Recto urges Congress to stick to fiscal plan in budget talks

CEBU, Philippines — Finance Secretary Ralph G. Recto has called on lawmakers to follow the government’s updated Medium-Term Fiscal Program (MTFP) as they prepare the 2026 national budget, stressing the need to use public funds wisely and effectively.

“Let us operate within the parameters of the Medium-Term Fiscal Program that reduces our deficit and debt gradually, creates jobs, increases income, and decreases poverty,” Recto said during a briefing with the House Committee on Appropriations on August 18, as reported in the Finance Department’s website.

He added that the 2026 General Appropriations Act (GAA) must “work as hard as the people who fund it—the taxpayers.”

The Medium-Term Fiscal Framework (MTFF), first created in 2022, was revised in 2024 by Secretary Recto to make its goals more realistic and responsive to current global challenges. These include the after-effects of the COVID-19 pandemic and global conflicts such as the wars in Ukraine, Gaza, and Iran, as well as ongoing trade tensions.

The revised framework aims to reduce the country’s budget deficit and debt slowly but surely, while also creating jobs, raising incomes, and helping more Filipinos escape poverty.

“And under this, we have ensured that every peso collected or borrowed will be stretched to deliver the biggest bang per buck for the Filipino people,” Recto said.

Recto reported that government revenues have been on a strong upward trend, growing by an average of 13.8% annually for the last three years. Tax collections have also steadily risen by 11.5% annually. In 2024, the revenue-to-GDP ratio reached 16.7%—the highest in 27 years.

From 2025 to 2028, tax revenues are expected to grow by 10.2% per year, reaching nearly P6 trillion by the end of President Marcos Jr.’s term. By 2030, revenues are projected to surpass P7 trillion.

These gains are being supported by new tax measures such as the VAT on digital services and the Capital Markets Efficiency Promotion Act. Future revenues are also expected from the Rationalization of the Mining Fiscal Regime Act and a proposed general tax amnesty.

The Department of Finance (DOF) is also working to increase non-tax revenues by boosting dividends from government-owned corporations and selling off unused government assets. Meanwhile, the Bureau of Internal Revenue (BIR) and Bureau of Customs (BOC) are stepping up efforts to improve tax administration through digital tools, strict enforcement, and closing tax loopholes.

Thanks to better revenue collection and spending discipline, the country’s budget deficit has fallen from a pandemic high of 8.6% in 2021 to a projected 5.5% in 2025. It is expected to go down further to around 4% by 2028 and to 3% by 2030. Recto warned against wasteful spending and urged Congress to avoid approving unnecessary budgets.

“People are naturally resistant to taxes. But their tax obedience can be won if they will see how the taxes they paid are spent for the right things, at the right price, by the right agency, at the right time,” he said. “And that is exactly what this administration is doing—putting every peso where it matters most.”

He explained that the Marcos Jr. administration is focusing on key areas like education, health, agriculture, infrastructure, and digital connectivity—sectors that generate jobs, grow incomes, and reduce poverty.

Despite inheriting P12.8 trillion in debt from the pandemic period, the Marcos Jr. administration has kept borrowing under control. Most of the loans are domestic, long-term, and at fixed interest rates, with the government maintaining a borrowing strategy of 80% local and 20% foreign.

The Philippines' debt level remains lower than many other Asian countries. “Every peso we borrow is invested in productive projects that deliver real benefits to Filipinos,” Recto said. “We will make sure that the economy will continue to outgrow the country’s debt. This will ensure that we have the ability to pay for our obligations.”

If the government sticks to its fiscal plan, Recto estimates that the Philippine economy will grow to P42.6 trillion by 2030, while keeping debt at 58% of GDP. He also pointed to the country’s strong credit ratings as proof that global investors trust the government’s financial strategy.

Recent government efforts are already showing results. Inflation slowed to just 0.9% in July 2025, largely due to actions taken to ease food prices. The economy has been growing at an average rate of 5.9% since President Marcos Jr. took office in 2022—nearly twice the global average.

Job creation has also improved significantly, with around six million jobs added since 2022. As of June 2025, a record 52.4 million Filipinos are part of the labor force, while unemployment and underemployment rates continue to fall.

Poverty incidence dropped to 15.5% in 2023, lifting 2.5 million people out of poverty. The administration’s goal is to reduce poverty to just 9% by 2028—freeing another 8 million Filipinos from poverty.

“This is the be-all and end-all of all our efforts,” Recto said. “As this is the definitive indicator that our growth has translated into real improvements in the lives of Filipinos through more and better jobs, higher levels of education, and healthier lives.”/JOB