Social Watch: 2015 Budget and Congress Power of the 'Coin Purse

Professor Emeritus Leonor Magtolis Briones

Former National TreasurerLead Convenor, Social Watch Philippines

August 14,2014Max’s Restaurant, QC Memorial Circle

No improvement in poverty for the No improvement in poverty for the past seven yearspast seven years

Source: 2012 Full Year Official Poverty Statistics; 2013 First Semester Official Poverty Statistics, PSA-NSCB

Poverty Incidence (PI) and Subsistence Incidence among Population (%), 2006, 2009, 2012 and 2013 1st sem

Fiscal ProgramFiscal Program

PARTICULARSPARTICULARS2013 2013

Adjusted Adjusted ProgramProgram

2014 2014 ProgramProgram

2015 2015 ProposedProposed

2016 2016 ProposedProposed

Levels in Billion Pesos Revenues Disbursements Surplus/(Deficit) Obligation Budget

Per cent of GDP Revenues Disbursements Surplus/(Deficit) Obligation Budget

Growth Rate Revenues Disbursements Surplus/(Deficit)* Obligation Budget

1,745.91,983.9(238.0)2,005.9

14.716.7(2.0)16.8

13.711.62.09.7

2,018.12.284.3(266.2)2,264.6

15.517.5(2.0)17.4

15.615.1

(11.9)12.9

2,337.32,622.6(285.3)2,605.9

16.218.2(2.0)18.0

15.814.8(7.1)15.1

2,760.83,082.8(322.0)3,077.9

17.119.1(2.0)19.0

18.117.5

(12.9)18.1

GDPGross Financing Mix (%) Foreign Domestic

11,914.5

8.092.0

12,990.3

15.085.0

14,463.5

11.089.0

16,179.0

9.091.0

Notes: *A positive growth rate indicates an improvement in the fiscal balance Source: DBM NBM 119 based on DBM, DOF, and NEDA data

Sources of Revenue

Sources of Tax Revenues, FY 2015

*Includes incremental revenues for BIR from Republic Act No. 10351 (Sin Tax Reform Law of 2012)Source: FY 2015 BESF, primarily from the Department of Finance

Revenue ProgramRevenue Program

Amount (in million pesos)

Net Income Taxes and Profits1,032,120

Tax on Property5,017

Taxes on Domestic Goods and Services700,821

Taxes in International Trade and Transactions456,468

Total2,337,333

Amount (in million pesos) Growth rate (%)

2013 2014 2015 2013-2014 2014-2015

Tax Revenues 1,535,698 1,879,918 2,194,427 22.41 16.73

Non-tax Revenues 177,459 136,133 140,906 (23.29) 3.51

Privatization 2,936 2,000 2,000 (31.88) 0.0

Total 1,716,093 2,018,051 2,337,333 17.6 15.82

National Government FinancingNational Government FinancingFY 2013 to FY 2015 (in million pesos)FY 2013 to FY 2015 (in million pesos)

Particulars 2013a/ 2014 2015

GROSS FOREIGN BORROWINGS 33,767 130,500 95,700

Net Foreign Borrowings (83,821) 4,236 20,898

GROSS DOMESTIC BORROWINGS 520,934 620,011 605,122

Net Domestic Borrowings 402,939 279,734 289,537

NET FINANCING 319,118 283,969 310,436

CHANGE IN CASH 65,933 16,002 24,978

TOTAL NET FINANCING REQUIREMENT 164,062 266,247 283,687

a/ Based on actual data reported in the Cash Operations Report (COR)Source: FY 2015 BESF, primarily from the Bureau of the Treasury

Debt trap. While government is planning to borrow a total of P700.822 Billion, it will only receive P310.435 Billion for both peso and foreign borrowings due to costs of borrowing and other charges.

Debt Servicing in the P2.606 T budget Debt Servicing in the P2.606 T budget does not reflect Principal Amortizationdoes not reflect Principal Amortization

NG Debt Service Expenditures

(in million pesos)2013 2014 2015

Interest Payments 323,434 352,652 372,863

Domestic 222,317 255,970 277,565

Foreign 101,117 96,682 95,298

Principal Amortization 235,583 466,542 390,386

Domestic 117,995 340,277 315,585

Foreign 117,588 126,264 74,802

GRAND TOTAL 559,017 819,194 763,250

Source: FY 2015 BESF, primarily from the Bureau of the Treasury

Source: FY 2015 Budget of Expenditure and Sources of Financing: DBM

Note: Net Lending amounts to PhP16.626B in 2013, PhP24.95Bin 2014 and PhP26.5B for 2015. This is equivalent to percentage distribution of 0.83%, 1.1% and 1.02% in expenditure program by sector respectively.

Allocation by SectorAllocation by Sector

In B

illi

on

s o

f P

eso

s

*Are Personal Services understated?


