator Osmeña to call for a special two (2) week session starting 10 January so that the Energy bill could be completed sooner. Speaker Villar replied that he would have to consult with his colleagues. 

Bill to Extend the Life of the Committee on Privatization 

4.18          Secretary Policarpio intervened to request the Legislators to expedite the passage of the Bill Extending the Life of the Committee on Privatization (COP) be expedited per the request of the Department of Finance as the COP term would end on 30 December 1999. Senator Ponce-Enrile expressed confidence that the bill would be passed by the Senate. Senator Drilon, however, reminded the body to consider the time required for the forthcoming budget debates. 

Revenue Measures 

4.19          The leadership of both Houses confirmed that revenue Bills like the Special Safeguards Bill, Tax Amnesty and the Road Users Tax are considered priority items and would taken up in Bicameral Conference as soon the they complete their respective legislative mills.  

Amending the Tariff Code: The Shift Transactions Value 

4.20          Secretary Espiritu requested the body to consider expediting the passage of House Bill 8623. He explained that RA 8181 has some inconsistencies regarding our WTO obligations. Although it was admitted that RA 8181 allowed the government to issue Implementing Rules and Regulations mandating the shift to transactions value, the government still had to comply with WTO regulations and the need for safety nets to avoid abuses of the system. 

4.21          It was suggested that the DOF draft the Implementing Rules and Regulations (IRR) mandating the shift and clarify the inconsistencies. Problems with the implementation would dealt in future legislation. 

Other Matters  

4.22          Senator Legarda noted that the President’s Legislative Agenda did not include  environmental bills. She requested that environmental bills like the National Land Use Bill, Clean Water Bills and Solid Waste Management Bill be considered in the Agenda. She inquired from the House on the status of their environmental legislation. Speaker Villar confirmed that environmental bills were a priority of the House and similar bills were listed in their legislative calendar. 

4.23           Executive Director Paredes of the League of provinces asked for support from the Council in pushing for amendments to Local Government Code. However, Secretary Diokno stated that he was against increases in the IRA of LGUs form 40 to 50% because of fiscal constraints. 

4.24          Representative Roxas also informed the body that Presidential Certifications given to non-priority bills affect the passage of priority bills in the legislative mill. He suggested that these certifications be given judiciously. Secretary Zamora noted the suggestion.  

4.25          Senator Drilon reminded the body that Amendment of the ARMM Basic Law would have to be passed by February or else the Elections would have to be postponed again. To which, House Majority Floorleader Roxas explained that the House version is in the mill and that the House would be reluctant to vote for another postponement of the ARMM Elections. 

5.0       Update on the Proposed 2000 Budget 

5.1       Secretary Diokno reported to the Council the developments on the proposed 2000 National Budget submitted by the President and reconfigured by the House of Representatives as House Bill No. 8374. He also presented updates on the macroeconomic and fiscal targets based on the latest figures of the Development Budget Coordinating Council (DBCC). 

5.2              The key changes introduced by House Bill 8374 on the PhP 651 Billion national budget submitted by President are the following: 

(a)                PhP 109.3 Billion in interest payments was treated as new appropriations rather than continuing appropriations as provided for in RA 4860.

(b)               The PhP 2.5 Billion “Lingap Para sa Mahirap” fund was scrapped.

(c)                A PhP 6.7 Billion Priority Development Assistance Fund  was included to support priority projects and programs such as food security (farm-to-market roads, irrigation, post harvest facilities, rice subsidy), social infrastructure (school buildings, socialized housing, etc.), economic infrastructure (roads and bridges. water supply, flood control) and other infrastructure, hospitalization assistance and financial assistance to district municipal and specialized hospitals. 

5.3              The bias for the social sector was maintained by both HB 8374 and the President’s proposal (NEP, 41.7% vs HB 8374, 42.1%) . Moreover, the value of economic services in the national budget improved under HB  8374 in relation to the share of agriculture, agrarian reform and natural resources. 

5.4              The allocation for the departments  was increased by  PhP 3.5 billion. The bulk of the increase went to the Department of Public Works and Highways (DPWH) and the Department of Social Welfare and Development (DSWD). Minimal increases were given to the Department of Science and Technology (DOST) and some other executive offices. The ARMM budget was reduced by PhP 11 million. 

