The Home of Representatives Committee on Appropriation continues deliberating on the nationwide funds for 2026. Spending is funded and restricted primarily based on (a) consistency with the Medium-Time period Philippine Growth Plan and (b) projected revenues and borrowings. Companies can not simply suggest a P10-trillion funds when the projected revenues are solely P6 trillion, leaving a funds deficit of P4 trillion that requires borrowings of equal quantities. No, that’s fiscally irresponsible, unsustainable and economically damaging.
From the Finances of Expenditures and Sources of Financing 2026 submitted by the Division of Finances and Administration (DBM) and the Workplace of the President, proposed Disbursements and spending will enhance to P6.63 trillion in 2026 from P6.08 trillion in 2025. The projected revenues from taxes and non-taxes can even rise to P4.98 trillion subsequent yr from P4.52 trillion this yr, so the projected funds deficit will rise to P1.65 trillion from P1.56 trillion this yr. To assist cowl this deficit, web financing (gross borrowing minus amortization) will rise to P1.63 trillion subsequent yr from P1.39 trillion this yr.
Big borrowing means large curiosity fee other than large principal amortization. In 2024, we paid curiosity fee alone – P763 billion or a mean of P2.1 billion a day. Projected curiosity fee this yr can be P848 billion or a mean of P2.3 billion a day; subsequent yr, P950 billion or a mean of P2.6 billion a day and in 2027, will breach the P1 trillion mark – large.
Many authorities businesses, upon the prodding of legislators and subsidy-seeking public, and pronouncements of recent subsidies by the President himself throughout his annual State of the Nation Handle, are bent on spend-spend-spend. It leaves the Division of Finance (DOF) scratching its head as to the place to get new revenues, on high of present revenues and the necessity to cut back the necessity for extra borrowings.
Among the many essential new revenues initiated by the DOF and rightly so, are larger dividends and necessary remittances by government-owned and managed firms (GOCCs).
Information from the Bureau of Treasury present that dividends by GOCCs reached P58.1 billion in 2021, rose to P69.1 billion in 2022, P102.2 billion in 2023, and additional elevated to P138.5 billion in 2024. This yr, January-June dividends already reached P86.81 billion so it’s doable to succeed in not less than P150 billion full yr 2025. Good.
The largest contributor to excessive dividends in 2024 had been: Bangko Sentral ng Pilipinas with P53.2 billion, Land Financial institution of the Philippines with P32.1 billion, PDIC with P10.7 billion, PPA with P5.1 billion and PAGCOR with P4.6 billion, an enormous decline from its peak P17 billion in 2020 after POGOs had been banned.
In January-June, the most important contributors up to now are: LBP with P26.4 billion, PAGCOR with P12.7 billion, PDIC with P10.1 billion, PSALM with P9 billion, PPA with P5.2 billion, and BCDA with P4.5 billion.
LBP has posted an enormous turnaround in dividends to the Nationwide Treasury. From a mean contribution of P6.2 billion per yr in 2013–2016, it elevated to P8.4 billion in 2022, dropped to zero in 2023 attributable to a P50-billion contribution to the Maharlika Funding Corp., then rose to P32 billion in 2024 and P33 billion by July 2025. Big. Hats off to LBP president and CEO Lynette Ortiz, a decades-long non-public banker and the primary Filipino CEO of Commonplace Chartered Financial institution Philippines.
DOF Secretary Ralph G. Recto’s initiative in 2024 to lift the necessary remittances of GOCCs from 50 % to 75 % of their web earnings was good, among the many essential recreation changers in Philippines’ public finance insurance policies.
On the flipside of GOCCs sending massive remittances and dividends to the Nationwide Treasury, many different GOCCs are subsidy-dependent. The worst of those is the Nationwide Irrigation Administration (NIA), with a subsidy of P34.6 billion a yr from 2017-2022, P40.7 billion in 2023, P71.2 billion in 2024 and P17.7 billion in January-June 2025.
I believe it’s a improper coverage by the federal government underneath the Free Irrigation Service Act (FISA) of 2018. Not all beneficiaries of this regulation are small farmers, some are company farms, non-public resorts and inns within the provinces and therefore, can afford to pay the service. Now all taxpayers nationwide subsidize these non-public companies.
One other subsidy-dependent and wasteful GOCC is the Nationwide Electrification Administration (NEA). Its common subsidy from 2012-2024 was P4.3 billion a yr. Many electrical cooperatives (ECs) within the provinces are inefficient if not outright wasteful. As an alternative of constructing these ECs grow to be firms and personal distribution utilities monitored by SEC and never getting subsidies, NEA is the political protector of those ECs and sends them cash. Ethical hazard downside is created, many ECs have little incentive to be environment friendly and supply good service (little or no blackout) to their prospects as a result of there’s NEA that may ship them cash on a regular basis.
One other good supply of presidency revenues other than taxes and remittances by GOCCs is privatization of sure authorities property and firms. Privatization proceeds are projected to extend from P3.3 billion in 2024, P5 billion this yr and P101 billion in 2026. The star of the present is the privatization of CBK hydro energy plant offered by PSALM to Aboitiz Energy and companions for P36.3 billion final month. The sale shall be finalized in 2026.
Finally, the very best fiscal consolidation coverage of the federal government can be to manage spending, finish sure present subsidies when new subsidies are created. Inform folks to grow to be extra self-sufficient and never state-dependent seemingly ceaselessly. DBM Secretary Amenah Pangandaman and employees may have simpler work when there are much less subsidy- and freebie-seeking folks and businesses. And plenty of public infrastructures are funded by way of PPP, not by way of taxes and borrowings.
