Legarda: 2017 Budget Addresses Domestic Concerns, Impacts from Global Factors

Senator Loren Legarda today said that the government has considered not only the national and local scenario but also the expected changes in the global political landscape, including the results of the US presidential elections, in crafting the proposed P3.350 trillion national budget for 2017.

“The national budget is anchored on a sound reading of the domestic and international economic outlook. We are forecasting real Gross Domestic Product (GDP) to grow at 6.5 to 7.5 percent over the coming year, with inflation rate settling at the level of 2 to 4 percent. These assumptions are based on government’s forecast of strong domestic demand and investment which will continue to boost economic growth,” said Legarda, Chair of the Senate Committee on Finance, upon presenting the budget for deliberations.

She added that the 364-Day Treasury Bill Rate is projected to hover between 2.5 to 4 percent, while the Peso-Dollar exchange rate is seen to settle between P45-P48 to the dollar. Gross International Reserves are projected at US$86.3 Billion, equivalent to 8.9 months of our country’s imports of goods, services, and income.

The Senator also allayed fears that the exchange rate assumption may no longer be relevant since the peso-dollar rate is now approaching P49 is to US$1.

“A peso depreciation favors the government’s fiscal position. Specifically, for every peso depreciation, expected revenues increase by P9.2 billion due to imports and customs duties. While this will also translate to an increase in government’s disbursements by P2 billion to pay for foreign-denominated debts, the net effect is still a positive P7.2 billion,” she explained.

She also said that the government is working to cushion the possible effects of the Donald Trump presidency on the business processing outsourcing (BPO) sector in the country and on the overseas Filipino workers (OFWs) in the US.

Meanwhile, Legarda stressed that the 2017 national budget seeks to deliver results.

“This will require an expanded spending program in 2017 that will result in a slight increase in our deficit from 2.7 percent of GDP this year to 3.0 percent in 2017.  This, according to our budget experts, is manageable and necessary to sustain the country’s growth momentum,” she said.

By the end of the year, the government’s debt is expected to decline to 42.7% of GDP from 44.7% in 2015 and 52.4% in 2010. Our economic projections suggest that this trajectory will continue to contract to 35% by 2022.

“A proactive debt management will be exercised to strike a balance between easing the debt burden on expenditures and more strategic borrowings,” Legarda said.

The Senator assured that the proposed budget for next year seeks to deliver results and ensure the delivery of services and benefits that will be felt by all Filipinos.

“A leap in infrastructure spending is one of the priorities of the 2017 budget given its indispensable role in poverty reduction, raising productivity, and in spreading the benefits of economic growth,” she said.

P860.7 billion for infrastructure development, equivalent to 5.4% of our GDP, is provided under the 2017 budget for next year.

Meanwhile, P1.345 trillion or 40% of the entire budget is being proposed to deliver social services that will address the most basic needs of the people.

Funding for education is set at the level of P699.95 billion; P151.5 billion is being proposed to fund health services; while P78.7 billion is set to support a comprehensive social investment package in the form of the Conditional Cash Transfer Program, targeting 4.4 million eligible beneficiaries in 2017. The 2017 budget also provides social pension to all indigent senior citizens, age 60 and above.

Meanwhile, among the notable amendments of the Senate in the budget are the following:

• P3 billion increase in the Philhealth budget to include the remaining 8 percent of Filipinos not yet covered by the universal healthcare program, while indigent patients will not have to pay for anything in government hospitals under the No Balance Billing (NBB) policy

• P2 billion Irrigation Fees Subsidy in the budget of the National Irrigation Administration (NIA) so that irrigation service fees will no longer be collected by NIA from farmers’ associations

• Grant of scholarships to students enrolled in Science, Technology, Education, Agri-fisheries and Mathematics (STEAM) programs priority courses in all State Universities and Colleges (SUCs) to encourage enrolment in said courses since all progressive nations have put science, technology, and innovation as a centerpiece of their development policy

“We crafted this budget to ensure that it will be inclusive—a budget that works, one that places money where they will make a real difference in improving the lives of our people,” Legarda concluded.