2015 Budget Message of President Aquino Posted on July 30, 2014 Message of His Excellency Benigno S. Aquino III President of the Philippines to the Sixteenth Congress of the Philippines on the National Budget for Fiscal Year 2015 July 30, 2014 Ladies and Gentlemen of the 16th Congress of the Philippines: By the mandate vested upon me by the sovereign will of the Filipino people, I have the honor to submit to you, through the President of the Senate and the Speaker of the House of Representatives, the proposed National Budget for 2015. A Stronger Relationship of Accountability We begin the annual process of Budget legislation in a truly remarkable time. In the last 12 months, we witnessed the unfolding of events that led our country toward an irreversible juncture in our history. We witnessed the awakening of our people, who now demand greater accountability from their government, and the call for a stronger voice in the process of allocating and spending public funds. We promptly responded to this plea by intensifying the pursuit of reform, especially in the way the government manages our people’s taxes. We discovered the great injustice committed by some public officials who abused the Priority Development Assistance Fund (PDAF), in collaboration with syndicates who used fake non-government organizations. We have never relented in seeking justice against those who broke our people’s trust. Likewise, we all took the high road to respond to the call of the times. In abolishing the PDAF, we established a system that is now more transparent and accountable, one that ensures each peso spent truly benefits our people. My fellow public servants, as we continue to aim for greater public accountability, we cannot expect those who benefit from the old system to cower and stand down. As we have seen, they will continue to fight tooth-and-nail to protect their vested interests, to stymie the reforms that we have rolled out since the beginning and are now gaining ground, and to cast doubt on our intentions in the minds of the public. In their desperation, they pull all stops to weaken the ability of this government to sustain its pursuit of the Daang Matuwid. For our people’s sake, we cannot let them win. Take the case of the Disbursement Acceleration Program (DAP), a reform measure we introduced in 2011 to counter government underspending that was a result of inherent weaknesses in our budgeting systems. At the heart of the DAP is our belief that the government cannot afford to do nothing—it must choose to use its powers under the Constitution, powers that previous administrations had also used, to respond to urgent challenges that our people face today. Even our harshest critics concede that the DAP was beneficial to our economy and our people. While we respect the authority of the Supreme Court, we humbly believe that its decision on the DAP failed to consider all our legal bases; more so that it hinged on a rigid and inflexible conception of public finance. The right thing for us to do is to file a motion for reconsideration on the high court’s ruling because we must ensure that our hands are not tied in fulfilling our mandate to spend each peso with efficiency, speed, and maximum impact. Pinaiigting lamang ng lahat ng mga pangyayaring ito ang sama-sama nating pagtahak sa Daang Matuwid. Higit na nagiging malinaw ang ating landas tungo sa tunay na pagbabago. Mga kapwa lingkod-bayan: nararapat lang na ipagpatuloy natin ang laban. Since the beginning of my Administration, we have pursued public financial management reforms to establish a regime of Paggugol na Matuwid—a budgeting system that ensures spending within our means, on the right priorities, and with measurable results. We have anchored our reform agenda on our conviction that greater transparency and citizen’s engagement ensure a budgeting system that works solely for the people and by the people. Ladies and Gentlemen of Congress, now more than ever, I ask for your support for Paggugol na Matuwid. As you have done so in the past Budgets under my Administration, I look forward to your continued and ever-stronger support for our budget reform agenda, as embodied in this Proposed Budget for 2015 that we submit to you today, as well as in a Public Financial Management reform bill that we will soon submit for your consideration. As we continue our work to transform the budget process, we must likewise transform our relationship—between Congress and the Executive—into one that is defined by greater public accountability. Now is the perfect time to clarify our roles in determining the allocation and use of public funds, in which the Executive proposes and implements the Budget, Congress reviews and approves it, and the Executive thereafter accounts for its performance. We redefine our relationship this way to empower our people, our bosses, to hold us responsible for how we manage the nation’s coffers. Ultimately, our people will hold us accountable for how we leverage the Budget to bring true prosperity to our country and to our people, especially the poor and disadvantaged. As our country achieves a new path of rapid and unprecedented growth, moving away from the past periods of boom and bust, we must acknowledge that growth alone cannot solve poverty. We must translate our economy’s continued growth to real and tangible benefits for the poor. We must empower our people to stand on their own two feet and create the lives that they desire. Nananagutan tayo. Sa pamamagitan ng Paggugol na Matuwid, sinisiguro natin ang Kaunlaran Para Sa Lahat. A Budget for Inclusive and Sustained Development Ladies and Gentlemen of the 16th Congress, on behalf of our people, I ask you to examine and thereafter approve this proposed P2.606-trillion National Budget for 2015—a Budget for Inclusive and Sustained Development. We built this Budget around the idea that no one, especially the poor and the vulnerable, should be left behind. At the core of this Budget is our belief that our people are our country’s greatest resource, they who have made our country’s achievements possible. We likewise believe that it is through their collective will and action that our country can achieve greater prosperity that truly benefits all. Matutupad lamang natin ang kaunlarang pangkalahatan kapag patuloy nating panghahawakan ang panata natin para sa pagbabago.Ang taumbayan ang ating Boss. We must always remember that inclusive development can only happen if public institutions act in accordance with the people’s interests. After all, the government can only effectively deploy scarce resources where they are needed the most if it is built on strong foundations of transparency, accountability, and efficiency. The government can only address the citizen’s pressing needs if the people themselves are empowered to participate in its decision-making processes. Allow me to discuss the key features and reforms that shaped this proposed Budget for 2015: This Budget expands with the economy and supports further economic