MANILA — The government will be funding 31 percent of the 2023 national budget from loans, the chairman of the House committee dealing with the matter said Tuesday.

House Appropriations Committee Chair Rep. Elizaldy Co said the national government will be obliged to "partly finance" the expenditures through borrowings.

Co made the remark at the start of the plenary deliberations on House Bill 4488 or the 2023 General Appropriations Bill began at the House of Representatives.

"In financing the budget, the National Government expects revenue collections in FY2023 to reach P3.633 trillion, or 15.3 percent of GDP. This is 10 percent higher than the FY 2022 programmed revenue of P3.304 trillion which is equivalent to 15.2 percent of GDP," Co said in his sponsorship speech.

"The P3.633 trillion revenue will fund about 69 percent of the P5.268 trillion programmed disbursements for FY 2023, obliging the national government to partly finance through borrowings about 31 percent of the expenditures," he added.

The bill noted that 95 percent of the revenues for 2023 will be from taxes, while 5 percent will be from non-tax revenues and sale of government assets.

It said that "government needs to borrow in FY 2023 the amount of about P2.207 trillion, of which P553.500 billion will be sourced from foreign creditors while P1,653.5 trillion will be sourced domestically."

"Of the total borrowings, P1,452.9 billion will be used to finance the deficit, settle P124.5 billion in maturing debt obligations, and the balance includes contributions to the bond sinking fund, and maintain sufficient cushion of cash in the National Treasury," it added.

The House's Congressional Policy and Budget Research Department (CPBRD) in its paper published ahead of the deliberations pointed out that while the overall government expenditure program has been increasing, its growth is much lower compared to the rate that debt service, including interest payments and net lending, has grown since 2021.

Net lending are advances by the national government for the servicing of guaranteed debts of government-owned and -controlled corporations.

While the 2022 budget amounting to P5.023 trillion grew by 9.2 percent, growth rate for debt service was much higher at 21 percent.

For 2023, the proposed expenditure program of P5.268 trillion is only 4.9 percent higher than the current year’s level, while debt service growth was relatively high at 12.9 percent.

"As a result, the portion of the total national budget that goes to debt service has steadily increased from 9.7% in 2021 to 11.6% in 2023," the CPBRD said.

"With more of debt service eating up the national budget, the productive part of the budget which can be used to support (national government) operations and the implementation of programs and projects is also gradually reduced in share," it added.

Paying off debt interest is covered by automatic appropriations which no longer require annual congressional approval.

In 2023, automatic appropriations stand at P1.596 trillion, which also cover Retirement and Life Insurance Premiums, National Tax Allotment or the former Internal Revenue Allotment, Tax Expenditure Fund, Special Accounts in the General Fund, Pension of ex-presidents/spouses, as well as the block grant for the Bangsamoro Autonomous Region in Muslim Mindanao.

According to the NEP, the automatic appropriations is about 30.3 percent of the proposed budget. It is P75 billion or 4.5 percent lower than its counterpart in the 2022 budget, primarily due to the P138.8 billion reduction of the NTA given the lower tax revenue collections because of the pandemic.

In a statement, House Deputy Minority Leader and ACT Teachers Representative France Castro said allocations for programs and projects of the government have consistently declined as debt servicing eats up the national budget.

"No wonder allocations in the proposed 2023 national budget for services and projects have been cut, our national budget for primary expenditures continues to decline with the growing allocation for debt service. This despite the increasing overall budget for the national government," she said.

"The need to repeal the law on automatic appropriation for debt servicing has become more urgent as the public debt has become an albatross for the nation. We already filed House Bill 2220, Repealing Automatic Appropriations for Debt, and we urge Congress to urgently hear the bill for its urgent passage," she added.

"The country’s debt is bloated by revenue losses from trade liberalization, overly generous fiscal incentives for foreign investors, and the guarantee of profits as the government assumes contingent liabilities. The Duterte administration left a whopping P12.79 trillion debt, most of which did not even go to the COVID-19 response or other social services."

"Habang hindi maitatama ang misprioritization ng budget, patuloy na mapipilitang gumastos mula sa kakarampot na sweldo ang mga teacher para makapaghatid ng may kalidad at accessible na edukasyon, patuloy na kulang ang badyet para sa mga benepisyo ng mga healthcare workers, at mananatiling kakarampot ang ayuda na maibibigay natin sa mamamayang Pilipinong naghihingalo na sa taas ng mga bilihin at serbisyo," Castro said.

Of next year's proposed budget, Congress only has to authorize P4.259 trillion, consisting of P3.671 trillion in Programmed New Appropriations and P588.2 billion in Unprogrammed Appropriations. The remainder comes from the Automatic Appropriations which are covered by other laws.

"The Programmed New Appropriations of P3.671 trillion, together with the P1.597 trillion in Automatic Appropriations which is outside the purview of this General Appropriations Bill, will provide for the appropriation cover for the P5.268 trillion budget," Co said.

He told his colleagues that the passage of the General Appropriations Bill ensures the fulfillment of the administration's agenda for prosperity and economic transformation.

"In solidarity and with a united front, we shall be able to deliver the necessary tools and resources with this budget to improve the lives of our constituents and uplift their hope for a better quality of life and future prosperity and advancement of the Filipino people," Co said.

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