PHILIPPINES

The Philippines’ economic freedom score is 63.8, making its economy the 70th freest in the 2019 Index. Its overall
score has decreased by 1.2 points, with drops in scores for monetary freedom, government integrity, and the tax
burden outweighing a higher score for property rights. The Philippines is ranked 15th among 43 countries in the
Asia–Pacific region, and its overall score is above the regional and world averages.

Continued strong economic growth, driven in part by ambitious state-funded infrastructure projects, has allowed
the government to prioritize domestic law-and-order issues over economic policy concerns. Investors remain
concerned about President Duterte’s heavy-handed rule, although Duterte has consolidated support from
Congress. The absence of entrepreneurial dynamism thwarts development. Despite the adoption of some fiscal
reforms, deeper institutional reforms are needed in interrelated areas: business freedom, investment freedom,
and the rule of law. The judicial system remains weak and vulnerable to political influence.

BACKGROUND

A former colony of Spain and then of the United States, the Philippines became a self-governing commonwealth
in 1935. Its diverse population speaks more than 80 languages and dialects and is spread over 7,000 islands in the
Western Pacific. Longtime Davao City Mayor Rodrigo Duterte succeeded President Benigno Aquino III in 2016.
Duterte has consolidated power by marginalizing his opponents, and his brutal crackdown on illegal drugs reflects
authoritarian tendencies. To improve economic relations, Duterte has downplayed tensions with China.
Agriculture is still a significant part of the economy, but industrial production in such areas as electronics, apparel,
and shipbuilding has been growing rapidly. Remittances from overseas workers are equivalent to nearly 10
percent of GDP.
Source: https://www.heritage.org/index/country/philippines

Philippines Fiscal Expenditure

Fiscal expenditure refers to the sum of government expenses, including spending on goods and services,
investment and transfer payments like social security and unemployment benefits. Fiscal expenditures are
part of government budget balance calculation.
Source: https://tradingeconomics.com/philippines/fiscal-expenditure

Philippines Government Expenditures

Philippines’s Government Expenditures data was reported at 310,815.000 PHP mn in Oct 2019. This records a
decrease from the previous number of 415,085.000 PHP mn for Sep 2019. Philippines’s Government Expenditures
data is updated monthly, averaging 63,675.000 PHP mn from Jan 1985 to Oct 2019, with 418 observations. The
data reached an all-time high of 415,085.000 PHP mn in Sep 2019 and a record low of 3,499.000 PHP mn in Sep
1985. Philippines’s Government Expenditures data remains active status in CEIC and is reported by Bureau of the
Treasury. The data is categorized under Global Database’s Philippines – Table PH.F001: National Government
Revenue and Expenditure.

Philippines's Government Expenditures from 2010-2019(Monthly):

Source: https://www.ceicdata.com/en/philippines/national-government-revenue-and-expenditure/government-expenditures

Philippines Government Expenditures: Excludes Net Lending & Equity

Philippines’s Government Expenditures: Excludes Net Lending & Equity data was reported at 296,750.000 PHP mn
in Sep 2018. This records an increase from the previous number of 256,389.000 PHP mn for Aug 2018. Philippines’s
Government Expenditures: Excludes Net Lending & Equity data is updated monthly, averaging 60,915.000 PHP mn
from Jan 1985 to Sep 2018, with 405 observations. The data reached an all-time high of 333,710.820 PHP mn in
Dec 2017 and a record low of 4,214.000 PHP mn in Mar 1985. Philippines’s Government Expenditures: Excludes
Net Lending & Equity data remains active status in CEIC and is reported by Bureau of the Treasury. The data is
categorized under Global Database’s Philippines – Table PH.F001: National Government Revenue and
Expenditure.

Source: https://www.ceicdata.com/en/philippines/national-government-revenue-and-expenditure/government-expenditures-excludes-
net-lending--equity

Philippines Government Revenue

Philippines’s Government Revenue data was reported at 261,553.000 PHP mn in Oct 2019. This records an
increase from the previous number of 236,528.000 PHP mn for Sep 2019. Philippines’s Government Revenue data
is updated monthly, averaging 51,223.500 PHP mn from Jan 1985 to Oct 2019, with 418 observations. The data
reached an all-time high of 317,236.000 PHP mn in May 2019 and a record low of 3,565.000 PHP mn in Mar 1986.
Philippines’s Government Revenue data remains active status in CEIC and is reported by Bureau of the Treasury.
The data is categorized under Global Database’s Philippines – Table PH.F001: National Government Revenue and
Expenditure.

