INTRODUCTION
I am happy to sign into law the most important legislative measure for 1998. RA 8522 or the General Appropriations Act (GAA) for 1998 is the most significant law for this year because it is the enabling authority for all the programs and projects that this administration and the next administration will undertake within the year.
THE 1998 GAA: A MODEL OF JUDICIOUS SPENDING
Congress has approved the appropriation of p495.7 billion which is the bulk of our total expenditure program of p565.3 billion for this year.

At the outset, I congratulate the members of Congress for their intense scrutiny and incisive review of the nation’s budget submitted by me and the executive branch last July. Our common objective is to insure judicious spending for our people’s well-being.

With the cooperation of everyone from the executive and the legislative branches, we will endeavor to maintain our five-year record of budgetary surplus which has earned for us the appreciation and confidence of our people and the international community.

The Asian financial turmoil has hit every economy in our neighborhood and the prevailing international view is that the Philippines can recover faster than other Asian countries. This brighter outlook comes the fundamentals we have worked hard to install, namely: a stable democratic political system; a steady policy of liberalization, deregulation and privatization of our economy; and our short-term external debt position, which, being the lowest among the tiger economies of ASEAN, has insulated us from strong pressures over the use of our foreign-exchange reserves.

The difficult experiences of other East Asian countries and our relatively better condition in relation to them should teach us to be extra vigilant to ensure that our socio-economic policies continue to be responsive and that our fiscal position be continuously stable.

Our fiscal discipline will be tested whenever onslaughts on the currency would demand the infusion of additional resources for interest payments and as peso counterparts of foreign-assisted projects. I, therefore, commend Congress for its foresight and wisdom in including in this law a general provision to impose reserves on expenditures that are mostly borne by government. Such provision in the GAA of 1998 is supplemented by the economy measures that the executive is adopting under Administrative Order No. 372 dated December 27, 1997 and other cost rationalization, standardization and reduction initiatives.

These moves for austere spending should enable us to weather currency fluctuations more capably and meet our targeted surplus by the end of my term this coming June. The imposition of reserves make the 1998 GAA a model of judicious spending, and assures the incoming administration of adequate funding for second semester programs.
A PEOPLE-ORIENTED BUDGET
In recognition of the needs of the middle and lower social classes, we are, at the same time, adopting measures to mitigate the adverse effects of belt-tightening. This budget contains a p2.5 billion poverty alleviation fund to support poverty-reduction programs and projects of local government units.

We must also implement the Salary Standardization Law (SSL)-II to enable the compensation of the rank-and-file in government to be comparable with the private sector’s. Also within this budget are other benefits for government personnel such as incentives for service fees; a provident fund scheme for emergency loans; increased allowances for policemen, jail guards and firemen; and a savings productivity fund which is 25% of savings generated by agencies and which may be used for employee housing programs and other such benefits.

While we may be in a difficult time for East Asia, elsewhere in the world, the economic outlook is good, and therefore there are opportunities to be seized. Our budget contains features to enable us to utilize emerging economic opportunities to the fullest in order to generate more jobs, expand livelihood and protect those who are already gainfully employed.

To improve our global competitiveness, the 1998 budget provides for the following:

* A p4.7 billion pole-vaulting fund to support crucial programs in our bid to become Southeast Asia’s knowledge center; energy exporter; food basket; medical center; shoppers’ paradise; trade, transport and communications hub; maritime power; center for culture and the arts; and financial center.

* Emphasis on information technology programs and projects, including the wide area network of the Department of Trade and Industry (DTI); the computerization of the Bureaus of Internal Revenue (BIR) and Customs (BOC); the National Crime Information System; and the computerization of the Commission on Elections (COMELEC).

We intend to carefully program and manage our expenditures as well as maintain the integrity of our fiscal program even as we ensure that programs vital to our economic and social development are fully supported. And we will make the public understand that judicious spending in these times of crisis is not necessarily cutting down on all expenses but ensuring that we spend only for programs that guarantee the best returns.
EXERCISING THE LINE VETO
I realize the efforts that Congress had put to improve our proposal for 1998’s budget. However, I too have a responsibility to uphold, vested upon me by our constitution and other laws, to ensure efficient management and implementation of our programs as covered by the budget. In these trying times, we have to be especially prudent in our spending.