expansion.International experts and other independent observers attest that our economy is on the path to sustainable prosperity. We attribute this manifestation to four years of our firm political will and determination in reforming the government. This state of affairs has provided us enough resources to change the circumstances of our people. Indeed, good governance is good economics. As the Philippine economy continues to expand, the government’s investments for inclusive growth must grow as well. Thus, the proposed Budget for 2015 reflects a 15.1 percent increase over the 2014 General Appropriations Act (GAA). Net of the debt burden[1], the Budget increases by a faster rate at 16.9 percent year-on-year. The total proposed Budget is equivalent to 18.4 percent of gross domestic product (GDP), higher than the 17.7 percent of GDP in 2014. Certainly, it is not enough to increase the Budget per se, as we must likewise ensure that resources are invested in the right priorities. Since the beginning, we have transformed the distribution of the Budget. In 2005, the shares of the Social and Economic Services sectors hovered at 27 percent and 18.3 percent, respectively; while the Debt Burden received the largest slice at 31.6 percent. In 2015, the shares of Social and Economic Services will improve to 37.1 percent and 26.9 percent, respectively, while the Debt Burden will decline to 15.3 percent. Once again, we focused this Budget for 2015 on interventions that our poor sectors need. The Philippines’ historically low level of spending on public infrastructure had constrained economic growth. We see it in congested ports and thin margins of electricity supply. Thus, we commit to increase infrastructure spending to a more respectable level of 5 percent of GDP by 2016. In 2015, the budget for infrastructure will increase to 4 percent of GDP, from 3.4 percent in 2014. This Budget focuses on the imperatives of inclusive development. We reshaped government budget priorities to focus on inclusive development, particularly the need to invest in our people through adequate and well-targeted social protection and basic social services and to create more meaningful employment and livelihood opportunities. We reduced poverty incidence to 24.9 percent of Filipinos in the first semester of 2013, from 27.9 percent and 28.6 percent in the same period of 2012 and 2009, respectively. Unemployment likewise fell slightly to 7.0 percent in April 2013, from 7.6 percent in the same period last year. However, our work is not yet done—we must intensify and sharpen the focus of government interventions to substantially reduce poverty. Since the beginning, we have implemented reforms to ensure that the government spends on the right priorities. We introduced the practice of issuing a Budget Priorities Framework[2], one that is consistent with our national planning framework, at the beginning of the annual budget preparation process. This framework aims to guide departments and agencies in designing their respective budget proposals. The 2015 Budget was designed following the objectives outlined by this framework: • Sustain economic expansion and facilitate the creation of more jobs; • Accelerate poverty reduction by expanding key social protection and social services; • Manage climate risks and “build back better” the communities ravaged by recent disasters; and • Establish an enabling environment for inclusive development through lasting peace and the rule of law; and, above all, through good governance. To support the effective roll-out of this Budget Priorities Framework, we called on all agencies to sustain the Program Budgeting Approach. This method ensured that the proposed Budget was crafted by one, cohesive government, as departments and agencies responsible for major government programs collaborated to unify their strategies in order to maximize the impact of their resources. This Budget prioritizes the needs of poor and vulnerable localities. This proposed Budget does not only increase public investments in priority social and economic services but also focuses on interventions in the specific development needs of poor localities. In ensuring that our economic growth truly benefits all, it is critical for us in government to know who and where the poor are, and to tailor-fit interventions according to the needs of underdeveloped localities. As we seek to leave no region, province, or community behind, we will work more aggressively to disperse wealth and opportunity across the archipelago. Rather than taking the “one-size-fits-all” approach of the past, we take cognizance of the specific needs and realities of localities, and suit interventions accordingly. Thus, the Budget Priorities Framework that we issued for the 2015 Budget correspondingly identified 44 provinces under the following Geographic Focus Areas: • Provinces with high poverty magnitude, where we must create more job opportunities; • Provinces with high poverty incidence, which require adequate social safety nets; and • Provinces which are most vulnerable to shocks and disasters. In crafting the 2015 Budget, we tasked departments and agencies to not only prioritize these provinces, but also to suit their service delivery strategies according to the specific needs of these provinces. This Budget increases the people’s voice in the use of their taxes. My administration is committed to deepen transparency and citizen’s engagement in the government’s financial affairs because we believe that an invigorated economy requires an empowered citizenry. Since the beginning, we have established mechanisms that give people a greater voice on how national resources are allocated and utilized. Through the Grassroots Participatory Budgeting Process (formerly Bottom-Up Budgeting), which we first employed in crafting the 2013 proposed Budget, we directly involved grassroots communities in the process of formulating and implementing the annual National Budget. For the 2015 Budget, community-based organizations and local CSOs engaged 1,633 cities and municipalities in developing local poverty reduction programs and projects—an expansion from the 595 cities and municipalities covered by the 2013 Budget process and the 1,225 cities and municipalities in the 2014 Budget process. The result was a larger allocation of P20.9. billion in 2015, from P8.0 billion in 2013 and P20.0 billion in 2014, to fund local projects, such as potable water supply, agricultural infrastructure and facilities support, rural healthcare facilities, and sustainable livelihood programs. We continue to nurture policies and innovations that Promote Greater Fiscal Transparency and Participation. We sustained the process of Budget Partnership Agreements between the national agencies and civil society organizations, and expanded its application to monitoring the implementation of the Budget. We enabled the meaningful participation of citizens in the budget process by giving citizens greater access to information on the budget—from requiring government