Message of

His Excellency Benigno S. Aquino Ill

President of the Philippines
to the Sixteenth Congress of the Philippines
on the National Budget for Fiscal Year 2015
July 30,2014
Ladies and Gentlemen of the 16th
Congress of the Philippines:
By the mandate vested upon me by the sovereign will of the
Filipino people, 1 have the honor to submit to you, through
the President of the Senate and the Speaker of the House
of Representatives, the proposed National Budget for 2015.

A STRONGER RELATIONSHIP OF ACCOUNTABILITY

We begin the annual process of Budget legislation in a truly
remarkable time.
In the last 12 months, we witnessed the unfolding of events
that led our country toward an irreversible juncture in our
history. We witnessed the awakening of our people, who
now demand greater accountability from their government,
and the call for a stronger voice in the process of allocating
and spending public funds. We promptly responded to this
plea by intensifying the pursuit of reform, especially in the
way the government manages our people's taxes.

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The President's Budget Message

We discovered the great injustice committed by some public

officials who abused the Priority Development Assistance
Fund (PDAF), in collaboration with syndicates who used fake
non-government organizations. We have never relented in
seeking justice against those who broke our people's trust.
Likewise, we all took the high road to respond to the call of
the times. In abolishing the PDAF, we established a system
that is now more transparent and accountable, one that
ensures each peso spent truly benefits our people.
My fellow public servants, as we continue to aim for greater
public accountability, we cannot expect those who benefit
from the old system to cower and stand down. As we have
seen, they will continue to fight tooth-and-nail to protect their
vested interests, to stymie the reforms that we have rolled
out since the beginning and are now gaining ground, and to
cast doubt on our intentions in the minds of the public. In
their desperation, they pull all stops to weaken the ability of '
this government to sustain its pursuit of the Daang Matuwid.
For our people's sake, we cannot let them win.
Take the case of the Disbursement Acceleration Program
(DAP), a reform measure we introduced in 2011 to counter
government underspending that was a result of inherent
weaknesses in our budgeting systems. At the heart of the
DAP is our belief that the government cannot afford to do
nothingit must choose to use its powers under the
Constitution, powers that previous administrations had also
used, to respond to urgent challenges that our people face
today. Even our harshest critics concede that the DAP was
beneficial to our economy and our people.

The President's Budget Message

While we respect the authority of the Supreme Court, we

humbly believe that its decision on the DAP failed to
consider all our legal bases; more so that it hinged on a rigid
and inflexible conception of public finance. The right thing for
us to do is to file a motion for reconsideration on the high
court's ruling because we must ensure that our hands are
not tied in fulfilling our mandate to spend each peso with
efficiency, speed, and maximum impact.
Pinaiigting lamang ng lahat ng mga pangyayaring ito ang
sama-sama nating pagtahak sa Daang Matuwid. Higit na
nagiging malinaw ang ating landas tango sa tunay na
pagbabago. Mga kapwa lingkod-bayan: nararapat tang na
ipagpatuloy natin ang laban.
Since the beginning of my Administration, we have pursued
public financial management reforms to establish a regime
of Paggugol na Matuwida budgeting system that ensures
spending within our means, on the right priorities, and with
measurable results. We have anchored our reform agenda
on our conviction that greater transparency and citizen's
engagement ensure a budgeting system that works solely
for the people and by the people.
Ladies and Gentlemen of Congress, now more than ever, I
ask for your support for Paggugol na Matuwid. As you have
done so in the past Budgets under my Administration, I look
forward to your continued and ever-stronger support for our
budget reform agenda, as embodied in this Proposed
Budget for 2015 that we submit to you today, as well as in a
Public Financial Management reform bill that we will soon
submit for your consideration.
3

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The President's Budget Message