I intend to fully implement the budgetary provisions and the economy measures that will allow us to reconcile our expenditures with the resources available for them. As in the past and in fulfillment of my sworn duty, I am, therefore, vetoing certain items, among them, the inclusion of interest payments in the General Appropriations Act of 1998.

I have said this many times before and I say it again: debt service-interest payments are automatically appropriated and need not be included in this law. We have several laws that have explicitly provided for this, and the supreme court has upheld the validity of automatic appropriations of such payments.

I have also applied my veto powers over particular special provisions regarding the revolving fund of the agricultural credit policy council of the Department of Agriculture (DA); the proposed fund of the Department of Environment and Natural Resources’ (DENR) arising cost of fees coming from the issuance of environmental compliance certificates; the proposed use of savings of the Philippine National Police and the reversion of unused appropriations for purchase of fire trucks of the bureau of fire protection, both agencies of the Department of the Interior and Local Government (DILG); the Department of Tourism’s (DOT) proposed fund support to local government units that have historical sites; and the reversion of unreleased appropriations for budgetary support to government-owned or controlled corporations. For these items, the veto has been applied because we cannot legislate to grant others the powers that have been granted exclusively to the president by the constitution.

Under the general provisions of this law, I am exercising the direct veto power over Sec. 13 regarding national internal revenue taxes and import duties of national and local government agencies and government-owned-or-controlled corporations; and Sec. 77 on capitalization or deferment of interest payment and/or restructuring of public debt. I am vetoing the first-cited item in accordance with our program to adopt economy measures, and the second, because Sec. 77 does not relate to any particular appropriation of this budget.

I have also taken note of some other items which require guidelines that must reflect our goal of extra-careful spending and whose implementation we must therefore strictly monitor.

This judicious exercise of my veto powers adequately responds to the expectations of budget reduction expressed in various fora, gives the president leeway in the disposition of items as new conditions emerge, and provides the next administration with flexibility to address other concerns that may arise in the future.

I have ordered the distribution of copies of my veto message, which enumerates the items that I have chosen to veto and explains why I am vetoing them.

Most of these items have been vetoed because they serve as leaks to income that should accrue to the national treasury and should therefore be plugged by us to attain our fiscal targets while at the same time, ensuring the flow of basic services needed by the majority of our people, and the completion of essential programs and projects which are of national or strategic importance.

If we must learn a lesson from the current economic problems of East Asia, that lesson should be about the dangers of extravagance and the need for prudent and judicious use of government funds at all times.

A final word on the GAA:

The budgetary realignments effected by congress which resulted in the increase of the appropriations of certain offices, agencies or special purpose funds, or the additional allocation for programs or projects, or the provision of new items in the budgets of offices, agencies or special purpose funds shall be implemented subject to executive approval pursuant to Section 25(5), Article VI of the Constitution, and in accordance with the provisions of Section 35, Chapter 5, Book VI of EO No. 292.

In particular, I note that p14.4 billion of new budgetary items have been incorporated in the General Appropriations Bill (GAB). In the light of the current economic and financial conditions and because public interest so requires, I am exercising my authority to suspend the expenditure of these budgetary items pursuant to Section 38, Chapter 5, Book VI of EO No. 292 so as to preserve and sustain the sound fiscal position of the government and ensure stable, long-term growth. I will, however, monitor and review emerging conditions and decide on the disposition of these suspended budgetary items as may be appropriate.
AMENDING THE DBP CHARTER
We also sign into law today RA 8523 which amends the charter of the Development Bank of the Philippines (DBP) to allow it to perform expanded powers and functions as a specialized bank and therefore achieve its mission to energize the economy and promote the development of capital markets.

Taking a short-term view, this law is also congress’ timely response to the clamor at the economic summit held last February 11, 1998 to make capital more readily available to the private sector.

With this amended charter, DBP gains additional scope in its operations to better assist the country in meeting the challenge of global competition. The increase in DBP’s authorized capital to p50 billion from the present p5 billion allows it to commit itself more readily as an equity holder in private banks that need capital pump-priming. As such, the bank can more actively address the private sector’s financial needs and hasten the delivery of capital to entrepreneurs operating in the provinces.

