Budget seen leaving no room for long-term spending items

By Kenneth Christiane L. Basilio, Reporter

THE GOVERNMENT risks taking its eye off longer-term strategic needs after years of devoting more than half of the budget to immediate spending priorities, the Congressional Policy and Budget Research Department (CPBRD) said.

The congressional think tank said since 2016, 50.9% of the national budget has gone to paying for current items like salaries, services and public works, with automatic appropriations absorbing 29.9% and special purpose funds 7.8%.

“Nearly 90% of the budget is pre-allocated for existing programs or mandatory obligations — leaving very limited room for new or emerging priorities,” the CPBRD said in an October report written by Johnry A. Castillo.

The Philippines adopted a two-tier budgeting approach in 2016, with the Tier-1 category devoted to ensuring that ongoing projects are sustained. This led to “a significant unintended consequence — an over-reliance on historical budgeting,” the CPBRD said.

As a result, the think tank said, commitments to ongoing spending items grew “dramatically” in subsequent years.

Only 11.7% of the enacted national budgets since the two-tier approach was implemented were set aside for “new and innovative priorities,” the CPBRD estimated. It added that a declining share of the budget for new programs could lead the government to neglect strategic concerns.

“If unaddressed, this trend risks creating a rigid budget that crowds out strategic investments and undermines the government’s fiscal consolidation efforts,” it said.

The Philippines aims to lower its debt-to-gross domestic product (GDP) ratio to 58% by 2028 after coming in at 63.1% at the end of June — the highest level since 2005. Development banks consider a 60% debt-to-GDP ratio as manageable for developing economies.

The CPBRD said the growing share of allocations for ongoing programs has also, in some years, pushed national budgets beyond their approved ceilings.

“Such trends underscore the need to periodically reassess Tier 1 commitments through performance-based reviews or strategic expenditure reviews,” it said. “Without this, the budget risks becoming a rigid financial plan with limited adaptability.”

Policymakers should prepare a comprehensive framework to help agencies reduce ongoing expenses and carve out fiscal space for new and strategic programs, it said, citing the need for greater oversight by the Finance and Budget departments over the budget process.

Congress and civil society groups should be given access to budget documents to better monitor the budget process and strengthen government transparency, it added.

The CPBRD also recommended the revival of a multi-agency subcommittee on program and project assessment to evaluate the budget proposals at the agency level.