Palace eyeing P2.27-trillion budget for 2014

MANILA, Philippines - Malacañang is putting together the proposed national budget for 2014, which it estimates would be about P2.27 trillion.

Next year’s budget would be President Aquino’s second spending program exceeding P2 trillion.

In a “budget call” memorandum, Budget Secretary Florencio Abad gave heads of departments and other agencies until April 15 to submit their budget proposals.

He informed them of the macro-economic assumptions that would guide the Palace in drafting the 2014 spending program, which Aquino will submit to the next Congress when it convenes in July.

At the same time, Abad set “budget ceilings” for agencies so that their proposals would be within the total projected spending limit.

“The fiscal position for 2014 translates to an obligation (spending) budget ceiling of P2.268 trillion, up by P262.1 billion or 13.1 percent more than the 2013 budget level of P2.006 trillion,” he said.

In 2012, the national budget amounted to P1.816 trillion.

Abad said the additional P262.1 billion to be spent next year would go to “increased investments in infrastructure, in good governance and anti-corruption, in building human capabilities especially of the poor, through quality education, public health care and housing, and in climate change adaptation measures – all fundamental requirements for the country’s competitiveness and development.”

The planned obligation or expenditure level is based on a gross national product growth of 5.8-6.8 percent, expansion in gross domestic product (GDP) of 6.5-7.5 percent, inflation rate of 3-5 percent, and an exchange rate of P42-P45 to one US dollar.

Last year, the economy grew by a surprising 6.6 percent.

“The growth in the domestic economy as adjusted for inflation is projected to be at 6-7 percent in 2013 and 6.5-7.5 percent in 2014,” Abad said.

Agriculture is expected to grow by 3.3-4.3 percent, industry by 7.4-8.6 percent, stronger than the 6.6-7.6-percent projection this year, and services by 6.5-7.4 percent, he said.

“The peso-dollar exchange rate is expected to be broadly stable at around P42-P45/US$1 over the near term, supported by the resilience of the domestic economy,” he said.

“The positive outlook for the domestic economy, as well as continued structural reforms, could direct more capital inflows to the country, which, along with the steady stream of remittances, could drive further the appreciation of the peso,” he added.

The exchange rate has been steady for months at less than P42 to US$1.

Given this macro-economic scenario, the government is projecting to collect P2.025 trillion in revenues, up from P1.745 trillion this year and last year’s P1.518 trillion.

The revenue target includes P43 billion in additional collections from higher taxes on the so-called “sin” products like cigarettes and liquor.

The government would continue to trim down the budget deficit to a “manageable level of two percent of GDP.” Thus, the planned deficit for next year is P266.2 billion.

The budget ceilings set by Abad are P9.9 billion for Congress, P2.5 billion for the Office of the President, P421.1 million for the Office of the Vice President, P20.3 billion for the Department of Agrarian Reform, P48.3 billion for the Department of Agriculture, P255.2 billion for the Department of Education, P31.9 billion for state universities and colleges, P4 billion for the Department of Energy, P21.8 billion for the Department of Environment and Natural Resources, and P27.8 billion for the Department of Finance.

The Department of Foreign Affairs was given a limit of P11.4 billion; Department of Health, P51.8 billion; Department of Interior and Local Government (including the Philippine National Police), P92.3 billion; Department of Justice, P10.7 billion; Department of Labor and Employment, P8.8 billion; Department of National Defense (including the Armed Forces), P81.8 billion; Department of Public Works and Highways, P189.3 billion; Department of Science and Technology, P10.3 billion; Department of Social Welfare and Development, P66.9 billion; Department of Tourism, P2.2 billion; Department of Trade and Industry, P3.7 billion; and Department of Transportation and Communications, P35.5 billion.

The judiciary was given a budget ceiling of P17.8 billion; Civil Service Commission, P1.2 billion; Commission on Audit, P7.9 billion; Commission on Elections, P2.5 billion; and the Office of the Ombudsman, P1.8 billion.

Abad said the “indicative ceilings” might be adjusted when Aquino meets with his Cabinet to determine the final shape of the proposed 2014 national budget.