BY REGINA BENGCO

PRESIDENT Arroyo yesterday signed the P1.126 trillion national budget for 2007 (Republic Act 9401), which Malacañang called a "social payback budget."

"Ito na ang dramatic increases in education, infrastructure and social services. Ito na ang payback ng expanded value added tax," said Budget Secretary Rolando Andaya Jr.

Andaya said the budget will "cure under-spending, spur growth, fund infrastructure and finance human development in a manner that will be transparent."

"This budget will enable us to provide free meals to 1.5 million youngsters as incentive for attending classes, recruit 3,000 policemen, send about 700,000 scholars to schools and colleges, immunize two million children, establish 2,400 outlets of Botika ng Barangay, and provide medical insurance to 4.4 million poor persons, among others," he said.

Arroyo, in an interview, said she only vetoed items which were "very technical in nature."

She said the budget for education was increased by P16 billion, health by P16 billion, social welfare by P1 billion, and public works by 50 percent to remedy the backlog in infrastructure.

The trillion-peso budget is based on assumptions of P1.11 trillion in revenues, a P63 billion deficit, real GDP growth rate of 6.1-6.7 percent, and foreign exchange rate of P48-P50 to $1.

By sectoral allocation, economic services (including agriculture, trade and natural resources) get 21.8 percent of the budget pie, while social services (health and education spending) are allocated 28.1 percent.

General public services account for 16.2 percent, defense 4.8 percent; and debt service 28.3 percent.

Andaya said interest payment declines to P303 billion this year, from P309 billion in 2006 and the trend will be sustained in the years to come.

He also said that the interest payment in 2007 could further dip if the peso continues to strengthen, freeing up more resources for social spending.

By object of expenditure, maintenance and other operating expenses make up bulk of the budget at P659.2 billion (58.5 percent), including the debt service fund and the Internal Revenue Allotment of P183.9 billion.

Personal services or salaries and other benefits get P335.29 or 78 percent while capital outlay gets P131.4 billion or 11.68 percent.

Government will also spend P8.3 billion to improve airports, P193 million for new lighthouses and ports, and P10 billion to repair storm-damaged areas.