Secretary of Finance
August 27, 2024
Thank you for this opportunity to brief the Committee on the 2025 Proposed Budget of the Department of Finance, its bureaus, and attached agencies.
As the government’s chief fundraiser, the Department of Finance is the steward of the nation’s fiscal stability.
Guided by our refined Medium-Term Fiscal Program, the DOF ensures that we hit our revenue targets annually to reduce deficit and debt gradually in a realistic manner, while creating more jobs, increasing our people’s incomes, and decreasing poverty in the process.
Our fiscal discipline already earned us a credit rating upgrade of A minus from R&I—the first under the Marcos Jr., administration.
Nagpapatunay po ito na malakas ang kumpiyansa ng mga investors sa sigla ng ating ekonomiya.
At ang upgrade na ito ay upgrade rin sa buhay ng mga Pilipino. Dahil maghahatid po ito ng mas maraming investments at negosyo na magdadala ng maraming trabaho at mas mataas na kita para sa bawat Pilipino.
And this will not be our last upgrade as long as we stick to our Medium-Term Fiscal Program. As this is our blueprint for the road to more As in the near future.
More importantly, our efforts have led to a stronger labor force, a growing middle class, and more comfortable lives for Filipinos.
Mas kaunti na po ang bilang ng mga walang trabaho. Dahil ang unemployment rate sa bansa ay nasa pinakamababang lebel na 3.1%.
Mahigit 50.3 milyong Pilipino na ang may trabaho, kung saan 63.8% nito ay nasa pormal na sektor.
Bumaba rin ang ating poverty rate sa 15.5%. Ang katumbas nito ay dalawa’t kalahating milyong Pilipino na naiangat natin mula sa kahirapan. We are on our way to reducing the poverty rate to just 9% by 2028.
And we are on track to meet our fiscal program for the year with the robust performances of the Bureau of Internal Revenue, the Bureau of Customs, the Bureau of the Treasury, and our GOCCs.
For the first seven months of 2024, revenue collections have reached 2.61 trillion pesos, 14.8% higher than last year.
Of which, tax collections from the BIR and BOC grew by 11%, reaching 2.24 trillion pesos.
Non-tax revenues recorded a 44.5% growth, totaling 368.80 billion pesos. The dividends from our GOCCs contributed much to this increase.
This strong revenue performance placed us among Asia’s top revenue-to-GDP ratios at 17.1% for the first half of the year. And this is above our full-year target of 16.1%.
We credit this feat to the BIR and BOC’s BRAVE digitalization strategies and the balikatan with allied agencies to kick our revenue operations into high gear.
As we ramp up BRAVE, we anticipate a 10.3% average annual growth in total revenues over the medium term to support our people’s growing needs.
Revenues as a percentage of GDP will increase from 16.1% in 2024 to 17.0% in 2028.
With higher revenues and improved expenditure management, our fiscal deficit is projected to drop from 5.6% in 2024 to 3.7% by 2028.
We also continue to manage our debt according to the highest standards of fiscal prudence.
As of June, our gross financing stands at 61% of the full-year goal of 2.57 trillion pesos. And this is being supported by a financing program that favors domestic borrowings.
We will ensure that the economy will continue to outgrow the country’s debt with our debt-to-GDP ratio dropping from 60.6% in 2024 to 56.3% in 2028.
Achieving these targets requires the passage of key revenue reforms pending in Congress, which we have recalibrated to avoid placing undue burdens on our people.
Above all, the continued implementation of digitalization reforms and revenue-enhancing programs is crucial to sustaining our collection growth.
Thus, we hope for the swift approval of the DOF’s 2025 proposed budget, which puts sharpened focus on these key priorities so we can fund the nation’s gargantuan budget.
To put it into perspective, the 2025 proposed national budget stands at 6.35 trillion pesos. Of which, only 4.64 trillion pesos are supportable by revenues.
Thus for next year, our expenditures amount to 17.40 billion pesos a day, of which 12.72 billion pesos per day will be financed by revenue collections, and the rest, 4.68 billion pesos, by loans. Every 24 hours.
Ganito po kabigat ang kailangang gawin ng DOF kada bente kwatro oras with our miniscule proposed budget of only 33.75 billion pesos for next year.