agencies to publish in their websites their financial and physical accomplishments through the Transparency Seals to leveraging technology and making more data available in open format, and even up to disseminating budget information to ordinary citizens in a more understandable format through the People’s Budget. This Budget increases government’s accountability for the results of public spending. We continue to enforce the basic management principle that each peso that the government spends must be tightly linked to measurable results. Last year, for the first time, we asked Congress to review and approve a budget for 2014 that included not only the financial allocations but also the performance targets that each government agency must meet. We called this the Performance Informed Budgeting (PIB), a budgeting paradigm that enables Congress—and the broader citizenry—to better scrutinize the government’s spending plan and to hold departments and agencies accountable for their performance. In crafting the 2015 Budget, we took the PIB to a higher level. If the performance targets presented in the 2014 Budget were pegged against the outputs, or the tangible goods and services, that agencies must deliver, the proposed Budget for 2015 now includes indicators of outcomes. Hence, this Budget does not only show how many households, for example, will benefit from the Pantawid Pamilyang Pilipino Program, but also discloses how many of these beneficiaries will actually be lifted from a level of survival to a level of subsistence, and eventually to a level of self-sufficiency. Our honorable legislators, this is a Budget that enables you in Congress to hold us responsible not only for how we disburse public funds, but more importantly for how effectively we deliver services, and how we are able to meet our socio-economic development goals. Moreover, as we strengthen the complicated link between budgets and results, we also continue to provide incentives for the bureaucracy’s timely delivery of results. We will expand the Performance-Based Incentive System given the positive results it has so far achieved in encouraging better management and teamwork. In 2012, we gave performance-based bonuses, which public servants received on an individual basis depending on how they and their respective units achieved their targets. In 2015, we will shift the P5,000 across-the-board Performance Enhancement Incentive to a one-month bonus for agencies that meet their 2014 targets. We will continue to explore ways to enhance the government compensation and position classification system in order to incentivize performance in the civil service. This Budget supports the rapid and effective delivery of public services. A Budget that is closely aligned to the Philippine Development Plan and is reflective of our people’s priorities will lose its purpose if government agencies are not able to deliver planned results or fail to spend their budgets in a prompt manner. Thus, we continue to pursue reforms not only to accelerate disbursements but also to improve the ability of the bureaucracy to deliver services in a rapid and effective manner. We will continue to de-clog the budget implementation process to enable agencies to implement their programs and projects as early as possible. We will sustain the GAA-as-Release Document policy, which considers the agencies’ budgets as released to them, ready for implementation on the first day of the fiscal year. We will continue to make Procurement Innovations as we have instructed agencies to complete their pre-procurement and detailed engineering activities before the Budget is passed to enable the awarding of contracts at the beginning of the fiscal year; and we will strengthen the bids and awards committees and procurement units of agencies and study measures to attract more bona fide contractors and suppliers to join the government’s bidding process. Accordingly, we ask Congress once again to impose a One-Year Validity of Appropriations, which will no longer allow the use of budgets intended for the year to carry-over to the succeeding year. This policy, we believe, encourages departments and agencies to utilize their allocated funds as early as possible, rather than to postpone the implementation of programs and projects to the following year. It also makes the accounting of the use of funds and the implementation of programs and projects more straightforward and transparent. We also saw it fit to clarify the Definition and Use of Savings and Augmentation in light of our policy to push agencies to spend their budgets, or else, to “lose it.” Given that this proposed Budget will be valid for one year, it will be counter-intuitive to allow the declaration of savings and augmentation of deficient budget items only at the end of the year. Thus, the proposed general provisions of this Budget seek to allow the declaration of savings by the end of the first semester—a realistic timeframe, as it gives enough time for the implementation of augmented programs and projects. This Budget enhances the health of government’s finances. Finally, as we increase and speed-up public spending on development priorities, we will not burden future generations with more indebtedness. Because we put our fiscal house in order by reducing our deficit by plugging tax leakages and improving our debt metrics, our country has regained its credibility among the investing community. Our investment grade credit ratings only demonstrate our commitment to our fiscal consolidation strategy. We will not waste our newfound stature in the market, for this is important not only in reducing the cost of financing but also in enticing more foreign investments in our country. Thus, this proposed Budget remains consistent with the government’s fiscal consolidation strategy of reducing outstanding public debt from the 52.4 percent of GDP that we inherited in 2010 to 46.6 percent by 2015; and keeping our fiscal deficit to 2.0 percent. Financing the 2015 Expenditure Plan Our honorable legislators, we hinged the financing plan for the 2015 Proposed Budget on the robust macroeconomic and fiscal environment that we have achieved and nurtured since the beginning of my Administration. Macroeconomic Environment We prepared this Budget to sustain the strong macroeconomic environment that we have attained in our four years in office—a vibrant GDP growth, a manageable inflation, a stable foreign exchange rate, low interest rates, and a sustained export growth. Hence, this Budget will provide the impetus for our economy to post a 7.0 to 8.0 percent growth in 2015 and 7.5 to 8.5 percent growth in 2016 after our GDP in 2013 grew by an outstanding 7.2 percent, among the highest in our region. We look forward to drivers of growth in 2015, including stable basic commodity prices, the influx of new investments, a healthier manufacturing sector, buoyant international and domestic tourism, stronger exports, and improved external trade conditions. Table 1: Macroeconomic Assumptions, 