Social, economic get over 70% of 2018 NG budget

The government's social and economic services are going to get the biggest chunk, 70.6 percent or R2.657 trillion to be exact, of the Duterte administration’s proposed R3.767-trillion budget for next year.

The Department of Budget and Management (DBM) will submit to Congress the Duterte administration’s proposed national budget of R3.767 trillion for 2018, representing 21.6 percent of the gross domestic product (GDP), slightly higher than the 20.1 percent this year.

The proposed budget for 2018 is anchored on the assumption that the first comprehensive tax reform package will be passed into law before year’s end.

Data showed that the biggest share of the pie, equivalent to 41.2 percent or R1.551 trillion, will go to social services wherein education, culture and manpower development will get R794 billion; social security, welfare and employment with R369.6 billion; others at R209.6 billion; and R177.6 billion for health.

Allocation to social services increased by 14.8 percent from this year’s R1.351 trillion and is equivalent to 8.9 percent of GDP.

At least 29.4 percent or R1.106 trillion of the pie, meanwhile, is allocated to economic services, such as infrastructure spending on power, water, transportation and communications (R734.5 billion), others (R238.4 billion) as well as agriculture and agrarian reform (R133.2 billion).

The budget for economic services is seen to breach the R1 trillion mark, growing by 20 percent from the R922.9 billion approved funding in 2017 and representing 6.3 percent of the country’s economic output.

Funding earmarked for general public services such as general administration, public order and safety, among others remained unchanged at R575 billion, cornering 15.3 percent of the nation’s budget and equivalent to 3.3 percent of GDP.

Likewise, at least 9.4 percent or R353.4 billion of the budget will go to debt servicing and interest payments, an increase of 5.5 percent from R334.9 billion. In terms of GDP, this sector represents 2.0 percent, slimmer than the 2.1 percent target in 2017.

Allocation for defense, on the other hand, will be 4.4 percent of the pie or R164.2 billion, an increase of 10.4 percent from the R148.7 billion budget in 2017 and equivalent to 0.9 percent of the nation’s GDP.

Finally, net lending will get the remaining R16.8 billion, unchanged compared with this year’s allocation, but will represent 0.1 percent of GDP.

Earlier, economic managers of the Duterte administration lowered their proposed national budget for next year following the approval of a watered-down tax reform package by the House of Representatives.

The inter-agency Development Budget Coordination Committee (DBCC), which sets the country's macroeconomic goals and assumptions, earlier planned to submit a budget plan of R3.840 trillion for 2018.

The Department of Finance (DOF) submitted in September last year a tax reform proposal based on net revenue gain of R174.2 billion. However, House lawmakers removed and adjusted some provisions of the bill, dragging down its potential revenue to R133.8 billion.

Finance Undersecretary Karl Kendrick T. Chua said the Duterte administration expects the House-approved Bill 5636 “Tax Reform Acceleration and Inclusion Act (TRAIN) will be passed into law before the end of the year.

The DBCC is keeping its GDP growth targets of 6.5 percent 7.5 percent this year and 7.0 percent to 8.0 percent from 2018 to 2022, alongside Dubai crude oil prices, inflation and interest rates assumptions.

The budget deficit program of 3.0 percent of GDP was also maintained throughout the Duterte administration.