Secretary Rolando G. Andaya, JrDepartment of Budget and Management

March 8, 2007

SHARING RESPONSIBILITY IN SHARING RESPONSIBILITY IN SUSTAINING ECONOMIC HARVESTSUSTAINING ECONOMIC HARVEST

Fiscal Sector: Expenditure Accounts Fiscal Sector: Expenditure Accounts

Philippines Development ForumPhilippines Development Forum

Presentation OutlinePresentation Outline

2007 Fiscal Program2007 Fiscal ProgramSetting the Foundations/Directions Setting the Foundations/Directions for the 2008 Budgetfor the 2008 BudgetExpected ResultsExpected Results

2007 Fiscal Program2007 Fiscal Program

Policy Framework for 2007Policy Framework for 2007Goal:

Working towards sustainable budget by putting funds in the right place at the right time, managing resource allocation effectively, and ensuring our desired results through increased capability and accountability

2007 Fiscal Program2007 Fiscal ProgramFiscal Program, 2005-2007Fiscal Program, 2005-2007

Particulars2005 Actual

2006 Actual 2007

Levels in PB

Revenues 816.2 978.8 1,118.8

Disbursements 962.9 1,040.9 1,181.8

Deficit (146.8) (62.2) (63.0) Obligation Budget

As percent of GDP

947.6 1,053.3 1,136.6*

Revenues 15.1 16.3 16.9 Disbursements 17.8 17.3 17.9 Deficit Obligation Budget

(2.7)17.5

(1.0)17.5

(0.95)17.2

* Includes P10B provision for Salary Adjustment

Deficit of P63 B or 0.97% of GDP

Revenue estimate that is conservative, consistent to the developments in the economy

Shift from input-based to output-based expenditures approach

Election will not result in breached spending limits

Sectoral Allocation of the 2007 BudgetSectoral Allocation of the 2007 Budget

Focus on infrastructure and education …Focus on infrastructure and education …

Particulars

Levels in PB Percent Dist’n Growth (%)2005 vs

20072005 GAA 2007* 2005 2007

Economic Services 157.9 237.0 19.4 21.0 50.1Social Services 254.3 309.3 28.9 27.5 21.6Defense 44.2 53.6 4.9 4.8 21.3General Public Services 141.9 188.4 16.0 16.7 32.8IP/Net Lending 320.3 337.8 30.7 30.0 5.5TOTAL 918.6 1,126.1 100.0 100.0 22.6

* Net of the P10.3 billion provision for Salary Adjustment

Increase in Increase in allall expense classes expense classes

Particulars 2005 2007 Amount Percent 2005 2007Total Budget 918.6 1,126.1 207.5 22.6 100.0 100.0 Personal Services 289.2 335.4 46.1 16.0 31.5 29.8 MOOE 86.6 146.3 59.6 68.8 9.4 13.0 Capital Outlays 77.7 142.4 64.6 83.2 8.5 12.6 Internal Revenue Allotment 151.6 183.9 32.3 21.3 16.5 16.3 Interest Payments 313.4 318.2 4.8 1.5 34.1 28.3

Levels (P billions) Increase/(Decrease) Percent Share

Budget Level by Expense Class, 2005 and 2007

• Increases in departments are made possible due to lower share of interest payments in the total budget (32% or P340B in 2006 and 28% or P318B in 2007)—first in 8 years

• Nominally, first in 12 years

Higher infrastructure spending trend…Higher infrastructure spending trend…

2005 2007 Amount Percent

Roads and Bridges 31.3 43.7 12.4 39.4 Airports/Air Navigational Facilities 1.3 8.2 6.9 532.0 School Building Program 3.2 5.9 2.7 84.2 Irrigation 5.3 7.4 2.1 38.8 Electrification 0.05 0.6 0.6 1,092.3 Other Infrastructure 15.4 26.5 11.1 72.1

TOTAL 56.6 92.3 35.7 63.1 Percent of GDP 1.0 1.4

Particulars Levels in PB Inc./(Dec.)

SONA Commitments: SONA Commitments: Infrastructure Spending for Super Regions Infrastructure Spending for Super Regions (in billion pesos)(in billion pesos)

Amount Percent

North Luzon Agribusiness Quadrangle (NLAQ) 0.27 0.67 0.40 146.8 Luzon Urban Beltway (LUB) 0.04 1.72 1.68 3,904.7 Central Philippines Super Regions 2.31 9.04 6.73 291.5 Mindanao Agribusiness Region 1.46 4.81 3.35 229.5

TOTAL 4.1 16.2 12.2 297.6

Inc/(Dec)Particulars 2006 * 2007

* Releases* Releases

Educational Programs (1)Educational Programs (1)

Particulars 2005 2007 Level Percent

School MOOE 2,811 5,474 2,663 94.7 School building Program 2,000 5,373 3,373 168.7 Textbooks 636 2,064 1,428 224.5 Creation of teaching and non-teaching positions 3,717 3,717 -Repair and Maintenance of school buildings and educational facilities 377 1,110 733 194.4 HR Training and Development 79 940 861 1,089.9 Pre School Program 23 600 577 2,508.7 Computerization Program 75 280 205 273.3

Increase/(Decrease)

(in million pesos)(in million pesos)