2013-2015 Sources: BSP, NEDA, NSCB Fiscal Program We will maintain our budget deficit at 2.0 percent of GDP, which is equivalent to P283.7 billion[3]. This level will enable us to balance the need for increased public investments while keeping them within our means. To achieve this, we will continue to pursue reforms to increase revenue collections without burdening our people with additional debt. We will leverage our investment grade credit ratings to further reduce the cost of our borrowings and size of our debt stock. Revenues. Our proposed Budget will be mainly financed by our improved revenue generation amounting to P2.337 trillion. This revenue target represents a 15.8 percent increase over the 2014 program, and is equivalent to a higher 16.5 percent of GDP. Tax revenues amounting to P2.194 trillion will account for 93.9 percent of the total revenue inflow; and the remainder will come from non-tax sources (P140.9 billion) and privatization (P2.0 billion). Collections of the Bureau of Internal Revenue (BIR) are projected to increase by 18.3 percent. The increase in BIR collections to P1.72 trillion next year or 12.1 percent of GDP will be realized as government continues to aggressively plug tax collection loopholes and bring tax evaders to justice. As of June 2014, the BIR has filed a total of 253 cases with the Department of Justice under the Run After Tax Evaders (RATE) program. Likewise, our continued pursuit of reforms at the Bureau of Customs (BOC) will enable the agency to raise its collections to P456.5 billion, which is equivalent to 3.2 percent of GDP. We will continue to build on our recent achievement of recording monthly double-digit growth rates for the first five months of this year. The organizational reforms we have instituted at BOC, the intensified anti-smuggling campaign, and the trade facilitation systems we have installed are clearly breathing new life and energy into the agency. Meanwhile, other revenues will come from the collections remitted to the Bureau of the Treasury (BTr) such as BTr’s own income (P37.3 billion), fees and charges (P34.4 billion), national government shares and dividends (P20.7 billion, of which P5.5 billion are projected dividends from government-owned or -controlled corporations) and sale of government assets (P2.0 billion), among others. 1. In 2015, we will borrow P700.8 billion in a manner consistent with our medium-term goal of reducing our debt stock, particularly our external debt. In the process, we help develop domestic capital markets. Of this amount of gross borrowings programmed for next year, P283.7 billion will be used to plug the projected fiscal deficit, P390.4 billion to amortize the principal of our outstanding debt (P315.6 billion for domestic and P74.8 billion for external), and P26.7 billion for the national government’s cash buffer account. Out of our borrowing program next year, we will raise 86.3 percent or P605.1 billion from the domestic market. Meanwhile, the remaining P95.7 billion, or 13.7 percent of the total borrowing program, will be sourced externally through concessional loans from development partners and commercial borrowings from the global capital markets. Investments for Inclusive Development in 2015 Since the beginning, my Administration has worked to make the Budget more biased toward the poor and marginalized. Thus, social services will get a lion’s share of the P2.606 trillion expenditure program at 37.1 percent or P967.9 billion; while economic services will get 26.9 percent or P700.2 billion. As we make government more efficient and our finances more stable, we will be able to reduce the debt burden on our Budget to P399.4 billion, or a mere 15.3 percent share. Table 2: The Budget by Sector, 2014 vs. 2015 We will likewise continue to increase the portion of the Budget allocated for developmental expenditures—for operating expenditures for vital frontline services such as social protection, education, and healthcare; as well as for infrastructure. To support the former, maintenance and other operating expenditures will increase by 11.3 percent to P432.6 billionin 2015; and subsidies to government corporations by 36.3 percent to P61.3 billion. Meanwhile, infrastructure and other capital outlays will expand by 25.5 percent or to P506.4 billion, contributing to a total national government infrastructure program of P562.3 billion, equivalent to 4.0 percent of GDP and an increase of 27.2 percent over 2014. The infrastructure program of P562.3 billion includes subsidy to GOCCs and LGUs. Table 3: The Budget by Expense Class, 2014 vs. 2015 The following is a summary of the priority programs that we will invest in through the 2015 Budget: Job Generation and Economic Expansion We have seen that inclusive and sustainable growth is built on the backs of a vibrant private sector and a growing middle class. Hence, we will sustain the growth trajectory that we have nurtured since the beginning of my term, as we create more jobs and livelihood opportunities while providing strategic support for new investments and industries. This proposed Budget thus invests in building a seamless economy through world-class transport infrastructure; in modernizing our agriculture sector and improving the lives and incomes of farmers and fisherfolk; in the resurgence of our manufacturing sector; and in maximizing the potential of the tourism sector. Transport Infrastructure. Part of our economic war chest is the P230.4 billion transport budget that will lower the cost of and reduce the time for transporting goods and people; link farms to markets; facilitate access to tourism destinations; allow the creation of more business and employment opportunities; and enable citizens with easier access to social services. We allocated P195.1 billion for road transport. We will not just build roads—we will build them safe and strong and maintained in good condition. The DPWH’s budget for the Roads and Bridges Program of P174.5 billion will consider new construction design specifications, such as the increase in concrete pavement thickness from 230 mm to 280 mm to prevent the early deterioration of our roads caused by overloading. The Philippines’ ranking in the quality of roads indicator in the World Economic Forum Global Competitiveness Index has significantly improved from No. 114 in 2010-2011 to No. 87 in 2013-2014, making our roads at par with those in Indonesia and Vietnam. By 2016, we will bring them to the level of those in China and Thailand. Our roads will transport more people and goods, thereby spurring more trade and investments in safer, faster, and cheaper ways. We will build more airports and seaports as they stimulate and catalyze economic activity as well as provide employment opportunities. They provide access to local and global markets and trade, thereby fueling industries, including tourism. We increased the 2015 budget for aviation by 45.8 percent to P13.3 billion. We increased our budget for ports development to P1.5 billion from P1.1 billion in 