House plenary starts debate on budget bill

The House of Representatives on Monday began its plenary discussions on the proposed  national budget for 2016 after almost two months of scrutiny of the budgets of the various government departments and agencies at the appropriations panel in the Lower House.

As the P3-trillion budget took centerstage in the House, another Palace-backed measure known as the draft-Bangsamoro Basic Law was placed in the back burner. Congressmen would devote the two remaining  weeks of session to discuss the proposed spending measure, said Speaker Feliciano Belmonte . “ The 2016 budget bill is our priority,” Belmonte stressed.

In his sponsorship speech to House Bill 6132, Davao City Rep. Isidro Ungab, chairman of the House committee on appropriations,   expressed confidence that with the “collective wisdom” of lawmakers, they will pass the measure on time, as they did in the past five years.

“The congressional power of the purse comes with the responsibility not only of ensuring that every public peso is spent within means, in the right priorities, and with measurable results particularly in fostering inclusive development but also of passing the budget bill on time delaying the passage of the budget bill will mean delaying our country’s forward move towards the achievement of our national development goals,” Ungab added.

Ungab said the proposed 2016 budget is 15.2 percent or P396 billion more than the 2015 expenditure program. It corresponds to 19.5 percent of The Gross Domestic Product, increasing from 18.7 percent of GDP in 2015.

Of the P3.002-trillion obligation budget, Ungab said new general appropriations which they proposed Congress to authorize amount to P2.139 trillion, consisting of P2.071 trillion in Programmed New Appropriations and P 67.5 billion in Unprogrammed Appropriations which may only be utilized if revenues exceed targets or new loans be secured.

He said the programmed new appropriations of P2.071 trillion, together with the P930.7 billion in Automatic Appropriations, which is outside the purview of this General Appropriations Bill, will provide for the appropriation cover for the P3.002-trillion budget.

Ungab said the proposed budget has been shaped by financial management reforms that include the two-tier budgeting approach, the GAA-as release document policy, the performance informed budgeting, the unified accounts code structure, and the bottoms-up budgeting process.

“As the proposed budget has been shaped by these reforms, we become more confident that it is not just a budget where we spell out the sources of funds and the plan for the disbursement of funds, but an investment plan for a better Philippines.     

“We agree with the appreciation of President Aquino that the national budget is the government’s most potent instrument in achieving the country’s development goals.    And from the point of view of a Representative of the people, I say with conviction that the national budget should be the clearest, the loudest, and the best expression of our people’s desire for development,” Ungab said.

Ungab said the budget measure is anchored on the assumptions that economic growth will be 7 to 8 percent this year, in 2016 and over the medium term, inflation will be within 2 to 4 percent, and an exchange rate of P43 to P46 per dollar.  

He added the budget measure would also be consistent with other macroeconomic assumptions such as a 364-day T-bill rate of 2 to 4 percent, exports growth at 6 percent, and imports growth at 12 percent.

Moreover, Ungab explained the budget proposal has been formulated based on fiscal program with: Total revenues of P2.697 trillion in 2016, which translate to 17.5 percent of GDP    and is higher by 18.5 percent from the 2015 revenue program of P2.275 trillion; Consolidated public sector deficit of P128.8 billion or 0.8 percent of GDP; National government budget deficit of P308.7 billion or 2 percent of GDP, consistent with the medium term fiscal program; and                 Outstanding national government debt of P6.423 trillion or a debt-to-GDP ratio of 41.8 percent by the end    of 2016.

The GAB also effectively reduces the number of Special Purpose Funds (SPFs), from 10 in the 2015 GAA to 7 in the 2016 GAB. The E-Government Fund and the International Commitments Fund were incorporated back to the budgets of the relevant departments, while the Rehabilitation and Reconstruction Program was integrated into the National Disaster Risk Reduction and Management Fund (NDRRMF).

Ungab also noted the amounts allocated for the Miscellaneous Personnel Benefits Fund and the Pension and Gratuity Fund were notably decreased, as funds for the creation of new or filling up of unfilled positions, as well as compulsory retirement, were integrated back into the respective departments’ budgets.

The NDRRMF, meanwhile, expanded significantly to enable the government to respond better to calamities and the needs of victims.

“The distribution of the 2016 Budget by sector reflects the government’s commitment to inclusive growth as more than P64 in every P100 will be spent on social and economic services in 2016―this shows a dramatic improvement from P45 in every P100 in 2015,” said Ungab.

The social services sector continues to get the largest share of the budget, at 36.8 percent of the national budget or P1.106 trillion. Economic Services will get the second largest share of the budget with 27.6 percent or P829.6 billion while General Public Services will receive 17.3 percent or P517.9 billion. The Debt Burden, which is composed of Interest Payments to service outstanding debts as well as Net Lending to government corporations, will reach an all-time low of 14 percent of the total budget or P419.3 billion. To boost the government’s capacity to defend national sovereignty, the Defense sector will get a share of 4.3 percent or P129.1 billion.

Ungab also cited that starting in the 2016 proposed national budget, the government adopted a new framework in classifying the budget called the Classification of Functions of Government (COFOG) which categorizes programs and projects of government agencies according to function to accurately reflect an agency’s contribution to the social and economic goals of the government.

Among the expense classes, capital outlays (CO) will receive the largest increase at 29.8 percent, or a budget of P702.9 billion representing 23.4 percent of the total 2016 budget. Notable public infrastructure investments in 2016 include the construction and rehabilitation of classrooms, especially those needed for the roll-out of Senior High School under the K-12 Program; the completion of the national road network; the construction and rehabilitation of health facilities especially in rural areas; among others.

As in previous years, the proposed budget for 2016 allocates the largest share of 36.3 percent for maintenance and other operating expenditures (MOOE), with P1.094 trillion.

Under the budget measure, personnel services (PS) will get P810.8 billion or 27 percent of the total expenditure program while Financial Expenses will receive 13.1 percent or P394.4 billion.

As to the funding source for government operations and programs, Ungab said these include:    government revenues in the amount of P2.697 trillion to be collected in 2016. Of this, P2.543 trillion or 94.3 percent will be sourced from tax revenues. The remainder will come from non-tax revenues at P151.4 billion and privatization proceeds at P2 billion; collections of the Bureau of the Treasury (BTr) at P58.3 billion, fees and charges at P40 billion, the sale of government assets at P2 billion, and other non-tax revenues at P53.2 billion; borrowings of P674.8 billion in 2016, of which    P308.7 billion will be used to finance the projected fiscal deficit, P347.7 billion to amortize maturing obligations, and P18.4 billion for the national government’s cash buffer account.

Based on the budget proposal submitted by President Aquino to Congress themed “Paggugol na Matuwid, Saligan ng Tuloy-Tuloy na Pag-unlad,” the Top 10 departments per allocation are: Department of Education (DepEd) 435.9 billion; Department of Public Works and Highways (DPWH) P394.5 billion; Department of National Defense (DND) P172.7 billion; Department of Interior and Local Government (DILG) P154.5 billion; Department of Health P128.4 billion; Department of Social Welfare and Development (DSWD) P104.2 billion; Department of Agriculture (DA) P93.4 billion; Department of Finance (DOF) P55.3 billion; Department of Transportation and Communications (DOTC) P49.3 billion; Department of Environment and Natural Resources (DENR) P25.8 billion; and Department of Science and Technology (DOST) P18.6 billion.

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