Educational Programs (2)Educational Programs (2)

Particulars 2005 2007 Level Percent

Department of Education GASTPE 1,829 3,140 1,311 71.7 TESDA PESFA 200 200 - - NCIP NCIP-EAP 53 73 20 37.7 CHED 375 441 66 17.6 DOST SEI 304 341 37 12.2 PSHS 61 70 9 14.8

Increase/(Decrease)

(in million pesos)(in million pesos)

Health and Other Social Services Health and Other Social Services ProgramsPrograms

Particulars 2005 2007 Level Percent

NHIP - coverage of indigent sector 750 3,500 2,750 366.7 Expanded program on immunization 317 467 150 47.3 Construction/ completion of hospital buildings 60 354 294 490.0 Establishment of new rehabilitation centers 138 238 100 72.5 KALAHI CIDSS 778 1,226 448 57.6 Housing 2,500 3,382 882 35.3 Training for Work Project - 202 202 -Technical Education and Skills Development Proj. 356 466 110 30.9

Inc./(Dec.)

(in million pesos)(in million pesos)

NG FAPs Budget by Department/SPFNG FAPs Budget by Department/SPFFY 2005 and2007FY 2005 and2007(in billion pesos)(in billion pesos)

2005 % 2007 %Program Share Program Share

Departments 28.2 76.3 38.3 78.9

DPWH 20.0 54.1 25.3 52.1 DOTC 2.2 5.8 6.8 13.9 DepEd 2.2 6.0 1.1 2.2 DENR 0.6 1.7 0.7 1.4 DSWD 1.1 3.0 1.2 2.5 DOLE 0.6 1.7 0.8 1.7 Others 1.5 4.0 2.4 5.0

Special Purpose Funds 8.7 23.7 10.2 21.1

AFMA 8.2 22.2 9.2 19.0 DA 4.5 12.1 6.6 13.6 DAR/ARF 3.7 10.1 2.6 5.4

ALGU 0.6 1.5 1.0 2.1

Total 36.9 100.0 48.5 100.0

Particulars

NG FAPs Budget by DonorNG FAPs Budget by DonorFY 2005 and 2007FY 2005 and 2007(in billion pesos)(in billion pesos)

2005 Percent 2007 PercentProgram Share Program Share

Japan 19.1 51.8 32.0 65.9

ADB 4.5 12.2 4.6 9.4

WB 6.6 17.9 6.6 13.6

Others 6.7 18.2 5.4 11.0

TOTAL 36.9 100.0 48.5 100.0

Particulars

Top Five (5) Departments, 2005 Top Five (5) Departments, 2005 and 2007and 2007

ParticularsLevels (P billions)

Increase/ (Decrease)

Rank

2005 2007 Amt % 2005 2007

DepEd (incl. SBP)

112 137.3 25.3 22.6 1 1

DPWH 49.5 79.5 30.0 60.6 2 2DND (incl. AFP Mod.)

46.2 49.5 3.3 7.1 3 4

DILG 43.9 51.6 7.7 17.5 4 3DA (incl. AFMA)

14.3 24.2 9.9 69.2 6 5

Setting the Setting the Foundations/Directions Foundations/Directions

for the 2008 Budgetfor the 2008 Budget

Introduced in 2007 Budget and being Introduced in 2007 Budget and being strengthened for 2008 budget preparationstrengthened for 2008 budget preparation

Adoption of improved guidelines and templates Adoption of improved guidelines and templates for Forward Estimates (FEs)for Forward Estimates (FEs)

Briefing of spending agencies on MTEF and FEsBriefing of spending agencies on MTEF and FEs Adding more depth to the Paper on Budget Adding more depth to the Paper on Budget

Strategy for presentation to CabinetStrategy for presentation to Cabinet Enhancing harmonization of planning and Enhancing harmonization of planning and

budgetingbudgeting Enhancing the FY 2008 Budget CallEnhancing the FY 2008 Budget Call

Making the Medium-Term Expenditure Making the Medium-Term Expenditure Framework (MTEF) IrreversibleFramework (MTEF) Irreversible

Cascading and Embedding the Cascading and Embedding the Organizational Performance Indicator Organizational Performance Indicator Framework (OPIF) in the 2008 BudgetFramework (OPIF) in the 2008 Budget

Cascading the OPIF to bureaus and attached Cascading the OPIF to bureaus and attached agencies of the 20 pilot departments, and agencies of the 20 pilot departments, and introduction to OEOs introduction to OEOs

Development of departments-wide log frames Development of departments-wide log frames and Performance Indicators (PIs)and Performance Indicators (PIs)

Costing og Major Final Outputs (MFOs) to Costing og Major Final Outputs (MFOs) to mainstream OPIF in budgetmainstream OPIF in budget

Intensive capability building on OPIF Intensive capability building on OPIF methodologiesmethodologies

Streamlining of fund releasing to support agency Streamlining of fund releasing to support agency operational targetsoperational targets

Strengthening internal control systemsStrengthening internal control systems

Expected ResultsExpected Results

Expected ResultsExpected Results

Accelerated reduction of 2007 deficit from the planned 2 % of GDP to 0.9 %

More productive government expenditures, particularly in infra and social services

Balanced budget by 2008

Thank youThank you