2014. The amount will be used to construct, develop, repair and rehabilitate 40 seaports. To bolster our maritime security, we will provide the Philippine Coast Guard P3.5 billion to buy patrol vessels. These vehicles will not only enhance our capability to patrol the country’s extensive shoreline but also support search-and-rescue operations during calamities. Our P16.9 billion subsidy for railways in the 2015 Budget will enable us to reduce transfer time by 50.0 percent; transport cost by 8.5 percent; lessen logistics costs of goods and services from 23.0 percent to 15.0 percent; reduce transport-related accidents by 2.0 percent; and generate time savings equivalent to P54.0 billion. This will fund the rehabilitation of LRT Line1 and 2 (P2.8 billion); LRT Line 1 South Extension (P4.8 billion); LRT Line 2 East Extension (P2.4 billion) and West Extension (P200 million); MRT 3 subsidy (P4.7 billion) and infrastructure outlay (P804 million); and PNR Main Line South Rehabilitation (P547 million) and repair and rehabilitation (P200 million), among others. Agriculture Development. Ang pagpapalago sa agrikultura at pangingisda ay mas epektibong panlupig sa kahirapan ng ating mga kapatid na magsasaka at mangingisda sa kanayunan. We endeavor to increase the productivity of the agriculture and fisheries sector to 3.5-4.5 percent growth in Gross Value Added by 2016 and improve the lives of 1.685 million poor farmers and 346,345 poor fisherfolk. In line with the Budget Priorities Framework, and the need to be more discerning of the differing requirements of the three focus areas, we crafted the 2015 budget for agriculture development differently: a) All the services available for the Department of Agriculture (DA) and attached agencies and corporations can be harnessed to support the commodity production targets in a more coordinated manner. Hence, the P86.1 billion allocated for the Agricultural Development Program was an integration of the budget of the DA for the rice production and consumption targets, the budget of the National Irrigation Authority (NIA) for irrigation, the budget of the National Food Authority for buffer stocking, the budget of the Agriculture Credit Policy Council for credit requirements; and the budget of the Philippine Rice Research Institute (PhilRice) for research and development (R & D). b) Agricultural production was focused on the top producing provinces so that other farmers, including coconut farmers who numbered among the poorest, could benefit from crop diversification and the replanting of coconut and high value crops by affording them larger incomes. R&D extension and credit services for such crops were also provided, with P14.5 billion allocated for farm-to-market roads that would link poor farmers to markets and trading centers. We will invest P26.0 billion in agriculture infrastructure that will cover 20,650 hectares with new irrigation and drainage areas and restore existing ones in 23,200 hectares. This investment, focused on the top 33 rice-producing provinces, will help achieve a target production of 4.48 metric tons of rice per hectare. Similarly, the support for fish production was focused on the top 52 municipal fishing sites, including infrastructure (fish landings and fishports through the Philippine Fisheries Development Authority), post-harvest facilities, credit services, and farm-to-market roads. This provision will address our production targets and help our fisherfolk rise from poverty. Thus, the allocation for the Bureau of Fisheries and Aquatic Resources (BFAR) was increased by 28 percent to P6.02 billion over the 2014 budget of P4.92 billion. This budget will mainly provide for the construction of 252 fish landings. Not to be forgotten are our coconut farmers who have been reeling from low productivity and pest devastation. We allocated P4.09 billion to the Philippine Coconut Authority, an increase of 71.9 percent from its 2014 budget, for the construction of farm-to-market roads, coconut planting and replanting, eradication and control of pests, and development of coconut enterprise sites and coco agro-industrial hubs. Manufacturing Resurgence. We will rebuild the existing capacity of industries, strengthen new ones, and maintain the competitiveness of industries with comparative advantage. We will close the gaps in the supply chain, provide access to raw materials, and expand domestic markets and exports. We will likewise build-up agriculture-based manufacturing industries that generate employment, and support small-holder farmers and agri-cooperatives through product development, value-adding, and integration to big enterprises for marketing and financing purposes. We allotted P239.8 billion for the Manufacturing Resurgence Program, P874 million of which will be used to promote and develop small and medium industries; and P104.5 million to the upgrading and continuous development of plans, programs, and policies for industry development. The amount of P662 million is earmarked for the Small Enterprise Technology Upgrading Program, which will generate 12,681 jobs and service 1,841 firms. In addition, a fund of P1.1 billion, representing balances from the 2013 and 2014 Budgets, is still available for 2015 for the development of Shared Service Facilities under the Department of Trade and Industry (DTI). This provision will provide catalytic support to enterprising small and medium industries needing vital equipment to expand their production and reach. Tourism Development. Since I assumed office, we have made sure that the tourism industry plays a big part in generating more employment. In 2013, the industry directly employed 4.9 million, which was 32 percent higher than the 3.7 million employment generation in 2010. The industry likewise contributed P748.3 billion, or 6.5 percent, to GDP in 2013, 42.8 percent higher than the P523.9 billion or 5.8 percent contribution to GDP in 2010. Our tourism development budget for 2015 aims to employ 6.3 million workers, and increase its share to 5.7 percent of GDP valued at P974.0 billion. We intend to achieve this target by attracting 8.2 million international visitors and 51.7 million domestic travelers through improved market accessibility, connectivity, and destination infrastructure. Hence, we will infuse the DPWH with a fund of P16.2 billion to construct, widen, and upgrade 966 kilometers of road and 1,227.6 lineal meters of bridges to airports, seaports, and declared tourist destinations. This amount represents 10.3 percent increase from the 2014 allocation of P14.7 billion covering 650 kilometers. We will likewise modernize and expand the capacity of existing airports, such as the Ninoy Aquino International Airport Terminal 1, under a rehabilitation project worth P592 million. We allocated P2.2 billion to the Department of Tourism (DoT) for strengthening the Philippines’ global brand as a prime travel destination through aggressive promotional campaigns and market development. To maximize the employment generating benefits of tourism, the