Republic of the Philippines
HOUSE OF REPRESENTATIVES
Metro Manila

NINETEENTH CONGRESS
First Regular Session

HOUSE BILL No. _**88

Introduced by Representatives Co (E.), Romualdez (F.M), Dalipe, Quimbo, Co (A.N), Suansing, Jr.
(H), Violago, Nava, Salimbangon, Bautista-Lim, Ty, Lacson, Zamora (M.C.), Abante,
Jr., Dujali, Espina, Jr., Bautista, Tiangco, Singson (R.V.), Limkaichong, Campos, Jr.,
Calderon, Del Mar, Vargas-Alfonso, Lara, Gonzaga, Cajayon-Uy, Yu (D.G.), Cari,
Martinez, Cuaresma, Cabredo, Garin, Tan (S.), Aquino II, Suarez, Cua, Alonte, Dy V
(F), Matugas, De Venecia, Dy (LP.), Bongalon, Alvarez (J.), Arenas, Albano, Loyola,
Gonzales II (N.), Haresco, Jr., Go (E.C.), Celeste, Alvarez (M.), Fuentebella, Zubiri, Jr.,
Umali, Villaraza-Suarez, Yap (Eric), Bernos, Momo, Vergara, Advincula, Atayde, Garcia
(D.), Garcia (M.A.), Gardiola, Luistro, Mercado (L.V.), Nograles (M.I.), Pancho, Rama,
Rillo, Villafuerte (M.L.), Bascug, Plaza, Tan (S.J.), Sali, Cruz, Jr. (R.), Angara, Cruz, Jr.
(A), Balindong, Eudela, Pleyto, Mangaoang, Barba, Matibag, Ang, Jr., Bustos, Reyes,
Delos Santos, Tulfo (J.), Lagon (S.), Cardema, Singson (R.), Tanchay, Verzosa, Jr.,
Chatto, Fortes, Legarda, Jr., Chungalao, Maceda, Cojuangco (J.), Amante, Romero,
Fresnedi, Lazatin II, Adiong, Revilla III (R.J.), Sakaluran, Almario, Asistio, Dionisio,
Jr., Dy TH (F.M,), Khonghun, Maniquiz, Panaligan, Tallado, Unabia, Vargas, Go (M.),
Co-Pilar, Ouano-Dizon, Lagon (D.), Aumentado, Yap (C.), Dimaporo (S.A.), Santos,
Mastura, Golez, Jr., Hernandez, Barzaga, Rodriguez (E.) and Pascual

EXPLANATORY NOTE

The submission of the President on August 22, 2022, of the FY 2023 National Expenditure Program
marks the start of the annual budget legislation/authorization process by Congress. The 1987
Constitution provides that “The President shall submit to the Congress within thirty-days from the
opening of every regular session, as the basis of the general appropriations bill, a budget of expenditures
and sources of financing, including receipts from existing and proposed revenue measures.” (Article VII,
Section 22, 1987 Constitution)

As such, it is now the responsibility of the House of Representatives through the Committee on
Appropriations, where the General Appropriations Act originates, to pass a timely, responsive and
inclusive budget for the Filipino people. The origination clause states, “A// appropriation, revenue or
tariff bills, bills authorizing increase of the public debt, bills of local application, and private bills shall
originate exclusively in the House of Representatives, but the Senate may propose or concur with
amendments.” (Article VI, Section 24, 1987 Constitution)

The role of Congress in the budget process likewise upholds the provision that "No money shall be paid
out of the Treasury except in pursuance of an appropriation made by law." (Article VI, Section 29 (1),
1987 Constitution)


The proposed FY 2023 National Expenditure Program submitted by the President is anchored on
the budget theme “Agenda for Prosperity: Economic Transformation Towards Inclusivity and
Sustainability’, with an overarching objective of economic transformation.

Presented by measurable medium-term macroeconomic and fiscal objectives, the General
Appropriations Bill embodies the 8-point socioeconomic agenda of this administration comprised of: (1)
food security; (2) improved transportation; (3) affordable and clean energy; (4) health care: (5) social
services; (6) education; (7) bureaucratic efficiency; and (8) sound fiscal management.

