BEYOND BUDGET

(Part 1)

Assalamu alaikum wa Rahmatullahi wa Barakatuh.

Last Aug. 2, on behalf of President Ferdinand R. Marcos Jr., I had the honor and privilege of submitting the FY 2024 National Expenditure Program (NEP) to Congress for review, consideration, and approval.

We made the submission seven days after the President delivered his second State of the National Address. The Constitution gives the President 30 days from the opening of every regular session to submit a budget of expenditures and sources of funding to the House of Representatives, to serve as the basis for the general appropriations bill.

The proposed budget aims to allocate the required funding for government operations and the ongoing implementation of our plan for economic transformation.

House Speaker Ferdinand Martin Romualdez said that our submission of the proposed national budget program in less than 10 days from the start of the regular session of Congress “[provides the House ample time to study, discuss and deliberate on the finer points of the proposal and formulate a national budget that is responsive to the development needs of the country."

Medium-term fiscal framework, eight-point socioeconomic agenda, and the PDP 2023-2028

The FY 2024 NEP is worth ₱5.768 trillion, or 21.7 percent of GDP. It is higher by 9.5 percent compared to the FY 2023 General Appropriations Act.
With the theme “Agenda for Prosperity: Securing a future-proof and sustainable economy,” the proposed national budget is aligned with the President’s Eight-Point Socioeconomic Agenda: 1) Protect purchasing power of families by ensuring food and water security; 2) Improve transportation; 3) Provide affordable, clean energy; 4) Reduce vulnerability and mitigate scarring from the Covid-19 pandemic by safeguarding health care; 5) Address learning losses by providing for education; 6) Strengthen social protection, especially for the most vulnerable; 7) Ensure sound macroeconomic fundamentals through sound fiscal management; and 8) Improving bureaucratic efficiency through digital transformation.

To reach these goals, the PBBM administration, through the National Economic and Development Authority, crafted the Philippine Development Plan 2023-2028, the country’s roadmap of actionable policies and programs, as well as legislative priorities to reach the country's desired development outcomes.

With an eight-point socioeconomic agenda to promote faster, greener, and inclusive growth for all Filipinos, the administration has set its medium-term goals include creating more jobs, investing in infrastructure, human capital development, and digitalization. Thus, the first-ever Medium-Term Fiscal Framework (MTFF), adopted by both Houses of Congress, was developed to serve as the blueprint to reduce the country's fiscal deficit, promote fiscal sustainability, and address climate change.

The MTFF lays down clear, measurable, and realistic macroeconomic and fiscal targets, including the following: a) 6.5 to 8.0 percent real GDP growth annually between 2023 and 2028; b) 9.0 percent or a single-digit poverty rate by 2028; c) 3.0 percent National Government (NG) deficit to GDP ratio by 2028; d) Less than 60 percent NG debt-to-GDP ratio by 2025; and e) attaining upper middle-income status by 2025.

Optimizing the budget

For FY 2024, the DBM received budget requests totaling ₱5.90 trillion. Due to limited fiscal space, we have considered several factors such as ensuring that the programs, activities, and projects of agencies are implementation-ready, to be delivered and executed in the said year; aligned with the priorities outlined in the Budget Priorities Framework; and consistent with the PDP 2023-2028. Moreover, we referred to the historical budget utilization rates of agencies in evaluating their absorptive capacity.

Now, let me discuss the dimensions of the proposed FY 2024 budget.

By general expense class, maintenance and other operating expenses will cover the bulk of the proposed budget next year at ₱2.156 trillion or 37.4 percent. This is mainly composed of the operating requirements of line departments, and the Allocations to Local Government Units and budgetary support to government corporations. Personnel Services (PS) expenditures will get the second biggest share, amounting to ₱1.695 trillion (29.4 percent). This will fund the creation of additional positions in various government agencies, compensation, and other PS benefits, as well as the pension of retired military and uniformed personnel. Capital outlays will be provided with ₱1.246 trillion (21.6 percent) to support the budgetary requirements of new and ongoing infrastructure projects under the Build-Better-More program. Meanwhile, financial expenses was given an allocation of ₱670.53 billion (11.6 percent).

By recipient, national government agencies will receive ₱3.86 trillion (67 percent of the FY 2024 budget) to cover banner programs and priority projects. local government units will receive ₱1.008 trillion (17.5 percent), pertaining to LGU shares from national taxes, including National Tax Allotment and BARMM Annual Block Grant.

By sector, the biggest allocation will be provided to the social services sector, amounting to ₱2.183 trillion (37.9 percent), while the economic services sector will receive ₱1.709 trillion (29.6 percent). The prioritization of the social and economic services sectors demonstrates the government’s resolve to reduce poverty, foster infrastructure and human capital development, and steer the country back on a higher growth trajectory. Meanwhile, the general public services sector was allotted ₱893.3 billion (15.5 percent), debt burden with ₱699.2 billion (12.1 percent), and defense with ₱282.7 billion (4.9 percent).

Beyond budget, we have crafted a national expenditure program that accounts for every peso. It has been optimized for us to continue the path toward our Agenda for Prosperity. The PBBM administration earnestly aspires for the national budget to set the stage for securing a future-ready economy and ensuring equitable and sustainable growth for all Filipinos, not just for the present. We hope to leave a legacy of progress for generations to come.