Source: https://www.ceicdata.com/en/philippines/national-government-revenue-and-expenditure/government-revenue
 Philippines Government Expenditures: Current: Tax Expenditures

Philippines’s Govt Expenditures: Current: Tax Expenditures data was reported at 600.000 PHP mn in Sep 2018.
This records a decrease from the previous number of 1,985.000 PHP mn for Aug 2018. Philippines’s Govt
Expenditures: Current: Tax Expenditures data is updated monthly, averaging 853.000 PHP mn from Jan 2007 to
Sep 2018, with 141 observations. The data reached an all-time high of 13,159.000 PHP mn in Jun 2009 and a
record low of 0.000 PHP mn in Jan 2015. Philippines’s Govt Expenditures: Current: Tax Expenditures data
remains active status in CEIC and is reported by Bureau of the Treasury. The data is categorized under Global
Database’s Philippines – Table PH.F001: National Government Revenue and Expenditure.

Source: https://www.ceicdata.com/en/philippines/national-government-revenue-and-expenditure/govt-expenditures-current-tax-
expenditures

AQUINO ADMINISTRATION

Source: https://pidswebs.pids.gov.ph/CDN/PUBLICATIONS/pidsbk13-budget2012.pdf

Expenditure Program

The PB message for 2012 is very clear on the thrust of the Aquino administration’s spending priorities for the year.
Dubbed as “Paggugol na matuwid: diretso sa tao” (Right spending: direct to the people), the PB for 2012 purports
to be the financial reflection of the administration’s social contract with the Filipino people (Executive Order No.
43 dated 13 May 2011). As such, it is said to be geared toward achieving the five priority areas of the said contract,
namely, (i) transparent, accountable, and participatory governance; (ii) poverty reduction and empowerment of
the poor and vulnerable; (iii) rapid, inclusive, and sustained economic growth; (iv) just and lasting peace and the
rule of law; and (v) integrity of the environment and climate change adaptation and mitigation. The 2012 National
Expenditure Program (NEP) is envisioned to be a results-focused budget. As in the previous year, the government
is said to have adopted the zero-based budgeting (ZBB) approach to foster efficiency and effectiveness in
spending. In particular, the ZBB is employed to weed out wasteful programs and direct government funds to
programs, activities, and projects (PAPs) that will benefit the Filipino people most. For 2012, all departments and
agencies are expected to center their PAPs on the five priority areas mentioned earlier. To promote transparency
and accountability in the bureaucracy and to ensure that public spending directly benefits the people, the
government fleshed out agency lump sum funds and directed the release of funds, to the extent possible, to the
smallest implementing units of departments and agencies. It has also strengthened the oversight of the
Department of Budget and Management (DBM) on the generation and use of savings including the realignment
of funds across allotment classes, within capital outlays, and over their use for allowances and additional benefits.
In line with this, the allocation for the salaries of unfilled positions is included in the Miscellaneous Personnel
Benefits Fund (MPBF) and will be released only upon the concerned departments and agencies’ submission of a
report stating that personnel have actually been hired. At the same time, special provisions in the Department of
National Defense (DND) and Armed Forces of the Philippines (AFP) that allow so-called “conversions” through
budget realignments have been removed in the 2012 NEP. In this way, the proposed spending program is clearly
an attempt to make more concrete the government’s battlecry: “kung walang corrupt, walang mahirap” (if there
is no corruption, there will be no poverty).

Spending priorities in the proposed PB for 2012

The proposed NEP for 2012 under the PB amounts to PHP 1.8 trillion. About 60 percent of the proposed
expenditure program for 2012 will be funded from new appropriations for various departments and agencies as
well as for special purpose funds.6 The remaining 40 percent will be funded from automatic appropriations.7
However, a total of PHP 161.7 billion is proposed as standby authority (i.e., unprogrammed appropriations) in case
the national treasury collects more than the revenue targets (Table 3).

The proposed expenditure program for 2012 is PHP 171 billion (10.4%) higher than the PHP 1.6 trillion expenditure
program for 2011 (Table 4). However, debt service (i.e., interest payments) is projected to decline by 6.7 percent
in 2012 compared to 2011 level due to the declining peso-dollar exchange rate and lower interest rate as well as
declining debt stock. Consequently, debt service is expected to fall by PHP 24.0 billion from PHP 357.1 billion in
2011 to PHP 333.1 billion in 2012. Thus, total national government expenditure net of debt service for 2012 is
programmed to be PHP 195.0 billion (13.0%) higher than the 2011 level.