The amount is 20.8% higher than the 2024 GAA level but represents only 0.5% of the government’s total proposed 2025 national budget.
The New General Appropriations constitute the largest portion of our proposed budget, amounting to 29.0 billion pesos.
About 78% or 22.6 billion pesos of these new appropriations is allocated to support the Department’s core operations and priority programs.
These include enhanced revenue administration by the BIR, better financial asset and debt management by the BTr, customs enhancement by the BOC, and improved local finance administration by the Bureau of Local Government Finance.
Automatic Appropriations, totaling 3.48 billion pesos, represent allocations for Retirement and Life Insurance Premiums as well as the Special Accounts in the General Fund.
And under the Special Purpose Funds, we have a 1.0 billion peso allocation for the replenishment of the People’s Survival Fund which will support numerous climate adaptation projects of our local communities.
Meanwhile, the Budgetary Support to Government Corporations amounting to 58.2 million pesos is allocated for the Philippine Tax Academy’s Specialized Tax and Education Management Programs.
A proposed Unprogrammed Appropriation of 210.57 million pesos is also included for the refund of the service development fee for the right to develop the Nampeidai property in Japan.
This is significantly lower by 79.9% due to the concluding year of the implementation of the BOC’s Philippine Customs Modernization Project and the reclassification of the BLGF’s Local Governance Reform Program under New General Appropriations.
As the bearer of the heaviest burden, the BIR will receive the largest share of the budget, totaling 17.68 billion pesos. This makes up for more than half or 54.4% of the total DOF proposed budget.
Kung tutuusin, sulit na sulit po ang budget na ito ng BIR, dahil sila ay aatasang kumulekta ng 3.23 trillion pesos in revenues next year. Ang 17.68 billion pesos na budget ay koleksyon lang nila sa loob ng dalawang araw.
Ang BOC naman ay may proposed budget na 5.66 bilyon lang, kumpara sa kokolektahin nilang 1.06 trillion pesos sa susunod na taon. Ang halaga nito ay koleksyon lang nila sa loob ng kwarenta’y otsong oras.
Ang ating Kagawaran ng Ingat Yaman, o BTr, ay may budget allocation na 6.46 billion pesos kumpara sa bigat ng kanilang responsibilidad na punan ang 1.54 trillion na deficit sa 2025.
In terms of allocation, 41.4% of our proposed budget is allocated to Personnel Services, 37.9% to MOOE, and 20.6% to Capital Outlays.
This is in line with our commitment to prioritize workforce development and infrastructure improvements like digitalization.
In fact, we are making significant digital transformation investments across agencies.
The BIR, BOC, and IC lead the charge with a combined amount of 4.2 billion pesos for digitalization, while other agencies are allotted around 600 million pesos.
These investments are aimed at significantly enhancing taxpayer experience, streamlining trade processes, and improving fiscal transparency.
Let me now provide you with the specific budget proposals of each DOF agency.
As mentioned earlier, the BIR has a proposed budget of 17.68 billion pesos, a 12.4% increase from this year’s GAA.
Capital outlay has the biggest increase to fund the construction, renovation, and rehabilitation of BIR office buildings, as well as the acquisition of 62 motor vehicles.
This likewise supports the BIR’s new, expanded, and ongoing digitalization programs and projects.
Its MOOE, amounting to 6.06 billion pesos, will support critical operations to sustain ICT programs and projects, particularly electronic services.
The proposed allocation of 8.92 billion pesos for personnel services will cover salaries, compensation, and other benefits for its 15,666 permanent employees.
Meanwhile, the BTr’s proposed budget of 6.46 billion pesos is 52.8% higher than the previous year.
Its MOOE of 3.25 billion pesos will address the Bureau’s ongoing and recurring costs.
The notable increase of 2.08 billion pesos is primarily due to the National Indemnity Insurance Program, which aims to protect the national government’s strategically important assets against natural disasters. The 2025 program will cover public schools as well as hospitals and healthcare facilities across the country.
Meanwhile, the capital outlay requirements of 2.70 billion pesos include funding for membership quota subscriptions and equity contributions to multilateral institutions through the International Commitments Fund.
This will also consist of the procurement of 5 motor vehicles and continued investments in ICT-related programs and projects.
The BOC’s budget, on the other hand, increased by 18.9% to 5.66 billion pesos.