The 8-point socioeconomic agenda is an action plan for the immediate recovery of the economy from
the lingering effects of the COVID-19 pandemic. The near-term objective is to address rising inflation
driven by internal and external factors, socioeconomic scarring, and low income.

In specific terms, the FY 2023 proposed national budget has three (3) main pillars, namely: (1)
strengthen the purchasing power of Filipinos: (2) reduce vulnerability and mitigate scarring from the
COVID-19 pandemic; and (3) enhance bureaucratic efficiency.

The President's budget message clearly underlines that the overall goal is to reinvigorate job
creation and reduce poverty by steering the economy back to its high-growth path in the near term and
sustaining its high, inclusive, and resilient growth in the long term.

Macroeconomic Assumptions and Fiscal Program

‘The FY 2023 budget is crafted based on a set of macroeconomic assumptions and parameters.
Changes in these impact the growth trajectory, revenue streams, and deficit levels. Among the major
macroeconomic assumptions are the following: (a) the real GDP growth rate; (b) inflation rate; (c) 364-
day interest rate; and (d) foreign exchange rate.

The targeted GDP growth rate is 6.5 to 8.0 percent, following the fiscal consolidation strategy for
2022 to 2028 to sustain growth from 2023 to 2028. This is despite the external factors arising from the
Russia-Ukraine conflict and the policy rate tightening of the US Federal Reserve.

Inflation assumption for FY 2023 is retained at 2.0 to 4.0 percent. This means that prices in the
typical consumption basket of Filipino families will remain stable and predictable. The assumption for
the price of Dubai crude oil per barrel for FY 2023 is pegged at USD 80 to 100 per barrel based on the
future market.

The price of Dubai crude oil per barrel for 2023 is seen to average at USD 80 to 100 per barrel
based on the future market, with the anticipated stabilization of global supply over the medium-term.

In the foreign exchange market, the peso-dollar-exchange rate is assumed at P51.00 —
P55.00/US$1 from 2023 to 2025 onwards. The primary market for the 364-day T-bill rate could settle
to 3.0 to 4.5 percent for 2023. The trends in the domestic T-bill market will continue to be influenced by
the current liquidity management efforts by the National Government and the Bangko Sentral ng
Pilipinas.



The FY 2023 Budget is consistent with the following macroeconomic assumptions.

Table 1. Key Macroeconomic Assumptions

2022 - 2023
Particulars 2022 2023
Real GDP Growth (%) 6.5-8.0
Inflation Rate (%) 2.0-4.0
364-Day T-bill Rate (%) 3.0-4.5
Foreign Exchange Rate (PhP/US$) 51-55
Dubai Crude Oil Price (US$/barrel) 80-100
LIBOR, 6 months (%) 3.04.0
Exports, Growth (%) 6.0
Import, Growth (%) 6.0

Source: BESF
The FY 2023 budget is also formulated based on the following fiscal program:

(Total revenues of P3,632.9 Billion in FY 2023, which translates to 15.3 percent of GDP and is
higher by 10 percent from the FY 2022 revenue program of P3,304.1 Billion;

(ii) Consolidated public sector deficit of P963.979 Billion or 4.1 percent of GDP;
(ii) National government budget deficit of P1,452.922 Billion or 6.1 percent of GDP;

(iv) Outstanding national government debt of P14.632 Trillion or a debt-to-GDP ratio of 61.60
percent by end-2023

Table 2. Fiscal Program, 2022-2023

(In Billion Pesos)

PARTICULARS 2022 2023
Revenues 3,304.1 3,632.9
Disbursements 4,954.6 5,085.8
Deficit (1,650.5) (1,452.9)

As % of GDP.

Revenues 15.2% 15.3%
Disbursements 22.9% 21.4%
Defici -7.6% 6.1%

‘Source: B

iii



The Proposed Expenditure Program

The proposed FY 2023 national budget amounting to P5.268 Trillion is 22.2 percent of GDP. This
is 4.9 percent higher or P244.4 Billion more than the FY 2022 budget of P5.023 Trillion.