As we continue our work to transform the budget process, we

must likewise transform our relationshipbetween Congress
and the Executiveinto one that is defined by greater public
accountability.
Now is the perfect time to clarify our roles in determining the
allocation and use of public funds, in which the Executive
proposes and implements the Budget, Congress reviews and
approves it, and the Executive thereafter accounts for its
performance. We redefine our relationship this way to
empower our people, our bosses, to hold us responsible for
how we manage the nation's coffers.
Ultimately, our people will hold us accountable for how we
leverage the Budget to bring true prosperity to our country
and to our people, especially the poor and disadvantaged.
As our country achieves a new path of rapid and
unprecedented growth, moving away from the past periods of
boom and bust, we must acknowledge that growth alone
cannot solve poverty. We must translate our economy's
continued growth to real and tangible benefits for the poor.
We must empower our people to stand on their own two feet
and create the lives that they desire.
Nananagutan tayo. Sa pamamagitan ng Paggugol na
Matuwid, sinisiguro natin ang Kaunlaran Para Sa Lahat.

The President's Budget Message

A BUDGET FOR INCLUSIVE AND SUSTAINED DEVELOPMENT

Ladies and Gentlemen of the 16 th Congress, on behalf of our

people, I ask you to examine and thereafter approve this
proposed P2.606-trillion National Budget for 2015a Budget
for Inclusive and Sustained Development.
We built this Budget around the idea that no one, especially
the poor and the vulnerable, should be left behind. At the
core of this Budget is our belief that our people are our
country's greatest resource, they who have made our
country's achievements possible. We likewise believe that it
is through their collective will and action that our country can
achieve greater prosperity that truly benefits all.
Matutupad lamang natin ang kaunlarang pangkalahatan
kapag patuloy nating panghahawakan ang panata natin para
sa pagbabago.Ang taumbayan ang ating Boss.
We must always remember that inclusive development can
only happen if public institutions act in accordance with the
people's interests. After all, the government can only
effectively deploy scarce resources where they are needed
the most if it is built on strong foundations of transparency,
accountability, and efficiency. The government can only
address the citizen's pressing needs if the people
themselves are empowered to participate in its decisionmaking processes.
Allow me to discuss the key features and reforms that
shaped this proposed Budget for 2015:

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The President's Budget Message

This Budget expands with the economy and supports

further economic expansion. International experts and
other independent observers attest that our economy is on
the path to sustainable prosperity. We attribute this
manifestation to four years of our firm political will and
determination in reforming the government. This state of
affairs has provided us enough resources to change the
circumstances of our people. Indeed, good governance is
good economics.
As the Philippine economy continues to expand, the
government's investments for inclusive growth must grow as
well. Thus, the proposed Budget for 2015 reflects a 15.1
percent increase over the 2014 General Appropriations Act
(GAA). Net of the debt burdenl, the Budget increases by a
faster rate at 16.9 percent year-on-year. The total proposed
Budget is equivalent to 18.4 percent of gross domestic
product (GDP), higher than the 17.7 percent of GDP in 2014.

The debt burden represents interest payments plus net lending

6

The President's Budget Message

Figure 1: the National Budget 2009 -2015 err

Total Expenditutt Budget
01
Y
o
ner 0
G
oa w
r -t h

2015
1,473.0 B 1,580.0 8

1,829.0 6

1,998.4 B

2,264.6 B

(proposed)
2,606,0 B

Certainly, it is not enough to increase the Budget per se, as

we must likewise ensure that resources are invested in the
right priorities. Since the beginning, we have transformed the
distribution of the Budget. In 2005, the shares of the Social
and Economic Services sectors hovered at 27 percent and
18.3 percent, respectively; while the Debt Burden received
the largest slice at 31.6 percent. In 2015, the shares of Social
and Economic Services will improve to 37.1 percent and 26.9
percent, respectively, while the Debt Burden will decline to
15.3 percent. Once again, we focused this Budget for 2015
on interventions that our poor sectors need.
The Philippines' historically low level of spending on public
infrastructure had constrained economic growth. We see it in
congested ports and thin margins of electricity supply. Thus,
we commit to increase infrastructure spending to a more
7