5.5              The allocation for special purpose funds, e.g foreign-assisted projects (FAPs), Agricultural and Fisheries Modernization Program (AFMP) and the Calamity fund was correspondingly reduced. and the Calamity fund. Budgetary support to government Corporations was increased by some PhP 30 million. A new special purpose fund was created and named Priority development Assistance and given an allocation of PhP 6.7 billion. 

5.6              In the original budget proposal, it was proposed to limit the life of appropriations for maintenance and capital outlays to one (1) year excepts for FAPs in order to hasten the implementation of projects and avoid the unnecessary build-up of Accounts Payable. However, this was revised by the House of Representatives to cover all appropriations for all agencies  as in previous years. 

5.7              With regard to macroeconomic and fiscal targets, the 1999 gtrowth target has been increased from 3.0% to 3.7% due to improved agricultural production and strong export growth. The 2000 estimated range was reduced from 5.3-5.9% to 4.5-5.5%. Inflation rate estimate for 1999 was reduced while interest rates as well as dollar exchange rate estimates were retained. 

5.8              The National Government budget deficit was expected t grow from the original estimate of PhP 68.54 to 85 .3 billion. The 2000 deficit target was likewise increasaed from PhP 40 billion to  PhP 63.5 billion. Despite these new targets, disbursements havwe to be reduced by some PhP 8 billion in 1999 and PhP 6.3 billion in 2000. If we wish to maintain the 2000 disbursements as a ratio of GNP  at the 1999 level of 18.6%, then the government will need to raise an additional revenue of PhP 15.5 billion over and above the additional PhP 4.7 billion in new revenue measures being requested to be passed within the year. 

5.9              The new revenue measures being requested are as follows: 

(a)    Land Conversion tax                       - 0.9 billion

(b)   Idle Land tax                                  - 0.2 billion

(c)    Private Motor Vehicle                     - 1.4 billion

Tax-Road user

                        (d)  redefinition of automobiles               - 1.0 billion

                        (e)  Rationalization of fiscal                     - 1.2 billion

                               incentives

                                                            Total                  4.7 billion 

5.10     The estimates on the government projected revenue program were adjusted downwards. In 1999 the revenue estimate of PHP 515.6 billion was projected to reach an actual level of 490.7 billion.     Likewise, the 2000 estimate was scaled down from PhP 597.7 billion to 568.8.  Using the revenue figure as a percent of GNP, the 2000 estimate is expected to match the revenue  effort in 1998 of 14.9% which was considered an unusually bad year. 

5.10          Extending the above analysis to the sources of the deficit in the public sector. The higher fiscal deficit is expected to be partly neutralized by the projected improved performance of government financial institutions like the SSS and GSIS. Overall however, the Consolidated Public Sector Deficit (CPSD) is expected to increase from the original estimate of PhP 104.9 to 107.7 billion in 1999. While the original 2000 estimate of Php 76.9 billion is expected to increase to 93.5 billion. The larger deficits are still manageable if viewed in relation to the size of the economy.   The CPSD as a ratio of GNP is expected to decline from 3.5 % in 1999 to 2.7% in 2000. The government remains committed to the medium term plan to gradually revert to a balanced budget during this administration. 

5.11          In order to finance the budget, the national government will have to raise its borrowing program by PhP 9.7 billion in 1999 (PhP 196.4 billion to 206.1 billion) and by PhP 28.7 billion in 2000 (PhP 147.6 billion to 176.3 billion). 

5.12          The original financing strategy for 2000 was to go slow on foreign borrowings and tap only concessional sources. In reviewing this strategy, it was agreed that it may be too early to rely heavily on domestic borrowings. Lower and stable interest rates should be continued in order to ensure a faster and more sustainble economic recovery. 

5.13          The fiscal sector is also considering some precautionary measures to deal with lower revenues in 2000, to wit: 

a)      Identification of expenditures, basically non-infrastructure which may be deferred until the Second semester.

b)      Calibrated releases from the Special purpose funds during the year.

c)      Closer monitoring of agency performance as a basis for rationalizing fund releases. 

