Republic of the Phitippines
HOUSE OF REPRESENTATIVES
‘Quezon City

FIFTEENTH CONGRESS
Thied Regular Session

COMMITTEE REPORTNO, _ 2383

‘Submitted by the Committee on Appropriations on 29 SEP 2012

Re: House Bill No. 6455
Recommending its approval without amendment:

Sponsors: Representatives Abaya, Belmonte, Jr. {F.), Limkaichong,
Benedicto-Angping, Bravo, Jr, Bondoc, Aimario, Sarmiento (M.S.),
Jaafar, Puno, Crisologo, Andaya, Jr, Arago, San Luis, Cua,
Malapitan, Nava, Joson, Balindong, Lacson-Noel, Viofago and
Osmefia

Mr. Speaker,

The Committee on Appropriations has the honos to submit to the House of
Representatives, for its immediate consideration and approval, the attached
House Bill No. 6456, titled:

AN ACT APPROPRIATING FUNDS FOR THE OPERATION
OF THE GOVERNMENT OF THE REPUBLIC OF THE
PHILIPPINES FROM JANUARY ONE TO DECEMBER
THIRTY-ONE, TWO THOUSAND AND THIRTEEN, AND
FOR OTHER PURPOSES

without amendment.

Respectfully submitted:

THE HONORABLE SPEAKER
HOUSE OF REPRESENTATIVES
‘Quezon City


KEY PROVISIONS:

Adopts the budget theme “Paggugo! na Matuwid: Atas ng Taumbayan”

Authorizes the enactment of funds amounting to 1.368 trillion, consisting of
P1.251 trilion of Programmed Appropriations and P117.5_ billion of
‘Unprogrammed Appropriations as standby fund should revenues exceed targets
or new loans be secured to support the proposed budgets.

Authorizes the utilization of P755.219 billion which are deemed automatically
appropriated as these were previously authorized under pertinent laws and
therefore outside the purview of this General Appropriations Bill

Proposes a total obligation budget of P2.006 trillion which is 10.5 percent or
P4190 billion higher than the 2012 tevel of P1.816 trillion. As a percentage of

Gross Domestic Product (GDP), the budget is 18.8 percent, slightly lower than
the 16.9 percent in 2042.

Assumes a GDP growth rates of 5.0 - 6.0 percent in 2012 and expected to
accelerate further to 6.0 ~ 7.0 percent in 2013. The proposed budget is also
formulated and consistent with the following macroeconomic assumptions:
Gross Nationa! income {GN1) of 4.4 -5.4 percent in 2012 and 5.4 — 6.4 percent
in 2013; inflation rate of 3.0 — 5.0 in 2013, same level as in 2012; 364-day T-bill
rates of 3.0 — 5.0; and foreign exchange rate of 42.0 — 45.0 peso to one us
dottar,

The 2013 budget is also formulated on the following fiscal program:

> Total revenue projection of P1.78 trilion which translates to
14.9 percent of GDP and higher by 14.1 percent from the
revised program of P1.56 trifion for 2012.

>» The Consolidated Public Sector deficit will significantly
dectine from the programmed 2.0 percent (P213.9 B) of GDP
in 2012 to 1.3 percent (P158.3 B) in 2013.

> National government budget deficit of P241.0 billion or 20
percent of GDP, fower than the programmed 2012 deficit of
P279.1 billion or 2.6 percent of GDP. The medium-term goal
is to achieve a fiscal deficit of 2.0 percent of GDP by 2013 up
to 2016.

> Outstanding NG debt of PS.7 trillion by the end of 2013 or a
debt to GDP ratio of 49.5 percent, lower than the 50.3
percent of GDP in 2012.

Top Departments —

> The Department of Education (Dep-Ed) remains at the top, as in previous:
years with an allocation of 292.7 billion for 2013, - up by 22.6 percent or
P53.9 billion from the 2012 level of P238.8 billion The Dep-ed will piug ail
resource gaps for classrooms, teachers, and textbooks by the end of 2013.


> The DPWH takes the second largest share of the budget in line with the
President's goal of strengthening the country's infrastructure base and
fueling economic growth. With a total 2013 budget of P152.9 billion, the
DPWH will focus on preserving the existing road network. upgrading and

constructing national roads and bridges, and tourism infrastructure
development programs.

> The DND receives a total of P121.6 billion, up by 12.8 percent or P13.5
billion from its 2012 fevel of P108.1 billion. The DILG also receives a
budgetary boost of 21.3 percent or P121.1 bitlion from its current years
allocation of P99.8 billion.

> The DA gets 20.7 percent increase or P12.7 billion bringing the agency's
budget to P74.1 billion from the current year's level of P61.4 billion. The
increase will support the agency's goal to achieve food self-sufficiency by
2013. The DOH receives a significant increase of 24 percent or P11 billion
with its total allocation rising to P§6.8 billion in 2013. The increase will help
the government advance its universal health care agenda for al! Filipinos,
particularly the poor and vulnerable.