Of the P5.268 Trillion budget, new general appropriations which Congress will authorize is
P4,259 Trillion, consisting of P3.671 Trillion in Programmed New Appropriations and P588.2 Billion in
Unprogrammed Appropriations which may only be utilized when revenue collections in any one of the
identified revenue sources exceed targets per Budget of Expenditures and Sources of Financing (BESF)
or when new foreign loans or grants are received.

The Programmed New Appropriations of P3.671 Trillion, together with the P1.597 Trillion in
Automatic Appropriations which is outside the purview of this General Appropriations Bill, will provide
for the appropriation cover for the P5.268 Trillion budget.

Table 8. The Proposed Expenditure Program
(In Billions Pesos)

+ Levels Percent to Total
Particulars
2022 2023 | 2022 2023,
Irotal New General Appropriations 3602.4) 42503] 1.7% 20.9%]
Less: Unprogrammed Appropriations 251 588 5.0%
Equals: Programmed New Appropriations 3350.7 aera] 06.r 69.7%]
Ptus: Automatic Appropriations rere 15969] s3.0%
National Tax Allotment soa] 19,
Debt Service-Interest Payment size sz 0.254 nas
BARMM Annual Block Grant 674 649 a4 12
RUP cod on 12% La
Net Lending 28. 28.7 05%
‘Tax Expenditure Fund 14.5) 14.5) 0.3%
Special Accounts in the General Fund an 22.9] 0.4%
lrotal Expenditure Program sore 520801 100.0%] 100.0%
Financing the FY 2023 Proposed Budget

Revenues and Borrowings

The National Government expects revenue collections in FY 2023 to reach P3.633 Trillion, or 15.3
percent of GDP. This is 10 percent higher than the FY 2022 programmed revenue of P3.304 Trillion
which is equivalent to 15.2 percent of GDP. The P3.633 Trillion revenue will fund about 69 percent of
the P5.268 Trillion programmed disbursements for FY 2023.

iv



Of the P3.633 Trillion revenues for FY 2023, P3.464 Trillion, or 95 percent will be in the form of
taxes while P168 Billion or 5 percent will be sourced from non-tax revenues and sale of government
assets. The Bureau of Internal Revenue (BIR) will generate the bulk of this amount with P2.670 Trillion,
while the rest will be contributed by the Bureau of Customs (BOC) with P765.6 Billion, and other offices
with P28.1 Billion.

On the other hand, the government intends to borrow in FY 2023 the amount of about P2.207
Trillion, of which P553.500 Billion will be sourced from foreign creditors while P1,653.5 Billion will be
sourced domestically. Of the total borrowings, P1,452.9 Billion will be used to finance the deficit, settle
P124.5 Billion in maturing debt obligations, and the balance includes contributions to the bond sinking
fund, and maintain sufficient cushion of cash in the National Treasury.

Table 4. Revenues, 2022-2023
In Billion Pesos
_ _ 7 2022 2023
REVENUES 3,304.1 3,632.9
| % of GDP _ i - 15.2| 15.3
% Growth 10.0 10.0 |
Tax Revenues 3,139.6 3,464.1
BIR - 2,392.6 | _2,670.4
BOC - 721.5] 765.6
Others 25.5 28.1
| Non-Tax Revenues 164.0 168.3 |
Privatization l 0.5 05
Source: BESF
Dimensions of the Proposed Budget

A. Budget by Sector

‘The expenditure program for FY 2023 gives priority to social and economic services in support of
the government's top priority programs and projects for poverty reduction and economic recovery. As
such, the social services sector will receive the largest share with P2,070.7 Billion or 39.3 percent of the
total FY 2023 budget, investing on human capital development and youth empowerment through
education, culture and manpower development, with the implementation of key programs and projects
aimed at protecting the vulnerable and providing expanded educational opportunities.

The economic services sector will receive the second largest share at 29 percent with a P1,528.5
Billion allocation to sustain the implementation of the Build, Build, Build Program and to fuel the Build,
Better, More program which is essential for the economic transformation and generation of more jobs.

The general public services sector ranks third in terms of budget allocation with P807.2 Billion
or 15.3 percent, while the defense sector ranks last with P250.7 Billion or 4.8 percent of the total budget.

