Finance Secretary Benjamin Diokno has assured legislators the Marcos administration’s proposed national budget for 2023 will propel economic recovery and rapid expansion.
Diokno assued Congress their economic team’s proposed 2023 budget will bolster the country’s bid “for a strong recovery and accelerated growth, and with capable leaders at the helm and the right policy tools, we face the next six years with full confidence in our bold socioeconomic agenda.”
Diokno gave the assurance during the recent Development Budget Coordination Committee’s (DBCC) briefing for the House Committee on Appropriations.
The administration’s economic team presented to the Committee the current state of the economy, the country’s fiscal performance and borrowing efforts, an overview of the Medium-Term Fiscal Framework (MTFF), the government’s legislative priorities, and the proposed 2023 national budget.
The Marcos administration proposes a P5.268-trillion budget for 2023, which is 4.9 percent higher than the budget for 2022. Diokno said in his opening statement, the government seeks to improve spending efficiency and alignment of budget priorities that are anchored on the Marcos administration’s 8-point socioeconomic agenda.
He said the government will focus on productive spending to stimulate growth. Having the highest multiplier effect in the economy, public infrastructure investments will be sustained at 5 to 6 percent of gross domestic product (GDP), he added.
Diokno said the government will eliminate imprudent spending through the rightsizing of government agencies, among other efficiency-enhancing initiatives. He also thanked the legislators for passing game-changing tax reforms and economic liberalization measures during the 18th Congress.
“The tax reform laws you have enacted have helped transform the Philippines into one of the fastest growing economies in the region. Along with the economic liberalization measures, these have allowed us to reinforce our strong macroeconomic fundamentals, weather the harsh effects of the pandemic, and chart a clear path to recovery and sustained growth,” he said.
The economy grew by 7.8% in the first half of 2022, which is above the DBCC’s full-year growth target of 6.5 to 7.5%. The expansion in the second quarter of the year will be broad-based, with positive contributions from three major sectors – agriculture (0.2% year-on-year [yoy] growth), industry (6.3% yoy), and services (9.1% year-on-year growth).
Diokno said the economy only needs to grow by 5.2 to 7.2% in the second half of the year to meet its full-year growth rate target for 2022. He assured the legislators the targets are “very much doable”.
“We are determined to pursue a faster, greener, and more inclusive growth that will benefit all sectors. This goal is guided by the Marcos administration’s 8-point socioeconomic agenda,” he added.
In the near-term, Diokno said the plan will address urgent challenges confronting Filipinos, particularly the impact of high commodity prices, due to inflation and lingering economic scars from the pandemic. Over the medium-term, the focus will be on creating more jobs, quality jobs, and green jobs through higher investments in smart infrastructure, human capital development, and digitalization.
Diokno explained that under the MTFF, the government will implement fiscal discipline to realize its goals. The framework proposes measures that will improve tax administration, enhance the fairness and efficiency of the tax system, promote environmental sustainability to address climate change, and reduce the country’s debt-to-GDP ratio.
“Our debt-to-GDP is expected to stabilize in 2023 and decline from 2024 onwards, until it reaches less than 60 percent by 2025 and further down to 51.2 percent by 2028,” Diokno said, adding the country’s need to borrow will decline significantly as revenues rise and the economy continues to expand.
As part of the government’s prudent debt management strategy and capital market development efforts, he said the Marcos administration will draw around 75% of its financing requirements from domestic sources.
Diokno said this approach will allow the country to remain insulated from foreign exchange volatilities due to ongoing global geopolitical risks, and as the economy expands, the debt in relation to the size of the economy will be reduced.
“We look forward to working closely with Congress in pursuing much-needed policy reforms to make the country one of the most dynamic and fastest-rising economies in the region,” he added.