MANILA, Philippines — The Department of Finance (DOF) is urging the incoming administration of President-elect Ferdinand “Bongbong” Marcos Jr. to cut wasteful expenditures to make sure the government keeps enough cash to finance priority projects.
Outgoing Finance Secretary Carlos Dominguez III said the new administration should discuss with the Department of Budget and Management (DBM) how it can trim spending without sacrificing the progress of the infrastructure program.
“That one will have to be discussed with the DBM. As in any large organization, there is always unnecessary stuff going around. The government is certainly not exempt from it, and probably is one of the highest spenders of unnecessary expenditures,” Dominguez said in an interview with reporters.
Dominguez said the government can even look into rationalizing some state-run firms to reduce the number of agencies it needs to subsidize. As to what government corporations these are, he passed the buck of identifying them to the next administration.
However, Dominguez asked the next administration to keep infrastructure as a priority spending in its annual budget.
Also, he said the government in the next six years should go beyond public works, funding as well digital facilities to keep up with the shift to an online economy.
Last year infrastructure spending hit P1.12 trillion, equivalent 5.8 percent of the gross domestic product (GDP), and is expected to stay above five percent of the GDP at 5.9 percent of the GDP in 2022, 5.5 percent in 2023 and 5.4 percent in 2024.
According to the DOF, the next administration should raise P249 billion in additional revenues to make space for debt payments, or else it might be forced to source new loans just to pay for old debts.
One of the options that the government can do to get that amount is to lower spending on social services and public works.
A reduction of P249 billion, in turn, results in forgoing the completion of 143,876 public classrooms, 8,174 kilometers of roads, 179,845 kilometers of bridge upgrades and 302 provincial hospitals.
It may also lead to a decline in health services required during the COVID-19 pandemic, as the funds could instead be used to put up 13,832 medical facilities in rural areas and 110,672 health stations in barangays nationwide.
The Finance department also warned that a P249 billion decline in productive spending takes away free irrigation for 609,645 hectares of land.
According to the DOF, the next administration could raise revenues through a string of fiscal reforms that it can undertake between 2023 and 2025.
It added the government could remove value added tax (VAT) exemptions, defer tax reduction and introduce new taxes to generate P349.3 billion in incremental revenues every year.