Debt Burden (interest payments and net lending to be disbursed to creditors) is allotted P611.0
Billion or 11.6 percent of the total budget.



Table 5. Budget by Sector

Levels Percent Shar: Percent of
Sector (In Billion Pesos) are GDP

2022 2023 2022 2023 | 2022 | 2023

Social Services 1,932.4 2,070.7 38.47% 39.31% 8.9% 8.7%
Economic Services 1,494.1 1,528.5 29.74% 29.01% 6.9% | 6.4%
General Public Services 834.7 807.2 16.62% 15.32% 3.9% 3.4%
Defense 221.1 250.7 4.40% 4.76% 1.0% 1.1%
Debt Burden. 541.3 611.0 10.78% 11.60% 2.5% | 2.6%
Total 5,023.6 5,268.0 100.00% 100.00% | 23.2% | 22.2%

Source: BESF

B, Budget by Expense Class

In terms of general expenses class, Maintenance and Other Operating Expenses or MOOE
comprises the largest share of the FY 2023 budget with P2.042 Trillion or 39 percent. This will mainly
fund the implementation of various education, health, and social protection programs of the national
government, as well as the operations of line departments and agencies.

Personnel Services accounts for the second largest share of the budget with P1.631 Trillion or 31
percent to cover, among others, the requirements for the creation of new positions and filling up of vacant
items for key agencies, provisions for compensation benefits including the last tranche for salary
increase and additional allowances for military and uniformed personnel (MUP), and for the National
Government Rightsizing Program.

The Capital Outlays and Net Lending will receive an allocation of P1.011 Trillion or 19.2 percent
of the proposed budget primarily for the various infrastructure programs, including Build Better, More.

‘The Financial Expenses provided primarily for the payment of interest on loans and bank charges

amounts to P583.2 Billion or 11.1 percent of the total budget.

Table 6. Budget by Expense Class
(Amounts, In Billion Pesos)

2022 2023 Percent Share
Particulars Program | Proposed [2022 | 2023

Current Operating Expenditures 4,004.4] 4,256.6] _79.79%| 80.8%
Personnel Services 1,405.3[ 1,631.4] 28.0%] 81.0%
MOOE 2,085.3] 2,042.01 41.5%| 38.8%
Financial Expenses 513.8] 583.2] 10.2%| 11.1%
Capital Outlays & Net Lending 1,019.2] 1,011.4] 20.3% 19.296
(TOTAL 5,023.6) 5,268.0] 100.0%] _100.0%|

vi



©. Top Recipients

Consistent with the constitutional provision where the highest allocation is given to education,
the Department of Education (DepEd), State Universities and Colleges (SUCs), Commission on Higher
Education (CHED) and the Technical Education and Skills Development Authority (TESDA) is allocated
a total budget of P852.8 Billion in FY 2023. This budget shall provide for the implementation of
measures to ensure safe face-to-face education, access to quality education and addressing gaps in
resources and facilities of schools located in the geographically-isolated and disadvantaged and conflict
affected areas. This also includes Universal Access to Quality Tertiary Education Program and
‘Technical Education and Skills Development Authority programs through promotion of reskilling and
upskilling agenda for displaced workers and out-of-school youth.

Ranked 24 is the Department of Public Works and Highways (DPWH) with an allocation of
P718.4 Billion. The amount is P68.2 Billion lower or 8.7 percent less than the FY 2022 level P786.6
Billion due to non-recurring capital outlay projects and the devolution of some programs/projects to the
local government units with the implementation of the Mandanas-Garcia ruling.

The budget includes P53.940 Billion for the construction of bypasses and diversion roads,
P19.766 Billion for the construction of missing road links and new roads, P146.892 Billion for flood
management program and P28.770 for bridge program. The convergence and special support program
of DPWH with other agencies is allocated P154.506 Billion, which include provisions for the Sustainable
Infrastructure Projects Alleviating Gaps (SIPAG) and Basic Infrastructure Program (BIP).

