MANILA, Philippines—(UPDATE 2) President Gloria Macapagal-Arroyo has signed into law the P1.414-trillion 2009 national budget that will boost state spending to stave off recession, Budget Secretary Rolando Andaya said.

The budget "will pave the way for public spending that will blunt the effects of the global economic downturn on the country," Andaya told reporters at the Palace Friday.

The budget measure, which Arroyo signed without fanfare, includes a P330 billion stimulus package for infrastructure, temporary jobs and cash handouts for the poor to keep the economy working as exports tank.

The government last month cut its 2009 growth forecast to between 3.7 and 4.4 percent and warned the budget deficit would soar to P178 billion, about 2.2 percent of gross domestic product, as it borrows more money for the stimulus program.

While Arroyo did not veto Congress' realignment of the P50 billion from debt servicing to the stimulus package, she vetoed the reclassification of the total P252 billion in debt payments to a regular item, and restored it as an automatic appropriation, Andaya said.

The government determines allocation in a regular item, while in automatic appropriations, as in the case of sovereign debt, the outlay is determined by how much is owed.

“What was vetoed was the concept of debt service being appropriated,” he said. “You pay for what is due during the course of the year.”

Andaya said the 2009 budget would be used for “targeted spending” on job creation, infrastructure development, and increased social services to cushion the blow of the global financial crunch.

He noted the 119-percent increase in the budget of the Department of Social Welfare and Development from P4.84 billion to P10.62 billion.

The Department of Education has the biggest budget at P158.2 billion.

Rounding out the top 10 agencies with the biggest appropriations are:
• Department of Public Works and Highways, P130 billion
• Department of Interior and Local Government, P63 billion
• Department of National Defense, P56.5 billion
• Department of Agriculture, P41.2 billion
• Department of Health, P27.9 billion
• Department of Transportation and Communications, P25 billion
• State colleges and universities, P22.8 billion
• Department of Agrarian Reform, P13.1 billion
• Judiciary, P12.6 billion.