> The DSWD takes some P56.2 billion, up by 15.2 percent or P7.4 billion
from its 2012 level of P4B.8 billion. The allocation will support the
government's bid to reduce poverty. The 4Ps will continue to be supported
with P44.3 billion in 2013, reflecting an increase of P4.8 billion or 10.9
percent from the current year's provision of P39.4 billion. The DOTC
Teceives 6.9 percent increase bringing its 2013 budget to P37.1 billion from
its 2012 level of P34.7 biltion.

> The DOF and DENR have the highest percentage growth of 40.7 percent
and 35.4 percent, respectively. In absolute terms, the DOF receives P33.2
billion while the DENR gets some P23.7 billion

Sectoral Allocation of the 2012 budget —

> The government sustains its comprehensive support of the Social Services
sector which continues to get the largest share among the other sectors with
P698.8 billion or 34.8 percent of the total budget. The sector will increase
by 13.9 percent ar P85.4 billion from the 2012 level of P613.4 billion. The
total allocation of P698.8 billion will be used to close goods-and-service
delivery gaps in public education, health, and social protection for the poor
and vulnerable in the next fiscal year.

> The Economic Services sector follows with P511.1 billion or 25.5 percent
share, up by 16.4 percent or P72.1 billion from the 2042 level of P439 billion.
The increase supports the rapid, sustained and inclusive growth that
redaunds to all Filipinos in a direct, immediate, and sustainable manner.

> General Public Services sector take the third largest share with P346 billion
or 17.2 percent, higher by 8 percent or P25.7 billion from the 2012 tevel of
P320.3 biltion.


> Debt burden comes next with P360.4 billion or 17.9 percent of the total
budget. This services the payment of interest of 333.9 billion and net
Tending account of P26.5 biflion.

> The Defense sector gets a share of P89-7 billion or 4.5 percent of the total
budget, higher by about 3 percent from the 2012 level of P87.2 billion.

Allocation by Expense Class —

> Interms of expense class, the obligation budget of P2.006 trillion is allocated
as follows: P641.3 billion or 32 percent goes to personal services {PS).
P1,039.5 trillion or 52 percent will go to maintenance and other operating
expenses (MOOE); and P326.2 billion or 16 percent will go to capita) outlays
{CO} and net lending (NL).

Regional Aiocation —

> By regional allocation, the distribution of the budget by main island groups
will significantly increase in 2013. The regionalized budget for 2013
increased to P990.4 bilfion or 49.4 percent share of the total budget of 2.006
trillion as compared to the regionalized budget in 2012 of P799.6 billion or 44
percent share of the total budget of P1.616 trilion.

> The istand of Mindanao will get a share of P258.6 billion or 26.1 percent of
the regionalized budget of P990.4 billion, up by P39.4 billion or 18 percent
from the P219.2 billion atlocation in 2012.

» The Visayas island will get a share of P193.8 billion or 19.6 percent of the
total regionalized budget, higher by P28.6 billion or 17.3 percent than the
2012 budget of P165.2 bilion.

» The island of Luzon will get the biggest share of P538 billion or $4.3 percent
of the regionalized budget, up by P122.8 billion or 29.6 percent than the 2012
allocation of P415.2 billion.

Funding the Social Contract with the Filipino People -

The 2012 budget was sharply focused on the government's social contract with
the people. in 2013, the government remains focused in fulfilling the contract
and have intensified the tevel of prioritization that will lift the poor from poverty
particularly on the five key result areas, to wil:

» Anticorruption and transparent, accountable, and participatory
governance - focused an progeams/projects for anti-corruption and good
governance like the digitization of financial management and governance
and the streamiining of regulatory processes like business permits.

> Poverty reduction and empowerment of the poor and vulnerable -
programs and projects on social protection, education, public healtty, and
affordable housing and settlements were expanded.


> Rapid, inclusive, and sustained economic growth — significant increase is
allocated to support the expanded requirements for infrastructure projects,
food self-sufficiency, and tounsm development, among others.

> Just and lasting peace and the rule of law — support to the peace process,

implementation of the muitiagency program PAMANA for the
reconstruction and development in conflict affected communities, the
continuance of judicial reforms, and the modernization of the AFP and
PNP.

> Integrity of the environment and climate change adaptation and mitigation
~ programs and projects shall be focused on the major river basins where
risks and ckmate change vulnerability is high:

«Reforms and Approaches of the Budget —

» Programs and projects of each government agency are geared towards
the five priorities and the basic too! used is the continued implementation
of the zero-based budgeting approach ensuring that the government
only spends on programs and projects with priority endeavors.

> Introduction of the program budgeting approach wherein budget
information and decision making should be structured according to the
objectives of the govemment and that component programs are
coordinated to ensure the delivery of services and results.

