How government plans to fund proposed P3.757T 2019 budget

Mara Cepeda
How government plans to fund proposed P3.757T 2019 budget
The General Appropriations Bill on the proposed 2019 budget is finally sponsored at the House plenary for 2nd reading after a two-day delay

MANILA, Philippines – The House of Representative has finally kicked off the plenary debates on the proposed P3.757-trillion budget for 2019 on Wednesday, September 19 after a two-day delay. 

House committee on appropriations vice chairperson Maria Carmen Zamora sponsored House Bill No. 8169 or the General Appropriations Bill (GAB) on the 2019 budget for 2nd reading approval at the plenary.

In her speech, Zamora said the administration of President Rodrigo Duterte plans to finance the 2019 budget primarily through taxes, non-tax revenues as well as locally and internationally borrowed resources. 

The proposed 2019 budget is set follow a cash-based budgeting system.

Sponsorship of the 2019 budget, is normally done by the chair of the committee on appropriations. The current chairperson is Karlo Nograles.

But jurisdiction over the GAB was taken from his panel on Tuesday, September 18 after the House leadership convened the committee of the whole that realigned P51.792 billion from the funds of the Department of Public Works and Highways.

This happened after the House leadership discovered around P50 billion worth of allegedly “misplaced” funds in 2019. (READ: Makabayan on ‘pork barrel’: Lawmakers fighting over people’s money)

How much will come from taxes? Zamora said the government plans to raise P3.208 trillion in revenues in 2019. 

Of this amount, P3.018 trillion or 94.1% will be in the form of taxes. Collections from the Bureau of Internal Revenue will comprise the bulk with P2.331 trillion.

The Bureau of Customs’ collections, meanwhile, is expected to contribute P66.2 billion while other offices’ contributions will be at P25 billion.

How much will come from non-tax revenues? For non-tax revenues, Zamora said the amount will be at P188.3 billion, while P2 billion is to be expected from the sale of government assets. 

How much will come from borrowed resources? For the remainder, the Philippine government also plans to fund the 2019 budget by borrowing a total of P1.189 trillion.

A total of P282.7 billion or 24% of this amount will be borrowed from foreign creditors, while the remaining P906.2 billion or 76% will be sourced domestically. 

“Of the total borrowings, P624.4 billion will be used to finance the deficit, settle P146.3 billion in maturing debt obligations, and the balance includes contributions to the bond sinking fund, and maintain sufficient cushion of cash in the Treasury,” said Zamora.

Why a cash-based 2019 budget? Zamora also defended the switch from an obligation-based to a cash-based budgeting system next year. 

A cash-based budgeting system limits contractual obligations and disbursing payments to goods delivered and services rendered within the fiscal year.

This means implementing agencies need to complete their contracts by the end of 2019, regardless of possible delays. Projects that are “not implementation-ready” will be removed from the proposed budget. 

Zamora said the cash-based budgeting system “promotes discipline” among agencies and would require them to have “better planning, early procurement, and greater coordination among agencies.”

She added a cash-based budget would address underspending.

“It supports the government’s expansionary policy by addressing underspending, enabling it to double expenditures for infrastructure services and expand social services and supports the government’s growth target of 7-8% during the period,” said Zamora. 

Members of the House initially rejected the budgeting system, saying it leads to across-the-board budget cuts that would limit government programs. Budget hearings at the House and the Senate were temporarily suspended.

But President Rodrigo Duterte’s intervention led to the executive and legislative branches to agree on 6-month extension to allow agencies to make their payments given the implementation of a cash-based budget system for 2019. – Rappler.com

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Mara Cepeda

Mara Cepeda specializes in stories about politics and local governance. She covers the Office of the Vice President, the Senate, and the Philippine opposition. She is a 2021 fellow of the Asia Journalism Fellowship and the Reham al-Farra Memorial Journalism Fellowship of the UN. Got tips? Email her at mara.cepeda@rappler.com or tweet @maracepeda.