Research group IBON found the proposed P5.02-trillion 2022 national budget ‘perplexingly business-as-usual’ as the budget has the same priorities as before the pandemic and with only minor adjustments to respond to the health crisis.

The Department of Budget and Management (DBM) submitted the proposed budget to the House of Representatives on August 26, a few days within the Constitutional mandate for the President to submit a budget proposal within 30 days from the opening of every regular session. The 18th Congress opened its third regular session on July 26.

The DBM presented the budget as the education sector getting the biggest chunk in terms of agencies – the Department of Education (DepEd), Commission on Higher Education (CHED), state universities and colleges (SUCs) and Technical Education and Skills Development Authority (TESDA) – with a combined P 773.6 B allotted budget. The DBM said social services will get the largest share of the budget, with P 1.922 trillion.

But for IBON, the proposed budget for health functions is only P 248.4 billion and social welfare and protection is P305.1 billion, while military and police will get P444.2 billion, debt interest payments will get P 512.6 billion and infrastructure or Build, Build, Build (BBB) will get as much as P 1.18 trillion.

“There is still disproportionate attention to infrastructure, the military and police and debt service with only marginal changes to the budget for health and social protection,” said the group in a post on August 26.

Earlier, the group said this is the second budget in a row that fails to respond to the pandemic. IBON said the government is not spending enough on health and ayuda [aid] for the country to recover quickly and mitigate or stop deprivation experienced by the people since last year. 

“The incomes of millions of families have fallen and nearly 18 million households do not even have savings anymore. Some 100,000 micro, small and medium enterprises (MSMEs) have closed and nearly 500,000 are still only operating partially,” the group stressed.

Health budget

The budget for health functions was proposed to increase by only P 26.8 billion to P 248.4 billion in 2022 from P221.6 billion in 2021.

The Department of Health (DOH) got only 3.2% share in the budget, with P162 billion earmarked for next year. This small budget increase for DOH is also despite the Health secretary saying that the country is expected to weather pandemic for one to two more years, according to international experts. The Health department also said this year’s initial target herd immunity, or more than 70% of the population fully vaccinated, might be extended to early next year.

PhilHealth, meanwhile, got 1.6% of the budget with P 80 billion.

Two lead institutions during this time of the pandemic would experience budget cuts.

The 2022 budget allotted for the Philippine General Hospital, the foremost COVID-19 referral hospital in the country, was P5.67 billion, lower than the P 6.87 billion it got in 2021.

The Research Institute for Tropical Medicine, the country’s main COVID-19 testing center, would get P 170 million less than its budget for 2021.

Social services, welfare and protection, ayuda budgets

IBON analyzed that the combined budgets for agencies giving emergency aid for needy household, farmers, workers and small businesses at P 305.1 billion is smaller than the separate budgets for infrastructure, military and police and debt service.

The combined social welfare and protection budgets is equivalent to just 59.5% of debt servicing interest payments, 64.8% of the police and military budget and 25.8% of the BBB budget.

The budget of the Department of Social Welfare and Development is only 3.8% of the total, with P 191.4 billion earmarked for the agency next year. The Department of Housing and Urban Development got a meager 0.02% or P 899 million.

The Department of Agriculture got 1.4% of the pie, with P 72 billion, while the Department of Agrarian Reform got a measly 0.3% of the budget, or P 12.8 billion.

The Department of Labor and Employment got only 0.9% or P 44.9 billion. The Department of Trade and Industry (DTI) were allotted only 0.2% with P 8.2 billion.

The Department of Education was given P 630.8 billion or 12.6% of the national budget. The Commission on Higher Education got P 52.6 billion (1.0%), state universities and colleges got P 75.4 billion (1.5%), and DTI-Technical Education and Skills Development Authority got P 14.7 billion (0.3%).

The agencies working on social services, welfare and protection were also among those assigned to extend ayuda to indigent families, workers, farmers and students, whether through pre-existing aid programs or those allotted for the pandemic emergency.