> Accelerates the completion of priarity program targets. in line with the
social contract. in view hereof, jhe DPWH shail be the principal
infrastructure agency to ensure that infrastructure outlay are focused on
the right projects, with the right costs and the right quality. Line agencies
shall focus on their core mandate and accelerate the delivery of targets to
ensure the greatest impact of government activities.

> The budget is also designed to strengthen the agency's accountability to
their. mandate and performance. The performance budgeting
approach is applied by moving towards the harmonization of all
performance management systems in govemment, using the Results-
Based Performance Management System (RBPMS). This will reward
public institutions and public servants who meet or even sutpass their
outputs and commitments under the Social Contract.

> Bottom-up-budgeting is introduced as a methodology to amplify the
voice of the grassroots in the way public funds are allocated. Some 595
municipalities were able to identify services which have been considered
and included in the budgets of eleven implementing national government
agencies.

> The 2013 budget asserts that transparency is an essential too! not only
in deterring corruption but also in enabling the delivery of fast and clear
results, The government sustained its policy of disaggregating lump-
sum funds . With the budget containing greater detail on programs and
projects the government will be able to shift to a Budget as Release


Document Regime by 2014 that eliminates the duplicative budget
request and release process.

» Transforming the Budget into a release document allows government
agencies to conduct pre-procurement activities. Contracts can then be
awarded on the first working day of the following fiscal year and projects:
can be implemented and completed much eartier than usual To
support this new regime, the predictability of public expenditure will be
strengthened through a new policy of One-Year Validity of
Appropriations in 2013.

+ Financing the proposed budget —

> The national government will raise P1.780 trillion in revenues to support
the expenditure plan for 2013. This is 14.1 percent or P219.5 billion
higher than this years revenue target of P1.560 trillion. The tax
collection effort in 2013 fs expected to reach 13.8 percent of GOP, higher
than the 13.3 percent in 2012. Tax revenues are expected to grow by
45.7 percent, with the BIR and BOC collections increasing by 16.2
percent and 14.5 percent, respectively.

> The Bureau of Intemat Revenue will collect P1 239 trillion or 69.6
percent of the total revenue while the Bureau of Customs will collect
P397 billion or 22.3 percent. The balance of 8.1 percent or P 144 billion
will be collected by other agencies which are sourced from fees and
charges, BTr income and privatization proceeds, among others.

> The proposed revenue of P1.780 trillion wilt support about 88 percent of
the total cash requirement of P2.021 trillion in 2013 while the balance of
42 percent will be sourced from borrowings

RELATED LAWS:

+ Various Provisions of the 1987 Constitution related to the appropriations of funds.
« Executive Order No. 292, series of 1987.

» Various Laws related to the appropriation of fund.


Deprleniver v, eve

CERTIFICATION

centres .seeo

This is to certify that the Committee Report submitted by the Committee
on Appropriations on House Bi No. 6455, titled “AN ACT
APPROPRIATING FUNDS FOR THE OPERATION OF THE
GOVERNMENT OF THE REPUBLIC OF THE PHILIPPINES FROM
JANUARY ONE TO DECEMBER THIRTY-ONE, TWO THOUSAND AND
THIRTEEN, AND FOR OTHER PURPOSES”, was approved in the
Executive Meeting held on September 5, 2012, 9:00 A.M. at the Rolando
R. Andaya Hali, South Wing Buitding, House of Representatives.

Caw lpr frrbutcer
CAROLYN Q. BUKUHAN
Committee Secretary

Attested by:



Pouse of Representatiors
Committee Attairs Wepactment

FACT SHEET

House Bill No. 6455

AN ACT APPROPRIATING FUNDS FOR THE OPERATION OF THE
GOVERNMENT OF THE REPUBLIC OF THE PHILIPPINES FROM
JANUARY ONE TO DECEMBER THIRTY-ONE, TWO THOUSAND AND
THIRTEEN, AND FOR OTHER PURPOSES

