Today's Santiago Times provided a sign of hope that the worldwide recession may finally be abating. An article entitled, CHILE ANNOUNCES 4.3 PERCENT BUDGET INCREASE FOR 2010, opens with, "While other nations are struggling to cut costs and sacrificing social programs to combat the worldwide economic crisis, Chile´s 2010 budget will grow by 4.3 percent next year and includes a 5.8 percent increase in social assistance programs, Finance Minister Andrés Velasco announced Wednesday."
The next sentence does give one pause: "The 2010 budget - proposed by Velasco this week - follows news that unemployment appears to have stabilized at 10.8 percent for the second consecutive month." Of course, the official U.S. unemployment statistic is now 9.8%, and I heard on CNN today that if you include those unemployed folks who have either exhausted their unemployment benefits, or who have taken part-time work in place of the full-time jobs they used to have, the figure rises to 17.2%.
But back to Chile. The remainder of the article is as follows:
"Velasco said Chile will meet budget its responsibilities and be one of the nations to most quickly recover from the world economic crisis because, “We were well prepared.”
Under Velasco´s guidance, President Michelle Bachelet’s government implemented a strict savings plan when the economy was soaring due to high copper prices a few years back. That decision was highly criticized by opposition parties at the time (and some within the governing Concertacion coalition), but proved to be a very wise decision. The surplus that accumulated allowed Chile to continue with social programs, increase stimulus spending and provide assistance to the most vulnerable through the tough 2009 fiscal year and on into 2010.
Velasco proposes a balanced budget for 2010 with a 4.3 percent spending increase compared to 2009. Spending focuses on education, social needs and increasing economic activity. The finance minister is projecting a 5 percent growth in GDP.
The budget allocates over US$7 billion to infrastructure spending to build sports and cultural facilities, roads and housing throughout the country. The Health Ministry alone will spend US$5.9 billion, an 8 percent increase over 2009, to build 31 new hospitals, among other projects. That will bring the number of hospitals built under Bachelet´s government to 90, a promise made during her campaign.
Education funding will increase for the third year in a row and represents the largest block of spending in the 2010 budget. The nearly US$8 billion will in part be used to double, from 30,000 to 60,000, the number of laptops awarded to the country’s best performing 7th graders. There are also increases in grants for students to study English, computer sciences or technical fields and those wanting to complete post graduate studies abroad. Velasco stressed that education spending is key to Chile’s future growth, stating, “A good education is a priority for today, not tomorrow.”
The key is Velasco's quote, “We were well prepared.”
A successful business plan should include a budget line item for Bad Debt. This covers customers to whom the business extended credit and who could not pay off their debt, accounts receivable that the company has to settle for less than 100% of the total due, et cetera. The Chilean government should be praised for its economic foresight. Citizens of Chile are now going to reap the rewards of this thinking.
Could the U.S. federal government do the same? The answer is not as simple as it seems. We have voluntarily taken upon our shoulders international responsibilities that a country such as Chile is neither equipped, nor inclined, to accept. Let's hope that the citizens of the U.S. will likewise reap the rewards of that thinking.
Showing posts with label budget. Show all posts
Showing posts with label budget. Show all posts
Friday, October 2, 2009
Friday, August 22, 2008
Iraq's Budget Surplus Raises Questions About Reconstruction Funding
On August 5, the Washington Times ran an article on Iraq's potential total budget surplus at the end of 2008. The article, "GAO: Iraq could have $79 billion budget surplus," went on to report:
"The Iraqi government could end the year with as much as a $79 billion budget surplus as ever-increasing oil revenues pile on top of leftover income the Iraqis still haven't spent on their national rebuilding effort, congressional auditors say.
A report by the Government Accountability Office (GAO) made public Tuesday prompted renewed calls from senators that Baghdad pay more of the bill for its own reconstruction, which has been heavily supported with U.S. funds.
The projected Iraq surplus, including unspent money from 2005 through 2008, has been building because of rising world oil prices, increasing Iraqi oil production, the government's inability to execute budgets for spending its money and persistent violence in the country, the GAO said."
