Incoming DBM chief to review P3.35-T ‘transition budget’

MANILA, Philippines - The incoming Duterte administration intends to review the P3.35-trillion “transition budget” for 2017 put together by the outgoing Aquino administration.

Budget secretary-designate Benjamin Diokno said yesterday they would not be able to submit the proposed budget a day after the first State of the Nation Address (SONA) of president-elect Rodrigo Duterte on July 25.

Diokno said submission could take place two to three weeks after the SONA to give them time to review the budget proposal.

However, even with the delayed submission, he said they would like Congress to approve the outlay before the end of the year so the Duterte administration would not have to recycle this year’s budget.

Diokno noted that President Aquino had always presented his budget proposal to Congress a day after his SONA.

One fiscal policy change that Diokno and incoming finance secretary Carlos Dominguez III are planning has to do with government borrowings.

They want to raise the deficit or borrowing cap to three percent of gross domestic product, instead of following the Aquino administration’s limit of two percent.

The outgoing government has successfully managed the fiscal deficit, which allowed it to keep borrowings down and interest low, enabling businesses and workers to borrow from banks at record low interest rates.

Under the Constitution, the President has 30 days from the convening of Congress, which is also when he delivers his SONA, to propose his budget.

It was outgoing Budget Secretary Florencio Abad who put together the 2017 outlay.

“This transition budget aims to bridge the goals and policies of the Aquino government with those of the next administration,” he said in a memorandum to heads of state agencies.

“With the institutionalization of reforms, this budget will hopefully guide the new administration in the allocation and management of public funds based on the principles of fiscal discipline, operational efficiencies, transparency and empowerment,” he said.

Abad’s budget proposal for Aquino’s successor is P348 billion more than this year’s P3.002-trillion outlay.

It is based on gross national product growth of 6.5-7.5 percent, gross domestic product (GDP) expansion of 6.8-7.8 percent, inflation of 2-4 percent, treasury bill rates of 2.5-4 percent, peso-dollar exchange rate of P45-P48 and crude oil price of $55-$60 per barrel.

It also assumes revenues amounting to P3.040 trillion, up from this year’s projected collections of P2.697 trillion. The budget gap would be financed through borrowings, mostly from the domestic market.

“The Aquino administration will entrust a healthier fiscal position to the incoming administration as a result of the various public financial management reforms implemented during its six-year term,” Abad said.

“To maintain this sound and sustainable fiscal environment in the coming years, the government will target a rising revenue effort reaching 18.8 percent of GDP by 2019 and a deficit level of two percent of GDP over the medium term, pending the fiscal strategy of the next administration,” he said.

Abad said Aquino’s successor would also inherit a healthy national economy.

“The strong macroeconomic fundamentals, in particular the low and stable inflation environment, favorable interest rates, sustained OFW remittances, vibrant business process outsourcing and increasing tourism receipts continue to drive the economy,” he added.

‘Bold and daring’

Speaker Feliciano Belmonte Jr., for his part, said Congress should ensure sufficient and timely funding for Duterte’s “bold and daring” economic programs.

Belmonte said now that the 10-point economic agenda of the incoming Duterte administration has been laid down, Congress should ensure appropriate funding for each program in the 2017 national budget.

He said the incoming administration is “prioritizing greater social inclusiveness in development and for building social cohesion into any growth strategy.”

Belmonte said the economic plan laid out at the Davao Business Summit clearly pivots the budget toward the agriculture sector in which a majority of the poorest Filipinos are engaged.

“It is not only our responsibility in Congress to look into each item of the detailed economic program, but also to ensure the necessary funding will be available to fully implement the agenda for the welfare of the people and the nation,” Belmonte said.

By adopting the regional growth center approach, the incoming administration ensures the poorest provinces will be first in line in terms of investments from the government, he said.

He also cited the economic plan’s emphasis on the manufacturing sector, which provides stable jobs and wages, unlike the subsistence salaries in the service sector.

“It is an empowering vision for our people, bold in taking on the harder path of building prosperity with the poor and daring in pushing greater equality in our society,” Belmonte said.

He said Congress must speed up its work to adjust to Diokno’s plan to hold off the submission of the 2017 budget for two to three weeks.