FY 2021 Budget Prioritizes Programs Addressing COVID-19

The Department of Budget Management (DBM) has instructed agencies to review and reprioritize its programs, activities, and projects (PAPs) under the proposed P4.335-trillion cash budget for FY 2021 toward containing the spread and mitigating the effects of the COVID-19 pandemic while marshalling an economic recovery under the “new normal”.

This is contained in its National Budget Memorandum No. 136 issued on May 21, 2020.

Cash-Based Budget Ceiling and Fiscal Space for FY 2021

To accelerate growth and help the economy recover from the COVID-19 crisis, the Development Budget Coordination Committee (DBCC) has pegged the FY 2021 cash appropriation at P4.335-trillion, equivalent to 20.2 percent of gross domestic product (GDP).

This is higher by 3.7 percent when compared to the level of P4.180-trillion approved last 12 May 2020.

The higher proposed cash-based budget for next year aims to support the Build, Build, Build Program to help stimulate economic growth.

With higher infrastructure investments, the country’s recovery from the COVID-19 pandemic can be better assured by generating more jobs in 2021, thus contributing a projected 0.9 percentage point increase to GDP growth to reach the range of 8.0 to 9.0 percent from the previous projected range of 7.1 to 8.1 percent.

This was contained in the updated approval of the DBCC, dated 27 May 2020, of the macroeconomic and fiscal targets to underlie the preparation of the FY 2021 National Budget.

The DBCC approved a revenue target of P2.929-trillion for next year, equivalent to 13.6 percent of GDP, and 12.1 percent higher than the P2.613-trillion projected for this year as a result of the forecasted contraction of economic growth of 2.0 to 3.4 percent and reduced tax base arising from the pandemic.

The DBCC likewise approved a budget deficit of 6.6 percent of GDP for next year which is lower than the 8.4 percent programmed this year and is set to be further reduced to 5 percent for 2022.

This is in a bid to return to the government’s fiscal consolidation track which was derailed by the current crisis and to keep the government’s debt at fiscally responsible levels.

A public infrastructure program of P1.131-trillion, equivalent to 5.3 percent of GDP, is targeted for 2021 in an effort to push the completion of a number of major flagship projects for 2021 and 2022.

Up from the reduced 4.6 percent for this year due to the reallocation of the budget to health and social amelioration programs, this upward push of the infrastructure program is expected to create some 140,000 to 220,000 additional jobs through direct and indirect employment.

FY 2021 Budget Priorities

The bulk of the PAPs for next year is aimed at strengthening the country’s capacity to address the COVID-19 pandemic by further buttressing the health care system, ensuring food security, enabling a digital government and economy, and helping communities to adjust to the “new normal”.

To improve the health sector, budget priority will be geared towards establishing more health facilities, purchasing necessary hospital equipment, test kits and vaccines, and ensuring sufficient and efficient deployment of health personnel to address COVID-19 and other infectious diseases.

More importantly, the FY 2021 budget aims to sustain funding for the implementation of the Universal Health Care Law.

For food security, the FY 2021 budget aims to ensure unhampered movement of agricultural goods and services through efficient transport and logistics systems as well as to intensify the provision of farm machineries and equipment to farmers and agriculture-based enterprises for their modernization.

The FY 2021 budget will also give priority to assisting micro, small and medium enterprises (MSMEs) through the MSME Resiliency Program and to expanding Shared Service Facilities and Regional Inclusive Innovations Centers.

The Balik Probinsya Program will likewise be supported by the FY 2021 budget.

To improve governance, budget priority will be given to fast-tracking the implementation of the Philippine Identification System to improve the efficiency of government’s social transfer programs.

Moreover, the government will also support the programs of the Department of Information and Communications Technology (DICT) by investing in ICT facilities, e-learning platforms, and digital upskilling that are critical for online and remote government operations.

The FY 2021 budget will also give priority to crucial and shovel-ready infrastructure projects that will promote better health services, ease of transportation and mobility of essential goods, as well as IT infrastructure that will lead to the establishment of an ICT-enabled government.

Other banner programs under the “new normal” for next year are also laid out in the report of the National Economic and Development Authority entitled “We Recover As One”.

The Duterte Administration seeks to ramp-up economic recovery following the COVID-19 pandemic by prioritizing these aforementioned programs that ensure a healthy population, a more agile workforce, and a resilient business environment.

More details regarding the FY 2021 Budget Priorities Framework can be found in https://bit.ly/2AHRKk7

You can read more about NEDA’s We Recover As One Report through http://www.neda.gov. ph/we-recover-as-one/