5.14          In closing, Secretary Diokno used the opportunity to urge Congress to support the Executive in its desire to consolidate its fiscal position without sacrificing its critical investment in physical infrastructure, agricultural modernization and human resource development. Specifically, the Executive requested Congress to facilitate passage of the FY 2000 national budget as proposed and, along with it, the revenue measures needed to finance the budget. 

5.15          Senator Drilon requested for a explanation for the increase in the projection for SSS/GSIS contributions from PhP 6.0 billion to 22.5 billion in 2000. In reply, Secretary Espiritu expalined that investments in equity of SSS and GSIS were originally excluded but are now included. Senator Osmeña suggested that item be taken up in detail when the Senate meets the DBCC. 

5.16          Sec. Angara then raised the issue that the Philippine tax to GNP ratio could be improved specially since our neighbors are averaging 18 to 19 percent of GNP. Secretary Diokno replied that the tax base of the government has eroded specially since the passage of many tax exemption measures during the previous administration. He explained that this fact is a good argument for the early passage of the Rationalization of Fiscal Incentives measure previously mentioned. The estimate of PhP 1.2 billion in revenues from the passage of the measure is conservative figure. 

5.17          Secretary Espiritu also explained that government proceeds form privatization efforts are estimated to reach only PhP 5 billion. However, passage of the COP/APT measure could help raise PhP 18 billion in privatization efforts from the sale PNB shares, and power sector related privatization efforts. 

5.18          Secretary Angara then queried Secretary Diokno about the disbursement reduction program in CY 2000. Secretary Diokno replied that the actual figure is PHP 15.5 billion for the whole year and half that for the 1^st semester depending information on revenue figures. He clarified that the reduction would not be an across the board exercise but, as would focus on items mentioned in the presentation. 

5.19          Senator Drilon noted that the deficit for the government would reach PhP 85 billion by year end. He expressed his concerns that the passage of all the revenue measures listed in Secretary Diokno’s presentation by the end of the year may not be feasible. 

5.20          Representative Recto noted that our neighbors had a deficit to GNP ratio of 5-7 %. He queried Secretary Diokno if it were possible for the government to sustain a higher CPSD level in the 3.5 percent level specially if the economy improves as expected. Secretary Diokno explained that our neighbors have a history of budget surpluses. They may not be accustomed to a budget deficit regime unlike the Philippines. He stated that the good indicator for investors would be in the reduction of the level of CPSD. 

5.21          Representative Recto then queried the Secretary Espiritu about improvements in tax administration. Secretary Espiritu then detailed some tax administration measures. He first mentioned a big taxpayers unit which raised some PhP 6 billion in collections> Tax mapping was another program being undertaken to identify new taxpayers. Another was administrative reorganization program approved for Bureau of Internal Revenue. A similar program would be initiated for the Bureau of Customs (BOC) shortly but the major focus is on the BIR as the bulk of the collection come from the BIR. 

5.22          Recto then queried Secretary Espiritu on the revenue shortfall despite an improved economic performance. He asked if it could related to improved figures from sectors that are normally  untaxed like agriculture and export sectors. Secretary Espiritu replied that was part of the explanation.The governement also had to refund PhP 6 billions in tax overcollections. Moreover the banking sectors charged their losses in 1998 together with poor construction figures resulted on collections from these sectors.. 

5.23          Secretary Angara noted that although agriculture as a matter of practice is not taxed but industries using agricultural products pay taxes. 

5.24          House Majority Floorleader Roxas then queried if the Pre-Need Code omission in the PLA was a typographical error. 

6.0       Council Agreement 

4.26          The Council agreed to adopt the amended motion of Secretary Angara to adopt in principle as the CLA the list of bills listed in the President’s Legislative Agenda (PLA) together with the list of environmental Bills recommended by Senator Legarda and Bills to be recommended by the Local Government Unit (LGU) representatives. 

4.27          The Council also agreed to adopt the motion of Secretary Angara for the Council to meet monthly. The motion was seconded by Senators Drilon, Legarda and House Speaker Villar. 

4.28          The Council agreed to adopt the motion of Secretary Angara for the LEDAC Task Force on the Common Legislative Agenda (TF-CLA) to meet weekly while Congress is in session. Secretary Policarpio of the PLLO strongly supported the motion.  

V.        ADJOURNMENT 

            The meeting adjourned at 1:06 p.m.

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