DOT is solidifying its partnerships with the DSWD, the DTI, and the DA to enable poor communities to benefit from tourism either as direct employees, tourism operators, or suppliers of agri-products and handicrafts. Training for Quality Workforce. To support our industries, we allocated P2.0 billion for the Training for Work Scholarship Program (TWSP) under the Technical Education and Skills Development Authority (TESDA). This budget will cover the training of 210,526 workers in agri-fishery, Business Process Outsourcing-Information and Communications Technology, tourism, general infrastructure, semi-conductor and electronics, and automotive. This allocation is 42.0 percent more than that in 2014. For those who will attend college, we will make sure they get the best deal out of their education. We will look into the possibility of asking state colleges and universities (SUCs) to offer degrees that are needed in their region or are best for our students in order to maximize public resources. Moreover, we will continue to restructure our public higher education system—by pursing the amalgamation of SUCs into regional universities, developing specialized institutions, rewarding performing SUCs, among other reforms—so that it responds to the real needs of our students and our economy. We allotted P43.3 billion for SUCs in 2015, a 13.8 percent increase over the 2014 allotment, to provide for needed faculty, operating funds, and capital outlays. This allocation includes P3.5 billion for scholarships under SUCs. In addition, P2.2 billion will be available to the Commission on Higher Education for scholarships. P316 million was allocated as research fund to improve the quality of higher education. We recognize that in these high-tech times, our students need to be adept at science, technology, engineering, agriculture, and mathematics so that they can match the skills that employers require. To respond to this demand, we will give our students science and math toolkits and equipment. We will provide our college students upgraded ICT facilities, laboratories, and R & D equipment so that they can translate their great ideas into great products. Social Protection and Social Services We want this government to be remembered as one that proactively intervened to uplift the poor, rescue them from desperation, and empower them to create greater prosperity for themselves. Through the social protection programs and social services in which this Budget invests, I believe that we will transform the silent numbers of sustainable growth to real and tangible benefits for the people. Social Protection. Our goal is to improve the well-being of poor families while promoting the rights of this vulnerable sector. Thus, as we work to further expand the economy, we will provide our poor with social safety nets that they can depend on in order to prevent them from sliding deeper into poverty. Therefore, we will continue to sustain the Pantawid Pamilyang Pilipino Program because nothing is more effective than giving direct help to poor families, who, in exchange for cash grants, commit to keep their children in school and seek healthcare for their pregnant women. Last year, we expanded the program to help children beneficiaries finish high school because studies say that those who complete their secondary education have better chances of getting employed. We also covered homeless families and indigenous people who would otherwise be untargeted under our current household-based survey. We will continue to support 4.4 million poor households under the conditional cash transfer (CCT) program with an allocation of P64.7billion. The DSWD has committed that by 2015, about 50 percent or 2 million families under the CCT program will be uplifted from survival to subsistence, and another 6 percent or 300,000 families will transition from subsistence to self-sufficiency. While the budget for the CCT program was increased marginally by 3 percent, we greatly increased our investments for community-driven development and social pensions for indigent senior citizens. We believe our poor can overcome poverty when they are empowered. Therefore, this Budget will fund projects that people themselves will identify as solutions to their pressing concerns. For instance, through a P17.5-billion proposed allocation for the KALAHI-CIDDS National Community-Driven Development Project, we will support 6,735 community projects that will cater to 1.5 million poor households. As we help our poor build their communities, we will provide them with opportunities to earn a steady stream of income. By funding our Sustainable Livelihood Program a sum of P4.9 billion, which is 102.7 percent higher than this year’s allocation, we will support poor families in building their own micro-enterprises or in obtaining training to facilitate their employment. We acknowledge our poor senior citizens, who toiled during their younger years, for their contribution in building this country. They, too, must have equal access to a better life. A total of 739,609 indigent senior citizens will get a monthly pension of P500, which will be implemented through the DSWD with an allocation of P4.8 billion, which is 53.2 percent higher than the current year’s budget. 1. Our promise to achieve rapid and high economic growth is likewise based on transforming our country to a nation of highly-skilled workers. We know where to start—future workers will receive quality education now. I believe that good education is the best investment in the future of a child and of a nation. Our solution is the K to 12 Education Program because we know that children who get early education have better chances of completing their primary education and that those who finish high school are better prepared to take on jobs of the 21st century economy. With this Program, we have adopted the international standard for primary education. The K to 12 Education Program provides our children the best possible education, and we have achieved important milestones early in its implementation. We have completed the curriculum guides. We have trained our Grades 3 and 9 public school teachers. We have begun the licensing process for private schools, and we are in the process of identifying possible Senior High School implementers. To support the implementation of the K to 12 Education Program, 39,066 more teachers will be hired, and 31,728 classrooms will be constructed in 2015. These augmentations will address the backlogs in critical inputs that are anticipated from an increase in student population as well as from the requirement of incoming senior high school enrolment. Additionally, we will provide our students with quality textbooks and well-equipped laboratories and classrooms. We will fine-tune our curriculum and connect our schools to the Internet so that early on, our basic education program will fit the needs of local industries and global markets. Thus, with a budget allocation of P364.9 billion for 2015, the Department of Education