DBCC: 2024 budget will establish future-proof, sustainable economy

The House Committee on Appropriations began its review of the PHP 5.768-trillion proposed national budget for Fiscal Year (FY) 2024 in a hearing with the Development Budget Coordination Committee (DBCC) on August 10, 2023.

The proposed budget adheres to the Medium-Term Fiscal Framework (MTFF) and will prioritize expenditures in line with President Ferdinand R. Marcos, Jr.’s 8-Point Socioeconomic Agenda and the objectives specified under the Philippine Development Plan (PDP) 2023-2028.

The PHP 5.768-trillion proposed budget is equivalent to 21.7 percent of the country’s gross domestic product (GDP) and is 9.5 percent higher than the 2023 national budget of PHP 5.268 trillion.

Finance Secretary Benjamin E. Diokno gave updates on the government’s fiscal and revenue collection performances and presented sources of funding for the national budget.

Secretary Diokno thanked the House for passing their versions of the priority reforms such as excise tax on single-use plastics (SUPs), Passive Income and Financial Intermediary Taxation Act (PIFITA), Real Property Valuation and Assessment Reform (RPVAR), value-added tax (VAT) on digital service providers, and ease of paying taxes.

According to him, tax revenue is projected to increase from PHP 3.5 trillion in 2023 to PHP 6.5 trillion in 2028, while non-tax revenues are expected to grow from PHP 191 billion in 2023 to PHP 184 billion in 2028.

“I am happy to announce that we are on track to meet the MTFP [Medium-Term Fiscal Plan] targets,” Secretary Diokno said.

The DOF aims to gradually reduce net financing or new debt from PHP 1.42 trillion in 2022 to PHP 1.22 trillion in 2024, which will help bring the country’s debt-to-GDP ratio to almost below 60 percent by 2025.

“Allow me to assure you, the honorable members of this chamber, that the Department of Finance and the economic team are working hard in support of the President’s agenda of attaining a future-proof and sustainable economy through the 2024 proposed budget,” Diokno said.

He said that the economic team will work closely with the House in pushing for appropriate and timely policies to make the Philippines one of the fastest rising economies in the region.

DBCC Chairperson and Department of Budget and Management (DBM) Secretary Amenah F. Pangandaman presented an overview of the national budget.

According to her, the DBM received budget proposals amounting to PHP 5.9 trillion. To facilitate this, the DBM has optimized the budget allocation for ready-to-implement projects, programs, and activities that have to be executed within 2024.

By general expense class, Maintenance and Other Operating Expenses (MOOE) made up the bulk of the proposed budget at PHP 2.156 trillion or 37.4 percent of the total budget.

This will support the operating requirements of departments for the implementation of social programs, local government units (LGUs), and government corporations.

This is followed by Personnel Services (PHP 1.695 trillion or 29.4 percent), Capital Outlays (PHP 1.246 trillion or 21.6 percent), and Financial Expenses (PHP 670.5 billion or 11.6 percent).

By recipient unit, national government agencies have been allocated PHP 3.866 trillion or 67 percent of the national budget to cover priority programs and projects, special purpose funds, National Disaster Risk and Reduction management fund, and the contingent fund.

This is followed by LGUs (PHP 1.008 trillion or 17.5 percent), government-owned and controlled corporations (GOCCs) (PHP 222.5 billion or 3.9 percent), and creditors as interest payments (PHP 670.5 billion or 11.6 percent).

By sector, Social Services will still have the largest share in the budget at PHP 2.183 trillion or 37.9 percent. This is followed by Economic Services (PHP 1.709 trillion or 29.6 percent), General Public Services (PHP 893.3 billion or 15.5 percent), Debt Burden (PHP 699.2 billion or 12.1 percent), and Defense (PHP 282.7 billion or 4.9 percent).

Bangko Sentral ng Pilipinas (BSP) Governor Eli M. Remolona, Jr. presented the macroeconomic assumptions behind the proposed budget, along with the BSP’s assessment of the monetary and external sectors.

According to him, core inflation has remained high at 6.7 percent but has started to decline as a result of tightening monetary policy. Meanwhile, inflation expectations have remained anchored which is indicative of the market’s confidence in BSP successfully hitting their future monetary policy objectives.

National Economic and Development Authority (NEDA) Secretary Arsenio M. Balisacan provided an overview of the Philippines’ progress according to the targets set in the PDP 2023-2028, as well as the strategies and priorities for 2024.

Strategies include ensuring food security, addressing learning losses, improving health, strengthening social protection, reducing transport, logistics, and energy cost, ensuring sound fiscal management, and enhancing bureaucratic efficiency.

The House of Representatives targets to approve the proposed national budget for FY 2024 by end-September.