Its personnel services allocation of 1.90 billion pesos will cover salaries for 3,726 permanent positions. And the additional 164.1 million pesos is allocated for retirement and life insurance premiums.
The proposed MOOE budget of 1.44 billion pesos under New General Appropriations will support the implementation of the Customs Revenue Enhancement Program and the Customs Border Protection and Cargo Control Program.
The capital outlay requirements of 742.9 million pesos will fund the acquisition of 17 service vehicles, investments in various ICT and office equipment, and the construction of the second phase of the new BOC building at the Iloilo Commercial Port Complex.
The IC has proposed a total budget of 1.0 billion pesos, which includes a nominal allocation of 6 thousand pesos under the New General Appropriations for augmentation purposes.
Its MOOE amounting to 434.58 million pesos will be utilized for increased investments in ICT programs and projects. While the capital outlay of 246.65 million includes the upgrading and modernization of its Data Center.
Meanwhile, the DOF – Office of the Secretary’s proposed 966.97 million peso budget is 4% lower than this year’s GAA level.
The MOOE budget of 491.25 million pesos will facilitate the Office’s Financial Sustainability and Revenue Strengthening Program, as well as the Asset Liability Management Program.
The marginal increase of 1% in MOOE includes 9.20 million pesos for the Philippines’ hosting of the Double Taxation Agreement Negotiations/ Renegotiations.
Meanwhile, the capital outlay requirements amounting to 47.46 million pesos will support OSEC’s digitalization and modernization initiatives.
For the BLGF, its budget will increase by 28.9% to 433.66 million pesos next year.
This is mainly due to the Bureau’s capital outlay requirements of 90.08 million pesos to cover the procurement of 12 motor vehicles, various construction projects, and the replacement of office equipment. This will also support the government’s share of the ADB-funded Local Governance Reform Project.
The National Tax Research Center has a proposed budget of 144.11 million pesos, an 11.2% decrease from the previous year.
The reduction is primarily due to the retirement of NTRC officials and a decrease in the funding requirements for its ICT projects and programs.
Nevertheless, the proposed capital outlay allocation will support the enhancement and upgrading of the NTRC’s ICT infrastructure, including the improvement of the Fiscal Incentives Registration and Monitoring System and the Center’s website.
Meanwhile, the Privatization and Management Office’s proposed budget will increase by 8.7% to 111.06 million.
This will enable the PMO to effectively oversee the privatization of government assets as we maximize non-tax revenue sources.
Finally, the Central Board of Assessment Appeals has a proposed budget of 18.05 million pesos, 2.49% higher than the previous year.
This is meant to effectively fulfill its responsibilities, centered on resolving assessment disputes and ensuring equitable resolution of property valuation and assessment cases.
As I end my presentation, let me assure the honorable members of this Committee that this budget proposal adheres to the highest standards of fiscal discipline and prudent financial management.
In fact, for our operations in 2023 and for the third year in a row, the DOF received an Unmodified or Unqualified Opinion from COA. Ibig sabihin, natiyak po ng auditor na ang ating financial statements ay naaayon sa applicable financial reporting framework. Ito po ay pruweba ng ating good governance, transparency, at accountability.
And through the years, the DOF has constantly proven its capacity to exercise sound and responsible budget utilization. Our first-semester performance clearly shows this.
With a total allotment of 58.36 billion pesos, the DOF has achieved an obligation rate of 70%, translating to 40.85 billion pesos in obligations.
In fact, the DOF ranks as the fourth highest among government agencies in terms of obligation rates. This is well above the entire government’s average obligation rate of 65.4%.
The disbursement rate also reached a robust 90%, with 36.87 billion pesos expended during this period.
You can be assured of the same level of budget utilization efficiency next year and beyond.
More importantly, our proposed budget every year is always a faithful reflection of our strategic priorities under the Bagong Pilipinas brand of governance.
The items discussed today are part and parcel of a larger effort to improve tax administration efficiency, deliver more responsive public service delivery, and provide economic prosperity for the Filipino people.
We will ensure that every peso is being stretched to deliver the biggest bang per buck for the Filipino people. Much like our triumphant Olympians, we will always go for the gold.
And with your support, that is precisely what we aim to achieve at every level and every agency under us.
Maraming salamat po, and we are now ready to answer any questions.