will make sure all of our children will be in kindergarten, 98 in every 100 will be enrolled in elementary, and 70 in every 100 will attend high school. By 2015, we want the Grade 10 achievement rate to increase to 62 percent. We want to see that the percentage of alternative learning system completers who pass the Accreditation and Equivalence test will increase by 2 percent. While a good education system builds the skills of our future workers, a good healthcare system builds their stamina to go through the daily grind of fuelling our economy. Universal Healthcare.I have seen how a broken healthcare system affects our people. Most of them pay for their own treatment because they have no adequate health insurance coverage. Most of them have not seen a medical professional in their entire life because there are no health facilities in their communities. Due to lack of proper health care, mothers have died due to absence of prenatal and postnatal care, and children, too, even before entering school. Our health care system was in this state when we were vigorously demanding for reform in our sin tax law and our reproductive health system. With your help in Congress and with our determination, the reproductive health bill was passed, and the sin tax reform law continues to generate additional revenues—much more than the projected—allowing us to provide adequate and better preventive health services, protect our people from diseases, and most importantly, provide them with financial protection. In 2015, we will cover more than 15.4 million indigents under our PhilHealth to significantly reduce out-of-pocket health expenses of our poor. My administration will sustain the 100-percent coverage rate of indigent families identified through the National Housing Targeting Survey for Poverty Reduction. With a P13.1-billion allocation for Health Facilities Enhancement Program, we will upgrade 1,242 barangay health stations, 587 rural health units/city health centers, 128 LGU hospitals, 19 DOH hospitals, and 11 treatment and rehabilitation centers. As we build better facilities, we will likewise provide more healthcare providers on the ground by deploying additional 398 doctors, 480 dentists, 12,540 nurses, and 5,749 midwives. At the end of day, we are hiring more health workers and building better facilities, because we want to prevent our people from getting sick and from paying for more costly treatment and cure. Along with providing better facilities and more healthcare providers, the Department of Health will ensure that 95 in every 100 of children get full immunization and that 8 in every 10 of pregnant women deliver in health facilities. With a P3.3 billion allocation, we will immunize 2.2 million children and provide pneumococcal vaccines to 1.4 million senior citizens and 429,000 infants. We allocated P3.3 billion to implement the Reproductive Health Law, especially in providing vitamin A supplements for children below 5 years old and making available family planning commodities to women as well as services to local government units. Socialized Housing. The 2015 Budget supports our commitment to enable poor Filipinos to own safe and affordable homes. We allotted a total of P7.3 billion for the Socialized Housing and Finance Corporation and the National Housing Authority (NHA) to be able to relocate at least 15,862 families in danger zones to safer areas. Likewise, we set aside P736 million for the NHA to provide emergency housing assistance to 26,426 victims of Typhoon Yolanda. The resettlement program for informal settlers will continue with the P577 million provided to the NHA. This budget will enable the agency to relocate 7,215 families, which is more than twice the 3,089 families targeted this year, to better communities. We will continue the successful Community Mortgage Program with a P1 billion proposed allocation to assist 16,500 families in acquiring their own lots and houses. Climate Change Adaptation and Mitigation None of our efforts to create more opportunities for our people to uplift their lives will matter unless we protect them from the harm that may be caused by natural disasters. Recent calamities have shown us how easily devastation can put people back in poverty. While we cannot stop another Yolanda from hitting our shores, together, we can fight the threats natural calamities pose toour country and our people. Kalikasan, katatagan, kaunlaran, ating isusulong! Build Back Better. Being adisaster-prone country with resource constraints, we cannot afford to be snared in the ‘vicious cycle of destruction and reconstruction.’ Hence, we will build resilient communities in safe zones where the most vulnerable can be better protected from the onslaught of disasters and calamities—both natural and man-made. With a P20.5-billion budget in 2015 under various funds[4] to enable quick, if not immediate, response, we will battle calamities and disasters by taking the reconstruction of affected areas a notch higher. Through our “Build Back Better” policy, we will consider enhanced designs and standards in reconstruction to ensure the survivability of infrastructure as well as the safety of location. Risk Resiliency Program. To build our country’s risk resilience, we will focus our efforts on strengthening the country’s natural ecosystems and on building the adaptive capacity of communities, consistent with our National Action Agendas for Climate Change. We will intensify the National Greening Program with a proposed budget of P7.0 billion. Since 2011, we have greened more than 1.1 million hectares of land and planted about 800 million seedlings. Our revitalized environment, especially our forests, will be our shield during typhoons and droughts. A greener ecosystem will help sustain the watersheds of our major river basins and battle the global warming phenomenon and other geohazards. Moreover, projects to protect environmental integrity will get a boost through the Air and Water Quality Programs: P139 million to ensure cleaner air; P99 million for waterways, of which P6 million is allocated for Adopt-an-Estero Program. Enabling the adaptive capacities of local communities, particularly in areas most vulnerable to shocks and disasters, is another preventive strategy we will employ in dealing with climate change and disasters. To do this, we apportioned P45.1 billion for flood control, lodged under the budget of the DPWH (P44.8 billion) and the MMDA (P281 million) to ease, if not prevent, the destructive effects of flooding. Additionally, we will bolster the country’s early warning systems with state-of-the-art technology to ensure that communities are cautioned when disasters strike. We will complement the formulation and implementation of our Risk Resiliency Program as we initiate the tagging of climate change expenditures in the 2015 Budget. This initiative will ensure that our climate actions are not only backed up by funds but also monitored effectively. Enabling Environment for Inclusive Development Finally, we will