The President's Budget Message

respectable level of 5 percent of GDP by 2016. In 2015, the

budget for infrastructure will increase to 4 percent of GDP,
from 3.4 percent in 2014.
This Budget focuses on the imperatives of inclusive
development. We reshaped government budget priorities to
focus on inclusive development, particularly the need to
invest in our people through adequate and well-targeted
social protection and basic social services and to create
more meaningful employment and livelihood opportunities.
We reduced poverty incidence to 24.9 percent of Filipinos in
the first semester of 2013, from 27.9 percent and 28.6
percent in the same period of 2012 and 2009, respectively.
Unemployment likewise fell slightly to 7.0 percent in April
2013, from 7.6 percent in the same period last year.
However, our work is not yet donewe must intensify and
sharpen the focus of government interventions to
substantially reduce poverty.
Since the beginning, we have implemented reforms to
ensure that the government spends on the right priorities.
We introduced the practice of issuing a Budget Priorities
Framework2, one that is consistent with our national
planning framework, at the beginning of the annual budget
preparation process. This framework aims to guide
departments and agencies in designing their respective
budget proposals. The 2015 Budget was designed following
the objectives outlined by this framework:

National Budget Memorandum No. 119, issued on 27 December 2013.

8

The President's Budget Message

Sustain economic expansion and facilitate the creation

of more jobs;

Accelerate poverty reduction by expanding key social

protection and social services;

Manage climate risks and "build back better" the

communities ravaged by recent disasters; and

Establish an enabling environment for inclusive

development through lasting peace and the rule of law;
and, above all, through good governance.

To support the effective roll-out of this Budget Priorities

Framework, we called on all agencies to sustain the Program
Budgeting Approach. This method ensured that the proposed
Budget was crafted by one, cohesive government, as
departments and agencies responsible for major government
programs collaborated to unify their strategies in order to
maximize the impact of their resources.
This Budget prioritizes the needs of poor and
vulnerable localities. This proposed Budget does not only
increase public investments in priority social and economic
services but also focuses on interventions in the specific
development needs of poor localities. In ensuring that our
economic growth truly benefits all, it is critical for us in
government to know who and where the poor are, and to
tailor-fit interventions according to the needs of
underdeveloped localities.
As we seek to leave no region, province, or community
behind, we will work more aggressively to disperse wealth
9

The President's Budget Message

and opportunity across the archipelago. Rather than taking

the "one-size-fits-all" approach of the past, we take
cognizance of the specific needs and realities of localities,
and suit interventions accordingly.
Thus, the Budget Priorities Framework that we issued for the
2015 Budget correspondingly identified 44 provinces under
the following Geographic Focus Areas:

Provinces with high poverty magnitude, where we

must create more job opportunities;

Provinces with high poverty incidence, which require

adequate social safety nets; and

Provinces which are most vulnerable to shocks and

disasters.

In crafting the 2015 Budget, we tasked departments and

agencies to not only prioritize these provinces, but also to
suit their service delivery strategies according to the specific
needs of these provinces.
This Budget increases the people's voice in the use of
their taxes. My administration is committed to deepen
transparency and citizen's engagement in the government's
financial affairs because we believe that an invigorated
economy requires an empowered citizenry. Since the
beginning, we have established mechanisms that give
people a greater voice on how national resources are
allocated and utilized.

