Economic managers to review targets, assumptions for 2019 budget today

THE DEVELOPMENT Budget Coordination Committee (DBCC) will convene today to review key economic assumptions for the 2019 budget targeted to be submitted to Congress on the day of President Rodrigo R. Duterte’s third State of the Nation Address (SONA) this month.

Finance Secretary Carlos G. Dominguez III said in a mobile phone message on Sunday that the “main item on the agenda is the 2019 budget in all its aspects.”

An advisory from the Department of Budget and Management (DBM) said the 173rd DBCC meeting will be held at the DBM headquarters in Manila.

Socioeconomic Planning Secretary Ernesto M. Pernia in a separate message said that the DBCC will “fine tune/finalize economic and financial assumptions for the 2019 budget.”

Budget Secretary Benjamin E. Diokno has said the Budget department will submit the proposed 2019 national budget to Congress on the day of Mr. Duterte’s SONA scheduled on July 23, which marks Congress’ third regular session.

The 2019 budget will be the first spending plan to have a cashbased appropriations scheme, which means agencies’ allocations are only valid within the fiscal year — as opposed to the obligation-based budget that allowed them to disburse funds for over two years.

According to Budget Undersecretary Laura B. Pascua, this means the upcoming budget may be slightly lower from this year’s plan as funds will be given only to those projects ready for implementation — a scheme seen to be “more accountable and transparent.”

“The 2019 budget will be slightly smaller than the 2018 obligation based budget because we are changing the basis of budgeting. Budgeting only for the goods and services which will be delivered and paid for in 2019,” Ms. Pascua explained in a separate text message on Sunday. “Hence, we had to be realistic in what agencies were utilizing of their past budgets, and take out those activities which we believed would be ready for 2020 implementation, not 2019.”

“There were a lot of these prior years contracts which were accumulated over the years.

“So now, agency performance would be measured in terms of disbursements for goods and services delivered and paid and, not merely obligated,” said Ms. Pascua. “What you see is what you really will get.”

In its April meeting, the DBCC set the cash-based 2019 budget at P3.469 trillion, about two percent

higher than the P3.401- trillion earlier expected and 7.91% less than this year’s P3.767- trillion budget.

It also adjusted the projected revenues and disbursements in its medium-term fiscal program, taking into account the expected take from Package 1B of the government’s tax reform containing the general tax amnesty, estate tax amnesty, the easing of bank secrecy restrictions, and the Motor Vehicle Users Charge increases, even as it remains pending in legislation.

It also retained the deficit ceiling at 3% of gross domestic product (GDP).

Revenues projected for 2019 stand at P3.203 trillion, equivalent to 16.7% of GDP and 12.4% greater than the P2.846-trillion revenues programmed this year.

Meanwhile, programmed disbursements for next year are currently at P3.782 trillion, equivalent to 19.7% of GDP and 12.2% more than the P3.37-trillion set this year.

The DBM in National Budget Memorandum No. 130 cited “funding pressures,” in the 2019 budget, which includes the P12 billion Tax Reform Cash Transfer Project as the P200 monthly transfers to beneficiaries will be raised to P300; the P33.9 billion payments for military pension following the lifting of pension indexation next year; and the P60.1 billion transfer of Coco Levy funds to farmers upon ratification of the Coconut Farmers and Industry Development Act.

At its last meeting, the DBCC also raised its Dubai crude oil assumptions to $55-70 per barrel in 2018 from $50-65 per barrel previously while retaining the $50-65 per barrel target for 20192022.

It also raised the dollar-peso exchange rate assumption for this year until 2022 to P50-53 from P49-52 per dollar previously.

The DBCC likewise set merchandise exports growth to 9% this year and 8% starting 2019 to 2022. Import growth, meanwhile, is seen at 10% this year and 9% for the succeeding years until 2022.

For the borrowing program, the portfolio was revised to a 6535 ratio in favor of local sources for 2018 from the previous 74-26 mix earlier programmed and 8020 in 2017. For 2019- 2022, the borrowing mix is set at a 75-25 ratio.