The good news is that levels of violence have decreased, and Iraq's oil production is on the rise. So why is the resulting budget surplus not being spent on any number of needed rebuilding projects? Why is the money just sitting there? As the GAO report detailed, this surplus has been building since 2005. The estimated surplus from 2005-2007 was $29 billion. With crude oil prices rising rapidly since 2007, another $50 billion will be added. The GAO report suggested the following reasons for why the money has not been spent:
"First ... (the) relative shortage of trained budgetary, procurement and other staff with the necessary technical skills as a factor limiting the Iraqi government's ability to plan and execute its capital spending," the GAO said, adding that a second problem is the government's weak accounting systems. Third ... violence and sectarian strife remain major obstacles to developing Iraqi government capacity."
Iraqi lawmaker Haider al-Abadi stated that Iraq is pulling its weight in funding reconstruction. However, the GAO also reported that from 2005 through April 2008, Iraq spent just $3.9 billion on reconstruction. How does al-Abadi define "...pulling its weight...?"
The governor of Iraq's Central Bank, Sinan al-Shabibi, said he thought the problem with not spending money on reconstruction was due not to the bulk of funds being spent elsewhere, but because of security problems, and especially the lack of experts in Iraq's ministries.
The Washington Times article also reported that, "Since 2005, the United States has funded a number of efforts to teach civilian and security ministries how to effectively execute their budgets. The efforts included programs to advise and help Iraqi government employees develop the skills to plan programs and to effectively deliver government services such as electricity, water and security."
Have the students in these classes been doing their homework? Has their progress been tracked? Have they been assigned experienced mentors to aid their efforts? I thought the post-Rumsfeld era was going to be more efficient, productive, and professional in all aspects of this war. They got the Surge right. What about the rest? Does anybody care ... or will it just be more expedient to dump it all on President Obama or President McCain?
"The Iraqi government could end the year with as much as a $79 billion budget surplus as ever-increasing oil revenues pile on top of leftover income the Iraqis still haven't spent on their national rebuilding effort, congressional auditors say.
A report by the Government Accountability Office (GAO) made public Tuesday prompted renewed calls from senators that Baghdad pay more of the bill for its own reconstruction, which has been heavily supported with U.S. funds.
The projected Iraq surplus, including unspent money from 2005 through 2008, has been building because of rising world oil prices, increasing Iraqi oil production, the government's inability to execute budgets for spending its money and persistent violence in the country, the GAO said."
The good news is that levels of violence have decreased, and Iraq's oil production is on the rise. So why is the resulting budget surplus not being spent on any number of needed rebuilding projects? Why is the money just sitting there? As the GAO report detailed, this surplus has been building since 2005. The estimated surplus from 2005-2007 was $29 billion. With crude oil prices rising rapidly since 2007, another $50 billion will be added. The GAO report suggested the following reasons for why the money has not been spent:
"First ... (the) relative shortage of trained budgetary, procurement and other staff with the necessary technical skills as a factor limiting the Iraqi government's ability to plan and execute its capital spending," the GAO said, adding that a second problem is the government's weak accounting systems. Third ... violence and sectarian strife remain major obstacles to developing Iraqi government capacity."
Iraqi lawmaker Haider al-Abadi stated that Iraq is pulling its weight in funding reconstruction. However, the GAO also reported that from 2005 through April 2008, Iraq spent just $3.9 billion on reconstruction. How does al-Abadi define "...pulling its weight...?"
The governor of Iraq's Central Bank, Sinan al-Shabibi, said he thought the problem with not spending money on reconstruction was due not to the bulk of funds being spent elsewhere, but because of security problems, and especially the lack of experts in Iraq's ministries.
The Washington Times article also reported that, "Since 2005, the United States has funded a number of efforts to teach civilian and security ministries how to effectively execute their budgets. The efforts included programs to advise and help Iraqi government employees develop the skills to plan programs and to effectively deliver government services such as electricity, water and security."
Have the students in these classes been doing their homework? Has their progress been tracked? Have they been assigned experienced mentors to aid their efforts? I thought the post-Rumsfeld era was going to be more efficient, productive, and professional in all aspects of this war. They got the Surge right. What about the rest? Does anybody care ... or will it just be more expedient to dump it all on President Obama or President McCain?
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