Introduced By: REPRESENTATIVES ABAYA, BELMONTE, JR. (F.) LIMKAICHONG,
BENEDICTO-ANGPING, BRAVO, JR., BONDOC, ALMARIO,
SARMIENTO (M.S.), JAAFAR, PUNO, GRISOLOGO, ANDAYA, JR,
ARAGO, SAN LUIS, CUA, MALAPITAN, NAVA, JOSON,
BALINDONG, LACSON-NOEL, VIOLAGO, OSMENA, ABAD,
BENITEZ, TING, GO (A.C), BERNOS, PRIMICIAS-AGABAS,
TOMAWIS, ENVERGA, JALOSJOS (S.F.), ARENAS, CALIXTO-
RUBIANO, DE VENECIA, FABIAN, YAP (S.), GONZALEZ,
SAHIDULLA, BAGATSING, MARCOS, HARESCO, JR., UNGAB),
MENDOZA (MLL), DAYANGHIRANG, FLORES, JR.. JALOSJOS,
JR. (R), SINGSON, JR., (E) DUAVIT, LAGDAMEO, JR. (A),
BICHARA, PANCHO, VILLARICA, LANETE, GO (A), YAMBAO,
CARI, PARAS, AMATONG, CASTELO, PONCE-ENRILE, JR.,
CATAMCO, OLIVAREZ, LEONEN-PIZARRO, BAGUILAT, JR.
RODRIGUEZ, JR. (1), LOONG, BIAZON, TAN, CASTRO, RAMOS,
JR. DY, CAJAYON, LOYOLA, ERIGUEL, MELLANA, UMALI (C.),
TEVES, ZAMORA-APSAY, COJUANGCO (E.), _CERAFICA,
MENDOZA (J.A.), UMALI (F.), FORTUNO, APOSTOL, COLLANTES,
TRENAS, BAUTISTA, ACOP, SACDALAN, ALCALA, DEL MAR,
SARMIENTO (C.), ALMONTE, ONG, VALENCIA, HERRERA-DY,
LOPEZ (C.J), GARAY, CASINO, BAG-AO, ILAGAN, BRIONES,
RODRIGUEZ, JR. (M.), EJERCITO, LAGDAMEO (M.Y.), GOLEZ (R),
MIRAFLORES, EMANO, TIENG, GARBIN, MAGSAYSAY (E),
BIRON, GULLAS, AUMENTADO

Committee Referral: APPROPRIATIONS
Committee Chairperson: REP. JOSEPH EMILIO AGUINALDO ABAYA

OBJECTIVES:

To authorize the appropriation of funds for the operation of the national
government, the local government units and government owned and controlled
corporations for Fiscal Year 2013.

= To approve the national budget amounting to P2.006 trillion with a greater and
deeper commitment to the President's social contract with the Filipino people


Republic of the Philippines
HOUSE OF REPRESENTATIVES
Metro Manila

FIFTEENTH CONGRESS
Third Regular Seasion

HOUSE BILL NO, 6455

Introduced by Representatives Abaya, Belmonte, Jr. (F.) Limkaichong, Benedicto-Angping, Bravo, Jr.,
Bondoc, Almario, Sarmiento (M.S.), Jaafar, Puno, Crisologo, Andaya, Jr., Arago, San.
Luis, Cua, Malapitan, Nava, Joson, Batindong, Lacson-Noel, Violago, Osmeia, Abad,
Benitez, Ting, Go (A.C), Berns, Primicias-Agabas, Tomawis, Enverga, Jalosjos (S.F.),
Arenas, Calixto-Rubiano, De Venecia, Fabian, Yap (S.), Gonzalez, Sahidulla, Bagatsing,
Marcos, Haresco, Jr., Ungab, Mendoza (M.L.), Dayanghirang, Flores, Jr., Jalosjos, Jr. 8),
Singson, Jr., (8) Duavit, Lagdameo, Jr., (A), Bichara, Pancho, Villarica, Lanete, Go (A.),
Yambao, Cari, Paras, Amatong, Castelo, Ponce-Hnrile, dr., Catamco, Olivarez, Leonen-
Pizarro, Baguilat, Jr., Rodriguez, Jr. (1.), Loong, Biazon, ‘'an, Castro, Ramos, Jv., Dy,
Cajayon, Loyola, Eriguel, Mellana, Umali (C.), Teves, Zamora-Apsay, Cojuangeo (E.),
Cerafica, Mendoza (J.A.), Umali (R.), Fortuno, Apostol, Collantes, Trefias, Bautista,
Acop, Sacdalan, Alcala, Del Mar, Sarmiento (C.), Almonto, Ong, Valencia, Hertera-Dy,
Lopez (C.J), Garay, Casifio, Bag-ao, Hagan, Briones, Rodriguez, Jr. (M.), Ejercito,
Lagdameo (MLY.), Golez (B.), Miraflores, Emano, Tieng, Garbin, Magsaysay (E.), Biron,
Gullas, Aumentado

EXPLANATORY NOTE

‘The President of the Philippines, His Excellency Benigno Simeon ©. Aquine THI, submitted to
Congress, a day after his SONA, the third financial blueprint of the government which embodies its
commitment to fulfill his Social Contract with the Filipino People. As the President said in his Budget
Message, the proposed 2013 national budget is a crucial step in the government's continuing pursuit of
good governance — governance Uhat will give the impoverished countrymen the opportunity to lift
themselves out of their situation; governance that will ensure that this country moves forward together.

As in previous years, the President’s budget is supported with documents as itemized in the
Budget of Expenditures and Sources of Financing (RESF), accompanied by the National Expenditure
Program (NEP), the President's Budget Message and other documents, in compliance with the
President's constitutional duty under Section 22, Article VII of the Constitution, which provides that “the
President shall submit to the Congress within thirty-days from the opening of every regular session, a3
the basis of the general appropriations bill, a budget of expenditures and sources of financing, including
receipts from existing and proposed revenue measures.”