With the meager budget these agencies got compared to BBB, debt or military, IBON said the proposed budget “refuses to give ayuda that millions of Filipinos need” for lost incomes due to the government’s over-reliance on lockdowns.

The group said the ayuda for 2022 only amounts to P 68.1 billion, excluding recurring programs such as the 4Ps and pension for indigent seniors. This is only 2.5 billion more than in 2021. The proposed ayuda budget for 2022 is also less than one-fourth of what was spent in 2020, at P 286.3 billion. IBON has long proposed P 540 billion in emergency cash subsidies, P 40.5 billion in cash-for-work programs and P101 billion in wage subsidies.

The group said, “The social welfare and multiplier effects of ayuda are far higher than that of many import-intensive big-ticket infrastructure projects and spending on military modernization and hardware.”

Build, build, build budget

IBON noted that infrastructure got a P100 billion budget increase in the proposed budget for next year.

The Department of Public Works and Highways got 13.7% of the budget, with P 686.1 billion. The Department of Transportation got P 151.3 billion, representing 3% of the total national budget.

IBON belied government claims that infrastructure is the way out of the pandemic. The group pointed out that budget increases in infrastructure since 2017 have not stopped the economic from slowing for three consecutive years even before the pandemic.

Defense and public order and safety budgets

IBON said the budgets for defense and public order and safety combined increased to P 470.6 billion from P 444.2 billion in 2021, representing 9.4% of the total budget.

The Department of National Defense got 4.4% of the total national budget, with P 222 billion while the Department of Interior and Local Government that heads the Philippine National Police got 3.8% with P 190.7 billion in the proposed budget.

The National Task Force to End Local Communist Armed Conflict (NTF-ELCAC), the main counterinsurgency of the administration headed by the president himelf, got a proposed P 29 billion budget. This is P 10 billion higher than its 2021 budget of P 19 billion. Various sectors, including legislators, have called to re-channel the NTF-ELCAC’s 2021 funds to health services, but in 2020 it was given more.

Debt service

Debt service for interest payments increased to P 512.6 billion, taking up 10.21% of the total budget. This is aside from the P785.2 billion in principal amortization that is not counted as part of the national budget.

The country’s debt ballooned to 10.991 trillion by end of April 2021. This is project to rise to almost P 12 trillion by end of 2021 and more than P 13 trillion by end of 2022.

No stimulus for pandemic response

Having a “record-high” (as Presidential Spokesperson Harry Roque pointed out) budget is meaningless, IBON said, every national budget is higher than the one that came before it (except in 1992). This is also meaningless as this is the second straight year also for non-existent stimulus, as the budget increased only by 11.5% from the 2021 national budget which is not far from the 11.3% average annual increase in the national budget recorded since 1987.

The lack of stimulus will be the biggest reason for the inability of the economy to rebound quickly from the unprecedented lockdown-driven economic collapse in 2020, said IBON.

On the one hand, the group noted how President Rodrigo Duterte’s administration was able to manage a 23.6% increase in the 2017 budget due to huge increases in infrastructure and military spending.

A similar rate of increase for 2022 would bring the budget to P 5.57 trillion, but with stress on health measures to contain the pandemic and help patients and frontliners, ayuda for families and support to small businesses instead.

“Such a proactive COVID-19 response justifies spending, additional borrowing that takes advantage of investment grade credit ratings and low interest rates, and revenue generation from a more progressive tax system taxing the rich and large corporations,” said IBON.

At the same time, the group said the Duterte administration also has to address the underspending and pandemic response anomalies pointed out by the Commission on Audit.

Push to re-channel budget to medical response and aid to people

IBON proposed that more resources should be used for immediately addressing the country’s health and economic emergency. The items in the budget the group proposed to re-channel to health and aid were:

  • P 109.2 billion in infrastructure for less urgent seaports, airports and railways
  • P 8.5-billion allocation for confidential and intelligence funds across agencies, 73% of which is allotted to the Office of the President (P 4.5 billion) and the Defense department (P 1.7 billion)
  • Almost P 1-trillion combined allocation for defense and police services and debt interest payments

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