Some recent stories and reports related to public finance and economics have caught my attention. Let me enumerate and discuss them.
One, from Department of Finance press statement, “PH draws strong interest from EU biz community at first-ever econ dialogue in Italy” (May 16).
Two, from The Philippine Star, “Government should advance fiscal consolidation” (May 21).
Three, from BusinessWorld, “Congress urged to cap spending via budget modernization bill” (May 19), “Agencies’ budget proposals reach P11 trillion for 2026” (May 20), “Budget cap to be set on May 26 as agency spending proposals surge” (May 20).
The Philippine Economic Dialogue (PED) held by the economic team in Milan, Italy last May 6 that the DOF announced in their press statement has “attracted a standing-room crowd of around 100 business leaders, bankers, and investors from across Europe, along with delegates from the ADB Annual Meeting – more than three times the expected turnout, underscoring the strong global investor interest in the Philippines.”
Key speakers in the event were DOF Undersecretary and chief economist Domini S.D. Velasquez, Department of Budget and Management Secretary Amenah F. Pangandaman, and Department of Economy, Planning and Development (formerly NEDA) Secretary Arsenio M. Balisacan.
The three officials discussed among others, fast growth, fiscal consolidation, solid revenue collection efforts, young and tech-savvy workforce, business-friendly reforms like the new laws on Public-Private Partnership (PPP) Code, Ease of Paying Taxes (EOPT) Act, the CREATE MORE Act, and New Government Procurement Act (NGPA). Also continued infrastructure investments like the 207 big-ticket projects under the Infrastructure Flagship Projects (IFPs) amounting to P10.1 trillion or $177.7 billion. Good job, economic team.
On The STAR report, it quoted the House think tank, Congressional Planning and Budget Research Department (CPBRD), formerly Congressional Planning and Budget Office (CPBO). I worked at CPBO from 1991-1999.
The CPBRD paper argued and I agree with them, that “policymakers are enjoined to intensify efforts to strengthen fiscal sustainability and advance fiscal consolidation by reducing borrowing and, more importantly, moderating deficit spending.”
On the BusinessWorld reports about P11 trillion budget request by agencies for 2026 and DBM plan to have “budget cap,” the economic team indeed should guard against this abusive tendency by many agencies to spend up to the stratosphere. And I think this is another proof of the Philippines’ “deep state” of various agencies, expanding existing expenditures and creating new ones as if taxpayers are their milking cows forever. The approved budget this year 2025 is P6.326 trillion and agencies want P11 trillion next year, horrible.
To control deep state overspending and over-borrowing mentality, I think many national agencies should be abolished along with their regional offices. Their functions can be devolved to provincial, city and municipal governments via more transfer of budget to the local governments. Wastes and corruption can never be eliminated by this policy but it can be minimized.
To help control high annual budget deficit and borrowings aside from spending control without raising new taxes, government should proceed with continued privatization of assets that are better managed by the private sector. And privatization proceeds should be used entirely to reduce the public debt, not earmarked to any agency, any department, or any program and project.
In my article last year, “On a huge budget surplus and long-term privatization revenues” (BusinessWorld, March 19, 2024), I showed table 2 where I estimated that privatizing NAIA land itself, 646 hectares, estimated compounded price of P1.3 million per sqm by 2034, can generate a potential revenue to the government of P8.38 trillion by 2023.
New Bilibid Prison (DOJ will move the jails to the provinces) land with 367 hectares, estimated compounded price of P1 million per sqm by 2024 can generate a potential revenue of P3.81 trillion by 2034.
In the news recently is the planned privatization of Caliraya-Botocan-Kalayaan (CBK) hydropower plant, 797 MW and the DOF hopes to sell it up to $600 million or P33 billion. Although Finance Secretary Ralph G. Recto estimates that it can fetch up to P50 billion in privatization proceeds.
Aside from CBK, the various big hydro plants in Mindanao like Agus-Pulangi that are supposed to be privatized based on the EPIRA law of 2001 can fetch more billions of pesos of revenues.
Yesterday I attended the roundtable discussion on “Macroeconomic Insights for National Action: An Economic Dialogue with Civil Society” organized by the DBM as chair of the Philippine Open Government Partnership (PH-OGP). It was held at Luxent Hotel, Quezon City. DBM Secretary Pangandaman was the keynote speaker.
The OGP is a good platform that promotes more transparency, accountability and participatory governance in Philippine government budgeting. In my observation, civil society organizations (CSOs) are among the factors why our budget and borrowings keep rising high yearly. Many CSOs lobby for endless subsidies and freebies, the substitution of personal and parental responsibility (in education, healthcare, food, etc.) by more government responsibility. And to me this is wrong.
“A government that is big enough to give everything you want is also big enough to take everything you have.” I do not remember who said that but that is the reality of big government, big freebies, big taxes and penalties.
I think we should go back to a society of more self-reliant citizenry, not more state-dependent people. A society of small government with small taxes and bureaucracies as people assume more personal and parental responsibility in running their own lives and households.