Having laid down the foundation of transparency and accountability in public fund management,
the government assumed an outward-looking position in the crafting of the 2013 national budget. The


“empowerment budget” seeks to expand the government's engagement with the larger Filipino public,
beginning with civil society, grassroots communities, and members of the private sector. It invests
significantly in the people's capabilities by prioritizing funding for public services that provide jobs,
educate the youth, ensure a healthier citizenry, and empower each Filipino to participate in economic
activity. Thus, the 2013 budget is anchored on the budget theme “Paggugol Na Matuwid: Atas ng
Taumbayan.” Guided by this principle, the 2013 budget has been crafted not just to serve the needs of
the people but, ultimately, to ensure rapid, sustainable, and inclusive socio-economic growth in the
country.

‘The proposed budget was crafted with the following guiding principles to make the budget a tool to
empower the people: a) greater and deeper commitment to the Social Contract; b) accelerated
completion of priority program targets; c) stronger government accountability to perform and respond; d)
transparency for faster budget execution and clearer results; and ©) greater stakeholder participation in
budget preparation and execution. ‘The “bottom-up budgeting” approach is introduced as a methodology
to amplify the voice of the grassroots in the way public funds are allocated and used. This aims to
significantly reduce poverty by incorporating in the budgets of key departments the priority
requirements of poor municipalities (hat cannot be shouldered fully by the LGUs.

‘The Committee on Appropriations submits this proposed General Appropriations Bill for your
scrutiny and to report to your constituencies that the budget is the embodiment of their collective hopes
and desires.

Macroeconomic Assumptions

‘The Philippine economy grew by 6.4 percent in the first quarter of 2012, Indeed this growth is
well above the market's consensus forecast of 4.8 percent, as well as above the preliminary average GDP
growth of 3.8 percent of comparable countries in the ASEAN region. Based on the latest country data,
the 6.4 percent growth was faster than [odonesia (6.3 percent), Malaysia (4.7 percent), Vietnam (4.0
percent), and Thailand (0.3 percent). However, China’s GDP growth was relatively faster at 8.1 percent.
Depending on how the balance of upward and downside risks will play out in the next three quarters of
2012, the strong 6.4 percent real GDP growth in the first quarter implies that the country’s growth for
2012 will most likely be on the high end of, if not possibly exceed, the 5.0 - 6.0 percent growth
assumption. These are the reports presented by the Development Budget Coordination Committee
(DBCC) during the presentation of the 2013 national budget to Congress.

‘The government remains committed to provide the best opportunities for all Filipinos in the
attainment of inclusive growth. Notwithstanding recent positive devclopments, the government remains
vigilant against possible external shocks since there is a general consensus that 2012 will be a
challenging year for the global economy as a weaker global outlook continues to loom large.

For 2013, real GDP growth is expected to accelerate further to 6.0 — 7.0 percent. Inflation rate is
maintained at 3.05.0 percent while the peso is expected to continue its stability against the US dollar,
keeping a P42— 45 peso-US dollar exchange rate for next year.

The DBCC-approved growth assumptions for 2013 takes into consideration the following
macroeconomic assumptions:


MACROECONOMIC PARAMETERS, 2012 - 2013

~ Projections/Targets
Particulars (Adopted by the DBCC on 26 June 2012)
-. 2012 2015
GNI Growth (%}: Budget Assumptions 44-54 5464
GDP Growth 0%): Budget Assumption 50-60 60-70
{ Nominal GNi (In Million Peace) =
Budget Assumption Tow "714,381,280 15,915,870
High 14,508,810 16,200,815
Nemnisial GOP (in Million Pesos)
Budget Assumption Low 10,734,207 11,951,880 |
High 10,850,331 12,176622 |
Inflation Rate CPI (2008-100) ) 30-50 30-50
‘364-day T-bill rates (6) 36-50 30-50
Foreign Exchange Rato PAUBR) 20-66 42.0450
‘Dubai Grade Oil Price (US®/burrel) : 960-1100 900 — 1100
LIBOR Rate, 8-months (%) O4-14 06-15
Exports of Goods, Level (US$ Million) 51,9540 88, 188.0
Growth Rave 0%) 10.0 120
Imports of Goods, Level (US Million) — 70,203.0 80,038.0
ro 120 ao]

Souor PY 2019 BREF

‘The 2013 budget is also formulated on the following fiscal program:

+ Total revenue projection of P1.78 trillion which translates to 14.9 percent of
GDP and higher by 14.1 percent from the revised program of P1.56 triltion for
2012,

+ The Consolidated Public Sector deficit will significantly decline from the
Programmed 2.0 percent (P213.9 B) of GDP in 2012 to 1.3 percent (P158.3 B) in
2013.