Ranked 3" is the Department of Health with an allocation of P296.3 Billion which includes the
budget of the Philippine Health Insurance Corporation of P100 Billion, an assurance of the government's
commitment to make health services available to the people specially the poor. Some P22.9 Billion of
the budget will be allocated for Health Facilities Enhancement Program (HFEP) for the construction,
rehabilitation and upgrading of health facilities and purchase of medical equipment. P29.1 Billion is
allocated for the purchase of drugs, medicines and vaccines, including medical and dental supplies for
distribution to government health care facilities. Medical Assistance to Indigent Patients is allocated
P22.4 Billion for hospitalization and assistance to indigent and financially-incapacitated patients.

Ranked 4 is the Department of the Interior and Local Government (DILG) with an allocation of
P253.1 Billion. This is primarily to maintain public safety, efficient delivery of public goods and services
at the local level and strengthening peace and order efforts.

The Department of National Defense (DND) ranked 5t* with P240.7 Billion allocation. This
budget is allocated to strengthen and support the operational requirements of military units, the
provision of the procurement of military hardware for its modernization program and training support
for its various personnel.

Ranked 6" is the Department of Social Welfare and Development (DSWD) with an allocation of
P197.0 Billion for the continues implementation of the: (i) Pantawid Pamilyang Pilipino Program (4Ps)
— P115.6 Billion; (ii) Social Pension for Indigent Senior Citizens (SocPen) amounting to P25.3 Billon; and
Gii) P19.8 Billion for Assistance to Individuals in Crisis Situation.

vii



Ranked 7* is the Department of Transportation (DOT») with an allocation of P167.1 Billion with
an increase of about P91.2 Billion or 120.4 percent higher than the FY 2022 level of P75.8 Billion, The
increase will support the implementation of the programs and projects under the Build, Better, More
program, to make the Philippines an investment destination with the implementation of the proper
transportation infrastructure such as railways and regional airports.

Ranked 8 is the Department of Agriculture (DA) with an allocation of P102.1 Billion budget for
FY 2023, with the aim of ensuring food safety and security, sufficient rice supply, expansion of fertilizer
support, and commitment to raise farmers’ and fisherfolks agricultural productivity. An amount of P10.0
Billion is also provided for the Rice Competitiveness Enhancement Fund (RCEF) in accordance with
R.A. No. 11203. The RCEF fund will be utilized to provide farmers tools and equipment, assistance in
the production, promotion, and distribution of certified rice seeds, upgrading of post-harvest storage
facilities, credit assistance, irrigation support, and research and development support. The farm-to-
market roads (FMRs) will receive an allocation of P13.1 Billion to connect and improve roads to farming
communities thus increasing local trade and productivity, reduce transportation costs of farm input and
output, and minimize post-harvest losses

Ranked 9% is the Judiciary with an allocation of P52.7 Billion. The amount includes P24.3 Billion
for the adjudication program of the Judiciary, and some P1.2 Billion for the construction, completion
and rehabilitation of Halls of Justice nationwide.

Ranked 10* is the Department of Justice (DOJ) with P28.2 Billion.

Table 7. TOP DEPARTMENTS
{n Billion Pesos)

2022 2023 Increase/(Decrease)
Department Amount_|Rank| Amount _| Rank | Amount | Percent.
EDUCATION 788.5| 1 852.8] 1 64.4 8.2%
DEPED 633.3), 710.7 77.4, 12.2%
sucs 108.4 97.8 “10.6 -9.8%
CHED 32.8 30.7 “2.1
TESDA 14.0 13.7
DPWH 786.6] 2 718.4) 2
DOH incl. PhilHealth 268.3) 3 296.3] 3 f
DILG 251.3) 4 253.1) 4
DND 220.9] 5 240.7 5
DSWD 205.0] 6 197.0] 6
DOTr 75.8] 7 167.1] 7
DA 71.0] 8 102.1] 8
The Judiciary 47.0| 10 52.7] 9 5.7] 12.1%
DOLE 51.3] 9

DOs 28.2] 10

viii



Conclusion

In view of the foregoing, I request every Member of this august body to join the Members of the
Committee on Appropriations in coming up with a collective decision and recommendation to approve
this General Appropriations Bill for FY 2023, which authorizes the appropriations of P4.259 Trillion for
the operation of the national government, consist of P3.671 Trillion in Programmed New Appropriations
and P58 Billion in Unprogrammed Appropriations.

