A worker paints social distancing markers on the ground at the Old Balara Elementary School in Quezon City. — PHILIPPINE STAR/ MICHAEL VARCAS

THE DEPARTMENT of Budget and Management (DBM) on Monday urged government agencies to review their budget proposals for 2023, amid limited fiscal space.

In a statement, the DBM said agencies should reevaluate their budget proposals for next year “to ensure the efficient use of limited resources and to provide additional fiscal space for new public programs and projects.”

The Development Budget Coordination Committee (DBCC) last month approved a record P5.268-trillion cap on the national budget for 2023, which represents 22.1% of the gross domestic product (GDP). Next year’s budget is 4.9% higher than the P5.02-trillion budget for this year.

In National Budget Memorandum (NBM) No. 144, the DBM said agencies should make sure that Tier 1 or existing programs and Tier 2 or new programs are in line with the government’s spending direction and other key strategies, as well as the incoming administration’s priorities.

The programs should also be implementation-ready and can be completed within a year. These should also reflect the agency’s absorptive capacity.

“For the National Government to maximize the use of limited resources and to practice prudent public financial management, the departments/agencies are hereby encouraged to reevaluate their Tier 1 proposals,” the DBM said.

“Given the absence of additional fiscal space for FY 2023, these adjustments in the Tier 1 levels may provide some headroom for direly needed Tier 2 proposals for new and expanded PAPs (program, activity and projects).”

Budget proposals for Tier 2 or new programs should focus on “health-related expenditures, disaster-risk management, social security, digital economy/government, local government support, and growth-inducing expenditures which include crucial and shovel-ready infrastructure projects, among others,” DBM said.

The DBM said these priorities will help accelerate the economy’s recovery from the pandemic.

The DBCC set a 6-7% GDP growth target for 2023, slightly lower than the 7-8% target for this year. The budget deficit is expected to decline to 6.1% of GDP in 2023, from 7.6% this year.

The outstanding National Government debt reached P12.68 trillion, equivalent to 63.5% of GDP, as of the first quarter.

“While this is significantly lower than the historic high of 71.6% of GDP debt ratio recorded in 2004, downside risks for recovery remain high with the ongoing pandemic and recent global developments, such as the Ukraine-Russia war,” the DBM said, adding these may add to uncertainty.

“This will require the government to be more prudent in managing its fiscal position to promote long-term sustainability, and ensuring that high-impact expenditure items will be prioritized to maximize the limited public funds available.”

Also, the DBM reminded National Government agencies to make sure they do not duplicate any functions assigned to local government units (LGUs).

“(The National Government agencies should) instead shift their focus to developing service delivery standards, and capacitating local governments in areas of implementation and management of devolved functions and public financial management,” it added.

Starting this year, LGUs received a bigger share of the National Government’s tax collections, alongside the transfer of basic services due to the implementation of the Supreme Court’s Mandanas ruling.

The ruling is named after Batangas Governor Hermilando I. Mandanas who successfully challenged the government’s previous position that LGUs were entitled to a smaller share of National Government funds. — TJT