Allocation By General Expense Allocation By General Expense ClassClass

Allocation by RegionAllocation by Region


In Billion Pesos

Where are the poor? Where are the poor? The 16 poorest provincesThe 16 poorest provinces

Province 2012 Poverty Incidence (%)

Island Region

Lanao del Sur

67.3 Mindanao

Eastern Samar

55.4 Visayas

Apayao 54.7 Luzon

Maguindanao 54.5 Mindanao

Zamboanga del Norte

48.0 Mindanao

Sarangani 46.0 Mindanao

North Cotabato

44.8 Mindanao

Negros Oriental

43.9 Visayas

Northern Samar

43.5 Visayas

Source: 2012 Full Year Official Poverty Statistics, National Statistical Coordination Board

*10 of the 16 poorest provinces are situated in Mindanao; 3 out of 4 in Visayas from the Samar provinces

Province 2012 Poverty Incidence (%)

Island Region

Western Samar

43.5 Visayas

Bukidnon 41.5 Mindanao

Lanao del Norte

41.4 Mindanao

Camiguin 41.0 Mindanao

Masbate 40.6 Luzon

Sultan Kudarat

40.4 Mindanao

Sulu 40.2 Mindanao

WHAT THE 2015 NATIONAL BUDGET WHAT THE 2015 NATIONAL BUDGET LOOKS LIKELOOKS LIKE

The Budget is like a huge, huge box. When it is opened, there are smaller boxes.

National Expenditure

Program Ph2.606 trillion

draft General

Appropriations Act Ph1.74 trillion

Automatic Appropriations Ph866.2 billion

The first smaller box is composed The first smaller box is composed of two even smaller boxes: the of two even smaller boxes: the budgets of agencies and the budgets of agencies and the special purpose funds. in the first special purpose funds. in the first of the two smaller boxes are the of the two smaller boxes are the agencies with the ten highest agencies with the ten highest budgetsbudgets

General Appropriations

Act PhP 1.74 trillion

Special Purpose FundsPhP 378.5 billion

Agency BudgetsPhP 1.361 trillion

There are still items which There are still items which are not listed in the are not listed in the expenditure program.expenditure program.still another box with a still another box with a different color. Inside this different color. Inside this box are two boxes: off box are two boxes: off budget items and direct budget items and direct remittances. the other box remittances. the other box contains the contains the unprogrammed unprogrammed expenditures. expenditures.

Not in the Expenditures/ Not in the Gen. Appropriations Act

Unprogrammed FundsPh 123 billion

Off Budget items and Direct RemittancesPh 40.6 billion

OUTSIDE THE EXPENDITURES BOX

Top 12 Agencies, FY 2013-2015

Dept. FY 2013 GAA

(‘000)

R a n k

FY 2014 GAA

(‘000)

R a n k

FY 2015 NEP

(‘000)

R a n k

DepEd 232,595,221 1 281,774,247 1 318,896,319 1

DPWH 155,517,533 2 206,634,047 2 287,825,956 2

DSWD 56,333,858 6 83,304,463 5 108,880,894 3

DILG 91,164,442 3 100,295,430 3 104,571,005 4

DND 80,420,311 4 82,265,071 6 99,469,167 5

DOH 51,074,586 5 84,356,933 4 87,209,479 6

DOTC 34,185,121 8 45,461,306 8 52,874,342 7

DA 64,474,099 5 68,596,751 7 48,435,703 8

SUCs 32,770,703 9 35,934,625 9 41,224,509 9

ARMM 13,172,022 13 19,615,029 12 24,299,773 10

DENR 23,135,850 10 23,345,621 10 20,849,411 11

The Judiciary 17,006,107 12 18,559,816 13 19,499,422 12

Proposed Special Purpose Funds for 2015Proposed Special Purpose Funds for 2015SPECIAL PURPOSE FUNDS

(in ‘000) GAA 2013GAA 2014

NEP 2015

Budgetary Support to Government Corporations

44,664,500 46,255,210 61,319,392

Allocation to Local Government Units 17,529,452 19,588,843 33,131,405

National Disaster Risk Reduction Management Fund 7,500,000 13,000,000 14,000,000

Contingent Fund 1,000,000 1,000,000 2,000,000

DepEd School Building Program 1,000,000 1,000,000 -

E-Government Fund 1,000,000 2,478,900 1,000,000

International Commitments Fund 2,636,723 4,815,644 7,443,963

Miscellaneous Personnel Benefits Fund

69,089,206 53,535,086 118,142,443

Pension and Gratuity Fund (formerly Retirement Benefits Fund)

98,715,143 120,495,952 140,566,386Source: GAA 2013-2014: DBM; FY 2015 National Expenditure Program

Proposed Special Purpose Funds for 2015Proposed Special Purpose Funds for 2015

1 The PhP22.4 Billion Priority Social and Economic Projects Fund proposed in the 2013 National Expenditure Program was later realigned to concerned agencies as a result of the campaign of ABI for the 2013 Budget.