With its larger capital base, a market-responsive and development-focused organization and re-energized workforce, we expect the DBP to play a greater role in freeing our people from poverty by speeding up the circulation of capital and spurring the growth of new domestic markets. This significant law gives DBP a more active role in transforming the Philippines into a financial hub in Southeast Asia.
OTHER REFORM LAWS
In furtherance of our political and social reforms, we also sign into law five other bills.

RA 8524 amends section 43 of the Local Government Code to extend the term of elected barangay officials and members of the Sangguniang Kabataan (SK) from the present three years to five years.

RA 8525 boosts educational opportunities in poorer communities. This law encourages the private sector to be more involved in human resource development (HRD) by granting tax incentives to private companies and enterprises that will assist any public school — whether of the elementary, secondary or tertiary level — particularly those within our identified “priority provinces”, under the “adopt a school” program. Private sector assistance may come in the form of construction or upgrading of facilities; instructional materials; staff or faculty development; and/or modernization of instructional technologies.

A coordinating council with representatives from our various national educational agencies, the Presidential Council for Countryside Development and a National Federation of Chambers of Commerce and Industry will coordinate and monitor this program.

We also congratulate the people of the newly-created highly-urbanized city of Valenzuela by virtue of RA 8526. At long last, Valenzuela City has been given its due as the northern gateway to Metro Manila!

We likewise felicitate the residents of Talavera, Nueva Ecija whose Dr. Paulino Garcia Memorial Research and Medical Center Extension Hospital has been upgraded under RA 8527. Indeed, health services are among the highest priorities of the Ramos administration.

We must also take note of the correction contained in RA 8528 regarding the status of Santiago City in Isabela not as an independent component city but as a component city, thereby allowing the voters of this city to participate in the elections for governor, vice-governor and other elective provincial positions for the province of Isabela.
CLOSING
On behalf of the Filipino people, I thank once more all the members of congress for passing the laws we have signed today, including the General Appropriations Act of 1998. We are assured now that we can keep up with our program of people-oriented governance for this year. At this time of economic turbulence in Asia, no other law could provide a more positive impact on what we must do this year to recover from the currency crisis, and return to the path of growth.

This is a critical year in our national life. Not only are we celebrating our 100th anniversary of freedom but we are also faced with make-or-break situations that we must resolve within the next few months including the conduct of honest, orderly and peaceful elections (HOPE). At this point, the course we take will determine whether or not we will triumph over this economic storm early enough to resume our march to growth, or go back to the “intensive care ward”.

It is increasingly evident that the unfolding events in our region have proven the correctness of the policies and strategies the Ramos administration has adopted over the past five-and-a-half years. We will therefore continue with what we have been doing — to insure people empowerment and global competitiveness — and the key to such continuity, the 1998 GAA or RA 8522, will now be implemented vigorously.

I must repeat, however, that we in government must exercise utmost discipline, generate more national savings and undertake greater diligence to attain a fiscal position that can adequately provide for the unforeseen contingencies and the hidden challenges before us.

I thank all the congressmen and congresswomen and senators whose invaluable efforts enhanced the 1998 national budget. I particularly commend the House Committee on Appropriations, chaired by the indefatigable Congressman Rolando Andaya, assisted by his equally industrious colleagues led by Congressman Feliciano Belmonte, for ably steering the bill through the various processes necessary for its passage, and for reviewing and shaping the substance of all the budgets I have submitted to Congress since 1992.

I also thank the senate finance committee, led by its chairman, Senator Ernesto Herrera, for the remarkable insights provided by his committee in enhancing the merits of this law.

I also acknowledge the efforts of the authors, co-authors, sponsors, co-sponsors, and bicameral committee chairmen and members of all the other landmark laws we sign today.

This is a time of gratitude — from the Filipino people to the members of Congress. This is also a day of reaffirmation for Congress and all of us in government.

We all reaffirm our commitment to the Filipino nation as an expression of our love for our people not only today, which is Valentine’s Day, but throughout our terms of office and throughout the life of our beloved Philippines.

Maraming salamat sa inyong lahat!

Mabuhay ang Kongreso ng ating bansa!

Mabuhay ang Pilipinas!