* National government budget deficit of P241.0 billion or 2.0 percent of GDP,
lower than the programmed 2012 deficit of P279.1 billion or 2.6 percent of GDP.
The medium-term goal is to achieve a fiscal deficit of 2.0 percent of GDP by
2013 up to 2016.

» Outstanding NG debt of P5.7 trillion by the end of 2013 or a debt to GDP ratio
of 49.5 percent, lower than the 50.3 percent of GDP in 2012.



The Proposed Expenditure Program

The proposect 2013 empowerment budget of P2.006 trillion is 10.5 percent or P190 billion higher
than the 2012 level of P1.816 trillion, As a percentage of GDP, the budget is 16.8 percent, slightly lower
than the 16.9 percent in 2012.

Of the P2,006 trillion obligation budget, the new geniarel appropriations which Congress will authorize
is P1,868 trillion, consisting of P1261 trillion of Programmed New Appropriations and P117.5 billion of
Unprogrammed Appropriations as standby fund should revenues exceed targets ar new loans be secured to
support the proposed budget. The programmed new appropriations of P1.251 trillion, together with the P755
billion of automatic appropriations which is oulaide the purview of this Generel Appropriations Bill, will provide
for the appropriation cover for Lhe P2.006 trillion budget.

‘The proposed expenditure program, computed on an obligation basis, is presented below:

‘New Appropriations P 1,968.82 Billion
Programmed New Appropriations 1,250,781
Unprogramraed New Appropriations 117.648
Automatic Appropriations. 758.219
Interost Payments on NG Debts 333.002
Intemal Revenue Allotment 302,904
Retirement & Lif Insurance Premiums 28,126
Customa Duties and Taxes, including Tax Expenditure Fund 8.900
Net: Lending 26,600
Rewards and Incentives Fund 2.183
Special Account 19,240
‘Tax Refund 15.518
Grants 546
Tote Avaitable Appropriations 2,128,548
‘Leas: Unprogrammed Naw Appropriations 117,648
‘Total Obligations ‘P2,006.000 Billion

Financing the Proposed Budget
A, Revenues

‘The national gavernment will raise P 1.780 trillion in revenues to support the expenditure plan for
2013. This is 14.1 percent or P219.5 billion higher than this year’s revenue target _of P1.560 trillion.
‘The tax collection effort in 2013 is expected to reach 13.8 percent of GDP, higher than the 13.3 percent in
2012. Tax revenues are expected to grow by 15.7 percent, with the BLR and BOC collections inereasing
by 16.2 percent and 14.6 percent, respectively. ‘The Bureau of Internal Revenue will collect P1.239
trillion or 69.6 percent of the total revenue while the Bureau of Customs will collect P397 billion or 22.3
percent. The balance of 8.1 percent or P 144 billion will be collected by other agencies which are sourced
from fees and charges, B'l'r income and privatization proceeds, among others. The proposed revenue af


P1.780 trillion will support sbout $8 percent of the total cash requirement of P2.021 trillion in 2013
while the balance of 12 percent will be saurced from borrowings.

Shown below is the comparative sources of revenues to support the 2013 budget.

REVENUES, 2012 -2013

(in Billion Pesos)
Percent of GDP. Growth
Particulars 2012 | 2013 [2012 | 2013

Program | Proposed | Programm | Proposed | Amount | Percent
Revenues 1,560.6| 1,780.1) _14.5%| 149% 219.5] 14.1%
‘Tax Revenues 1427.4] 1,6512| 18.3%|  15.6%| 223.8| 15.7%
BIR 1,066.1] 1,2386| 9.9%] 104%] 172.51 16.2%
BoC 47.1] 397.8| 32%! 3.3%] 502] 14.5%
Others 42/153] 0.1%] 0.1% ail 7.7%
Non-Tax asaz{ 1289! 12%| ax | 4.a)| 3.2%
Fees and Charges 679} 695] 06%) 0.6% 16) 2.4%
BTr Income 633} 874! 06%! 5%] 6.9) | 8.3%
Privatization 20 20} 0.0%! 00%| 00] 0.0%

‘Memo Item: ° 7

GDP (in billion pesos) 10,734.22  11,951.9
B. Borrowings

‘The projected budget deficit of P24i billion will be sourced fram net borrowings of P308.3 billion,
of which P80.8 billion will come from foreign while P227.5 billion will come from domestic sources, The
remaining excess of the total net borrowings of P67.3 billion will be used to raise the necessary cash
balance in the ‘Treasury.

Dimensions of the FY 2013 Budget

Sectoral Allocation

By sector, the government sustains its comprehensive support of the Social Services sector which
continues to get the largest share among the other sectors with P6988 billion or 34.8 percent of the
total budget. ‘The Sector will increase by 13.9 percent or P85.4 billion from the 2012 level of P613.4
billion. ‘The total allocation of P698.8 billion will be used to close goody-and-service delivery gaps in
public education, health, and social protection for the poor and vulnerable in the next fiscal year.