The timely passage of the General Appropriations Bill ensures the fulfillment of the
Administration's Agenda for prosperity and economic transformation.

In solidarity and with a united front, we shall be able to deliver the necessary tools and resources
with this budget to improve the lives of our constituents and uplift their hope for a better quality of life
and future prosperity and advancement of the Filipino people.

For the Committee on Appropriations:



1 Republic of the Philippines 1
2 HOUSE OF REPRESENTATIVES 2
3 Metro Manila 3
4 4
5 5
6 NINETEENTH CONGRESS 6
1 1
8 8
9 First Regular Session 9
10 10
ul mH
R - R
i HOUSE BILL NO. 4488 B
4 4
15 15
16 16
" 1
18 Introduced by Representatives Co (E), Romualdez (FM), Dale, Quimbe, Co (AN), Suansing, Jr. (H), Violago, Nava, Salimbangon, 18
19 Bantista-Lim, Ty, Lacson, Zamora (MLC), Abante, Jr, Dojali, Espina, Jr, Bantista, Tiangco, Singson 19
2 (RY), Limkaichong, Campos, Jr, Calderon, Del Mar, Vargas-lfonso, Lara, Gonzaga, Cajayon-Uy, Yu 20
al (D.6,), Cari, Martinez, Cuaresma, Cabredo, Garin, Tan (S), Aquino Il, Suarez, Cua, Alonte, Dy V (f), 21
2 Matugas, De Venecia, Dy (LP), Bongalon, Alvarez (J), Arenas, Albano, Loyola, Gonzales II (Nl), 22
i} Haresco, Jr, Go (E.C), Celeste, Alvarez (M), Fuentebella, Zubiri, Jr, Umali, Villaraza-Suarez, Yap 2
4 (Eric), Bernos, Momo, Vergara, Advincala, Atayde, Garcia (D), Garcia (M.A), Gardiola, Luistro, Mercado 24
s (LV), Nograles (ML), Pancho, Rama, illo, Vilafuerte (MLL), Bascug, Plaza, Tan (S.J), Sali, Cruz, Jr, 2
26 (QR), Angara, Cruz, Jr. (A), Balindong, Endela, Pleyto, Mangaoang, Barba, Matibag, Ang, Jt, Bustos, 2
a1 Reyes, Delos Santos, Tulfo (J), Lagon (S), Cardema, Singson (R), Tanchay, Verzosa, Jr, Chatto, Fortes, 27
% Legarda, Jt, Chungalao, Maceda, Cojuangco J), Amante, Romero, Tresnedi, Lazatin Il, Adiong, Revilla 28
a I (RJ), Sakaloran, Almario, Asistio, Dionisio, Jt, Dy I (7M), Khonghun, Maniquiz, Panaligan, 9
q Tallado, Unabia, Vargas, Go (M), Co-Pilar, Ouano-Dizon, Lagon (D), Aumentado, Yap (C), Dimaporo x
2 (S.A), Santos, Mastara, Golez, Jr, Hernandez, Barzaga, Rodrigues (E.) and Pascual 2
B Fy
cr u
5 %
6 36
u AN ACT a
38 APPROPRIATING FUNDS FOR THE OPERATION OF THE GOVERNMENT OF THE REPUBLIC OF THE PHILIPPINES FROM JANUARY ONE T0 38
39° DECEMBER THIRTY-ONE, TWO THOUSAND AND TWENTY-THREE ey
40 rT)
41 41
42 Be it enacted by the Senate and the House of Representatives of the Philippines in Congress assembled: a

ny
4 4

45 Section 1. Appropriation of Funds. The following sums, or so much thereof as may be necessary, are hereby appropriated out of 45
46 any funds in the National Treasury of the Philippines not otherwise appropriated, for the operation of the Government of the Republic of the 46
41. Philippines from January one to December thirty-one, two thousand and twenty-three, except where otherwise specifically provided herein: 47