SPECIAL PURPOSE FUNDS

(in ‘000)

GAA 2013 GAA 2014 NEP 2015

Priority Development Assistance Fund

24,790,000 - -

Priority Social and Economic Projects Fund1 -

Feasibility Studies Fund - 400,000 -

Rehabilitation & Reconstruction Program

20,000,000 1,000,000

TOTAL (in ‘000) 267,925,024 282,569,635 378,603,589

Source: GAA 2013-2014: DBM; FY 2015 National Expenditure Program

UNPROGRAMMED FUNDS (in ‘000)

GAA 2013 GAA 2014 NEP 2015

Budgetary Support to GOCCs 16,826,406 3,036,268 5,060,762

Support to Foreign-Assisted Projects 2,226,655 6,124,491 3,095,319

General Fund Adjustments (for the Share of the ARMM pursuant to R.A.9054; NEP 2015) 1,000,000 1,000,000 800,000

Support for Infrastructure Projects and Social Programs

23,000,000 20,000,000 20,000,000

Disaster Relief & Mitigation Fund - 3,000,000 -

Debt Management Program

60,363,130 1,000,000 -

Proposed Unprogrammed Funds for 2015Proposed Unprogrammed Funds for 2015


UNPROGRAMMED FUNDS (in ‘000)

GAA 2013 GAA 2014NEP 2015

AFP Modernization Program 10,632,180 5,000,000 10,000,000

Risk Management Program - 20,000,000 30,000,000

Payment of Total Administrative Disability Pension 3,000,000 243,000 -

Reconstruction and Rehabilitation Program

- 80,000,000 -

People’s Survival Fund

500,000 500,000 -

Equity Value Buy-out of the Metro Rail Transit Corporation 0 0 53,900,000

TOTAL (in ‘000) 117,548,371 139,903,759 123,056,081

Proposed Unprogrammed Funds for 2015Proposed Unprogrammed Funds for 2015


AUTOMATIC APPROPRIATIONS

(in ‘000)GAA 2013 GAA 2014 NEP 2015

Interest Payments for Debt Service 333,902,000 352,652,000,000 372,863,000

Internal Revenue Allotment 302,304,001 341,544,726,000 389,860,429

Tax Refunds15,518,556 -

Pension under RA 2087 & 5059 331,000 331,000 331,000

Grant Proceeds 545,844 6,450 140,902

Custom duties and taxes, including Tax expenditures 26,900,000 26,900,000 25,475,000

Net Lending 26,500,000 24,950,000 26,500,000

Employees’ retirement and life insurance premiums 28,125,611 28,859,006 30,149,491

Rewards and Incentives Fund 2,182,808 - -

Special accounts in the general fund 19,240,064 21,116,662 21,242,275

TOTAL 755,219,215 796,029,175 866,231,428

Proposed Automatic AppropriationsProposed Automatic Appropriations for 2015for 2015


Issues on Special Purpose Funds, Automatic Issues on Special Purpose Funds, Automatic Appropriations and Unprogrammed FundsAppropriations and Unprogrammed Funds

Lump sum appropriations have always been problematic

◦ since these are not as detailed as regular appropriations, they tend to be vulnerable to abuse.

◦ accountability is sometimes difficult to establish and documentation difficult

◦ in the Philippines, lump sum appropriations include special purpose funds, overall savings and unprogrammed funds

To SummarizeTo Summarize Total projected National Expenditures-Ph2.758 trillion General Appropriations - Ph1.740 trillion Unprogrammed Expenditures- 123 billion Off Budget Remittances- 29 billion Automatic appropriations- 866 billion

General Appropriations Act to be passed by Congress - Ph1.740 trillion Special Purpose Funds- 379 billion Agency Budgets to be examined 1.361 trillion, of which

are Personnel Expenditures 761 billion free for detailed examination by

Congress 600 billion

WHO HAS THE REAL POWER OF WHO HAS THE REAL POWER OF THE PURSE?THE PURSE?

For the next four months, Congress will work on the budget and approve it by December.

If the Evardone bill will be passed the President can declare savings by January or any other time of the year.

Even now, the DBM has written to Malacanang changing the definition of savings and proposing a bill for approval by Congress.

WHO HAS THE POWER OF THE WHO HAS THE POWER OF THE COIN PURSE?COIN PURSE?

Congressmen and Senators are anxious to ensure their re-election. They are now under pressure to approve either of the proposed bills.

Will they regain their lost Power of the Purse?

Documents

Social Watch: 2015 Budget and Congress Power of the 'Coin Purse