‘The Economic Services sector follows with P611.1 billion or 26.5 percent share, up by 16.4 percent
or P72. biltion from the 2012 level of P439 billion. The increase will support rapid, sustained and
inclusive growth that redounds to all Filipinos in a direct, immediate, and sustainable manner.

General Public Services sector take the third largest share with P346 billion or 17.2 percent,
higher by 8 percent or P26.7 billion from the 2012 level of P320.3 billion.

Debt burden cames next with P360.4 billion or 17.9 percent of the total budget. This will service
the payment of interest of P833.9 billion and net lending account of P26.5 billion.

‘The Defense sector will get a share of P89.7 billion or 4.5 percent of the total budget, higher by
about 3 percent from the 2012 Jevel of P87.2 billion.

Sectoral Allocation
FY 2012-2013
(au billion pesos) ee
Levels Percent Share | Increase/(Decreass)
___.. Seetor 2012 2013 2012 2013__| Amount %
Economic Services 439.0 B1L1| 24.2% | 25.5% 72.1) 16.4%
Social Services 613.4 698.8 | 38.8% | 34.8% 85.4) 13.9%
Defense 87.2] 89.7| 4.8%] 4.6% 26] 29%
General Public Services 320.3) 346.0] 17.6%]. 17.2%]  28.7| 8.0%
Net Lending 230) 26.5} 13%] 13% 3.5| 15.2%
Debt Service- Interest Payments | 433.1! 333.9| 18.3% | 16.6% 0.2%
(Total 1,816.0 | 2,006.0 | 100.0% | 100.0% 190.0| 10.5%
Allocation by Expense Class

In terms of expense class, the obligation budget of P2.006 trillion is allocated as follows: P6413
Dillion or 32 percent goes to personal services (PS); P1,039.5 trillion or 52 percent will gu to maintenance
and other operating expenses (MOOE); and P8252 billion or 16 percent will go to capital outlays (CO)
and net tending (NL).

Regional Allocation

By regional allocation, the distribution of the budget by main island groups will significantly
increase in 2013. ‘The regionalized budget for 2013 increased to P990.4 billion or 49.4 percent share of
the total hudget of 2.006 trillion as compared ta the regionalized budget in 2012 of P799.6 billion or 44
percent share of the total budget of P1.816 trillion,


The island of Mindanao will get a share of P258.6 billion or 26.1 percent of the regionalized
budget of P990.4 billion, up hy P39-4 billion or 18 percent from the P219.2 billion allocation in 2012.

The Visayas island will get a share of P1938 billion or 19.6 percent of the total regionalized
budget, higher by P28.6 billion or 17. percent than the 2012 budget of P165.2 billion.

The island of Luzon will get the biggest share of P538 billion or 54.3 percent of the regionalized
budget, up by P122.8 billion or 29.6 percent than the 2012 allocation of P4L5 2 billion.

REGIONALIZED BUDGET
2012 - 2013 . io
| Levels (in bitions) | Percent Share | Growth

ISLAND 2012 2013 2012 2013 {| Amount | Percent
LUZON 415.2 538 | 51.9% | 543% 122.8| 29.6%
VISAYAS 165.2 198.8 | 20.7% 19.6% 28.6) 17.3%
MINDANAO 219.2 258.6 | 27.4%} 26.1%} 39.4 18.0%
TOTAL 799.6 990.4 | 100.0% | 100.0% 190.8 | 25.9%

Top Departments

‘The Department of Educution (Dep-F) remains at the top, as in previous years with an allocation
of P292.7 billion for 2013, - up by 22.6 percent or P53.9 billion from the 2012 level of P238.8 billion. The
Dep-ed will plug all resource gaps for classrooms, teachers, and textbooks by the end of 2013.

‘The DPWH takes the second largest share of the budget in line with the President's gual of
strengthening the country’s infrastructure base and fueling economic growth. With a total 2013 budget
af P152.9 billion — higher by 21 percent or P26.5 billion than the 2012 level of F 1264 billion, the DPWH
will focus on preserving the existing road network, upgrading and constructing national roads and
bridges, and tourism infrastructure development programs.

The DND will receive # total of P121.6 billion, up by 12.6 percent or P13, billion from its 2012
budget of P108.t billion. The DILG will likewise receive a budgetary boost. of 21.3 percent or P121.1
billion from its current year’s allocation of P99.8 billion.

The DA will get 20.7 percent increase ar P12.7 billion bringing the agency’s budget to P74.1 billion
from the current year's level of P614 billion. The increase will support the agency's goal to achieve food
self-sufficiency by 2013. The DOH will also receive a significant increase of 24 percent or P11 billion
with its total allocation rising to P56.8 billion in 2013. The increase will help the government advance
its universal health care agenda for all Filipinos, particularly the poor and vulnerable.