nurture an environment that enables inclusive development—an environment of social stability. We look forward to the day when communities will no longer be left vulnerable to the vagaries of violence, when small entrepreneurs will no longer be stifled by predatory interests, or when taxpayers will no longer be shortchanged by syndicates who pillage the nation’s coffers. The rule of law will prevail when government exists only to protect the people’s interests and not the interests of the few and powerful. This proposed Budget for 2015 bolsters our efforts to build a government worthy of the people’s trust, one that is credible enough in its agenda for peace and in its struggle to reform public institutions. Just and Lasting Peace. We believe that the way to inclusive development includes an important process—the settlement of internal conflicts through peaceful means. We will continue to address the lack of social and economic services in conflict-affected communities. We will intensify the presence of the government in these areas by nurturing the economic potential of these places where violence and distrust previously thrived. The signing of the Comprehensive Agreement on the Bangsamoro (CAB) with the Moro Islamic Liberation Front on March 27, 2014 was a landmark achievement. The government anticipates the next major milestone in the peace process—the passage of the Bangsamoro Basic Law (BBL) by the end of the year. In anticipation of the enactment of the BBL, a total proposed budget of P2.7 billion, to be lodged in various agencies[5], is being set aside to implement the law, which will include the disarming of combatants, the conversion of bases into productive economic hubs, among other interventions agreed upon in the peace treaty. The regions that will be covered by the BBL have a potential to become a new point of economic interest. These interventions, which will be undertaken through this law, will allow the people in the region to create the road toward their own prosperity. What we achieved in the signing of the CAB would serve as an inspiration in continuing to push for the peaceful settlements of other internal conflicts, as well as in implementing social and economic interventions, such as the Payapa and Masaganang Pamayanan (PAMANA) program that was allocated P7.3 billion for 2015 . Good Governance. Our work toward inclusive development is anchored on a transparent and accountable administration. We saw the plea of our people with the recent turn of events. They heightened their challenge for good governance and call for anti-corruption. The Aquino Administration responded with transparency and accountability. Through the Department of Budget and Management (DBM), the Department of Finance (DoF), with the Bureau of Treasury (Btr) and the Commission on Audit (COA), this Administration established the Public Financial Management (PFM) Reform Program to create a transparent, accountable, and efficient government financial system. Government financial systems will be harmonized for efficient financial reporting, thus lessening the incidence of corruption and making each government agency accountable for their financials. In implementing the PFM, we adopted the Unified Account Code Structure, which created a common classification system for budget and accounting transactions, allowing the more efficient tracking of government transactions from proposal to auditing. We likewise implemented the Treasury Single Account, which enabled the government to save P437.8 million as of end-2013, by closing 266 dormant government bank accounts. The programs implemented through the PFM Reform Roadmap are prerequisites of the Government Integrated Financial Management Information System (GIFMIS), which will create an automated processing system and a centralized database for government financial management. Our goal is to be able to use the GIFMIS in 2015 to craft the proposed Budget for 2016. Paggugol na Matuwid: Kaunlaran para sa Lahat My fellow public servants, as you examine each budgetary item and committed result contained in this proposed Budget for fiscal year 2015, I invite you to commit with me to the long-term prosperity of our country and our people. Let us remember the pains our people suffered through the decades—a progress that they can only see but not own; an unending cycle of promise and disappointment; a seemingly permanent state of insecurity, scarcity, and despair. They endured all these because of governments and leaders who only concerned themselves with short-term gratification and a myopic desire to hold onto power. We have pledged, when we were installed to power, to be the opposite, to use our power only for the sake of those who vested this power unto us—the Filipino people. Our people long to break free from the cycles of boom and bust, from uncertainty and vulnerability, from the shackles of poverty, inequality, and lack of opportunity. We, as public servants, are accountable to them. We will be held accountable for how we are able to finally free them from hopelessness and empower them to define their own destiny. Only a government that exists for their sake and by their will can make this possible. Pananagutan natin sa taumbayan ang pagsiguro na kalahok ang bawat isa sa kanila, lalo na ang mga kababayan nating kapos-palad, sa patuloy na pagsulong ng ating bansa tungo sa higit na kaunlaran. Pananagutan natin bilang isang pamahalaan na gawin ang lahat ng nasa ating kapangyarihan upang maibigay sa ating mga Boss ang makabuluhan at pangmatagalang kasaganaan. Now more than ever, our collective effort to establish a proactive and reformist government will give our people the great and unique chance to irreversibly change their fortunes. Our people are now beginning to reap the gains of our refusal to merely coast along, of our doggedness in disrupting the status quo. Ladies and gentlemen of the 16th Congress, as we all commit to establishing a legacy of inclusive and sustainable development, I hereby ask you to peruse, scrutinize, and eventually approve this proposed Budget for fiscal year 2015. In the spirit of People Power, (SGD.) BENIGNO S. AQUINO III President of the Philippines ____________________ [1] The debt burden represents interest payments plus net lending [2] National Budget Memorandum No. 119, issued on 27 December 2013. [3] With a programmed disbursement level of P2.621 trillion and revenues of P2.337 trillion, the projected deficit for 2015 is P283.7 billion. The P2.606 trillion is the proposed obligation budget for 2015. [4] National Disaster Risk Reduction Management Fund (formerly Calamity Fund, P13 billion net of the People’s Survival Fund that will finance climate change adaptation programs and projects at the local level); Quick Response Funds under 8 departments and agencies (P6.5 billion); and Rehabilitation and Reconstruction Fund (P1.0 billion) [5] DSWD, DA, TESDA, DepEd, PHIC, CHED)
Posted on: Tue, 09 Dec 2014 18:06:01 +0000
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