Budget’s role in growth and governance

The National Expenditure Program (NEP) is now being reviewed by the House committee on appropriations. Themed as the “Agenda for Prosperity: Economic Transformation Towards Inclusivity and Sustainability,” the NEP for fiscal year 2023 is the first full-year budget to be submitted by the Department of Budget and Management (DBM) under the Marcos Jr. administration. It amounts to P5.268 trillion, higher by P244.4 billion or 4.9 percent compared to this year’s budget of P5.024 trillion.

As the NEP contains the details of the government’s proposed programs, it is perceived to address the near-term, eight-point agenda of the Marcos Jr. administration. These include the “immediate issues of inflation, socioeconomic scarring, and low income, among others,” and the overall eight-point agenda for the medium term.

On the first day of budget hearings, DBM Secretary Amenah Pangandaman identified the four guiding pillars of government expenditure, namely: strengthen the purchasing power of Filipinos; reduce vulnerability and mitigate scarring from the COVID-19 pandemic; enhance bureaucratic efficiency; and support to local governments.

A notable next step in budget reform is for the DBM to submit a written statement on its commitment and program to clean the process of procurement in the Procurement Service of the DBM.

Also commendable is the budget modernization bill, which is one of the priority legislative measures of the current administration. This seeks to “strengthen fiscal discipline in the allocation and use of budget resources by ensuring that every peso budgeted by government would lead to the actual delivery of programs and projects.”

With respect to the administration’s objective of making agriculture perform a major role in the economy, this sector now ranks fifth in the budget allocation with P184.1 billion.

To supplement budget reform initiatives, the review, deliberation, and approval of the President’s budget should also consider the following constructive suggestions.

First, a comprehensive evaluation of public spending priorities would be laudable. Lessons from the past simply demonstrated how misplaced priorities and nonaccountability resulted in many lost opportunities.

Second, it will also be admirable to see that physical and digital infrastructure projects are attuned to the needs of the population. Otherwise, the worthwhile budget process can be endangered by hints of partisanship and political patronage.

Third, there is also the need to be transparent in government spending to justify that any budget increase will result in the improvement of fiscal management and the delivery of public services. The higher the increase in the budget, the more responsible government should be.

Fourth, the 2023 NEP should also exemplify how the private sector could perform its indispensable role in the country’s digitalization in terms of infrastructure, human capital and financial investments, and public-private partnerships.

Fifth, financial consolidation should also cater to the long-term needs of the country. In this respect, the medium-term fiscal consolidation, according to the DBM Development Budget Coordination Committee, consists of increasing revenue collections, maintaining the average of disbursements, decreasing the deficit, and spending for infrastructure substantially.

Lastly, good institutions are a prerequisite to the creation of jobs and public and private investments. To this end, political and economic institutions will be the breeding ground of innovation and initiatives toward recovery.

In essence, while the DBM ensures the proper allocation of the national budget, the budget itself serves as the crucial instrument to manage and expand the limited fiscal space, promote good governance, and propel resilient, inclusive growth.

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Dindo Manhit is the founder and CEO of the Stratbase Group.