The DSWD will take some P562 billion, up by 18.2 percent or P7.4 billion from its 2012 leve) of
48.8 billion. The allocation wili support the government's bid to reduce poverty. The 4Ps will continue
lo be supported with P44.3 billion in 2018, reflecting an increase of P4.8 billion or 10.9 percent from the



* Anticorruption and transparent, accountable, and participatory governance - focused on
Programsiprojecs for anti-corruption and good governance like the digitization of financial
management and governance, and the streamlining of regulatory processes like business
permits.

+ Poverty reduction and empowerment of the poor and vulnerable - programs and projects on
social protection, education, public health, and affordable housing and settlements were
expanded.

+ Rapid, inclusive, and sustained economic growth — significant increase is allocated to support
the expanded requirements for infrastructure projects, food self-sufficiency, and tourism
development, among others,

© Just and lasting peace and the rule of law - support to the peace process, implementation of
the multi-agency program PAMANA for the reconstruction and development in conflict affected
communities, the continuance of judicial reforms, and the modernization of the AFP and PNP.

+ Integrity of the envirunment and climate change adaptation and mitigation ~ programs and
projects shall be focused on the major river basins where risks and climate change vulnerability
is high.

Major Budget Reforms and Approaches

‘The proposed budget was crafted with the assurance that the programs and projects of each
government agency are geared towards these five priorities and the basic toal used is the continued
implementation of the zero-based budgeting approach ensuring that the government only spends on
programs and projects with priority endeavors. The other new budget reform utilized is the introduction
of the program budgeting approach wherein budget information and decision making should be
structured according to the objectives of the government and that component programs are coordinated to
ensure the delivery of services and results.

‘The 2013 budget secks to accelerate the completion of priority program targets in line with the
social contract. In view hereof, the DPWH shull be the principal infrastructure agency to ensure that
infrastructure outlay are focused on the right projects, with the right casts and the right quality.

On the other hand, line agencies shall focus on their core mandate and accelerate the delivery of
targcts to ensure the greatest impact of government activities,

‘The budget is also designed to strengthen the agency's accountability to their mandate and
performance. The performance budgeting approach is applied by moving towards the harmonization
of all performance management systems in government, using the ResulteBased Performance
Management System (RBPMS). ‘This will reward public institutions and public servants who meet. or
even surpass their outputs and commitments under the Social Contract.

‘To enshrine greater stakcholder purticipation in the crafting of the budget, bottom-up-budgeting
is introduced as a methodalogy to amplify the voice of the grassroots in the way public fimds are


allocated. Some 596 municipalities were able to identify services which have been considered and
included in the budgets af eleven implementing national government agencies.

The 2019 budget asserts that tranaparency is an essential tool not only in deterring carruption
but also in enabling the delivery of fast and clear results. ‘The government sustained ite policy of
disaggregating lump-sum funds. With the budget containing greater detail on programs and projects
the government will be able to shift to a Budget as Release Document Regime by 2014 that
climinates the duplicative budget request and release process. Transforming the Budget into a release
document allows government agencies to conduct pro-procurement activities. Contracts can then be
awarded on the first working day of the following fiscal year and projects can be implemented and
completed much earlier than usual, ‘To support this new regime, the predictability of public expenditure
will be strengthened through a new policy of One-Year Vatidity of Appropriations in 2018,

‘To summarize, the new general appropriations which Congress will authorize is P1,468.8 billion
Sonsisting of P'1,250.8 billion of Programmed New Appropriations and P117.6 billion of Unprogramaned
New Appropriations. ‘The proposed automatic appropriations of P7682 billon has been previously
suthorized under existing laws and therefore is outside the purview of this General Appropriations Bill

Calleagues and Members of the 15% Congress, let us once again support this reform budget,
Congress is responsible and is committed to the early passage and approval of the budget of the Filipino
people. Congress is likewise responsible in delivering to their lives the food, the medicines, the children's
books and school desks, and other hasie needs which Congress has promised them through the budget.

May this representation, the Chairman, also take this opportunity to thank the Speaker, the Vice-
Chairmen and members of the Committee on Appropriations, as well as other members of the Louse and
the Minority for their time, effort, and wisdom in constructively scrutinizing and considering the budget.
Likewise, may this representation express his heartfelt gratitude and appreciation for the trust dedi
confidence conferred upon this representation by the House of Representatives as Chairman of the
Appropriations Committee. It has been a sincerely self-actualizing, soul-warming, character building,
gratifying, and equally humbling experionoe. ‘This representation wishes that everyone will be given
the opportunity ta assume this post someday. Maybe not in Uhe next Congresses, but in God's time and
in accordance with God's plans.

The Chairman therefore respectfully requests the Honorable Members of the Howe of
Representatives for their support for the 2013 Ceneral Appropriations Dill, the vory last budget of this
Congress and of this humble representation,

FOR THE COMMITTEE ON APPROPRIATIONS

Gnepo YA

JOSEP} RMILIO AGUT
Chairman