10

The President's Budget Message

Through the Grassroots Participatory Budgeting Process

(formerly Bottom-Up Budgeting), which we first employed in
crafting the 2013 proposed Budget, we directly involved
grassroots communities in the process of formulating and
implementing the annual National Budget. For the 2015
Budget, community-based organizations and local CSOs
engaged 1,633 cities and municipalities in developing local
poverty reduction programs and projectsan expansion
from the 595 cities and municipalities covered by the 2013
Budget process and the 1,225 cities and municipalities in the
2014 Budget process. The result was a larger allocation of
P20.9. billion in 2015, from P8.0 billion in 2013 and P20.0
billion in 2014, to fund local projects, such as potable water
supply, agricultural infrastructure and facilities support, rural
healthcare facilities, and sustainable livelihood programs.
We continue to nurture policies and innovations that
Promote Greater Fiscal Transparency and Participation. We
sustained the process of Budget Partnership Agreements
between the national agencies and civil society
organizations, and expanded its application to monitoring the
implementation of the Budget. We enabled the meaningful
participation of citizens in the budget process by giving
citizens greater access to information on the budgetfrom
requiring government agencies to publish in their websites
their financial and physical accomplishments through the
Transparency Seals to leveraging technology and making
more data available in open format, and even up to
disseminating budget information to ordinary citizens in a
more understandable format through the People's Budget.

111'11E161f

OYD14998

11

The President's Budget Message

This Budget increases government's accountability for
the results of public spending. We continue to enforce the
basic management principle that each peso that the
government spends must be tightly linked to measurable
results. Last year, for the firsttime, we asked Congress to
review and approve a budget for 2014 that included not only
the financial allocations but also the performance targets that
each government agency must meet. We called this the
Performance Informed Budgeting (PIB), a budgeting
paradigm that enables Congressand the broader
citizenryto better scrutinize the government's spending
plan and to hold departments and agencies accountable for
their performance.
In crafting the 2015 Budget, we took the PIB to a higher
level. If the performance targets presented in the 2014
Budget were pegged against the outputs, or the tangible
goods and services, that agencies must deliver, the
proposed Budget for 2015 now includes indicators of
outcomes. Hence, this Budget does not only show how
many households, for example, will benefit from the
Pantawid Pamilyang Pilipino Program, but also discloses
how many of these beneficiaries will actually be lifted from a
level of survival to a level of subsistence, and eventually to
a level of self-sufficiency.
Our honorable legislators, this is a Budget that enables you in
Congress to hold us responsible not only for how we disburse
public funds, but more importantly for how effectively
we'deliver services, and how we are able to meet our socioeconomic development goals.

12
tgi4

111111111111ifl1111111iitir111111
PNOY014999

The President's Budget Message

Moreover, as we strengthen the complicated link between

budgets and results, we also continue to provide incentives
for the bureaucracy's timely delivery of results. We will
expand the Performance-Based Incentive System given the
positive results it has so far achieved in encouraging better
management and teamwork. In 2012, we gave performancebased bonuses, which public servants received on an
individual basis depending on how they and their respective
units achieved their targets. In 2015, we will shift the P5,000
across-the-board Performance Enhancement Incentive to a
one-month bonus for agencies that meet their 2014 targets.
We will continue to explore ways to enhance the government
compensation and position classification system in order to
incentivize performance in the civil service.
This Budget supports the rapid and effective delivery of
public services. A Budget that is closely aligned to the
Philippine Development Plan and is reflective of our people's
priorities will lose its purpose if government agencies are not
able to deliver planned results or fail to spend their budgets
in a prompt manner. Thus, we continue to pursue reforms
not only to accelerate disbursements but also to improve the
ability of the bureaucracy to deliver services in a rapid and
effective manner.
We will continue to de-clog the budget implementation
process to enable agencies to implement their programs and
projects as early as possible. We will sustain the GAA-asRelease Document policy, which considers the agencies'
budgets as released to them, ready for implementation on
the first day of the fiscal year. We will continue to make
Procurement Innovations as we have instructed agencies to
13

The President's Budget Message

complete their pre-procurement and detailed engineering

activities before the Budget is passed to enable the awarding
of contracts at the beginning of the fiscal year; and we will
strengthen the bids and awards committees and
procurement units of agencies and study measures to attract
more bona fide contractors and suppliers to join the
government's bidding process.
Accordingly, we ask Congress once again to impose a OneYear Validity of Appropriations, which will no longer allow
the use of budgets intended for the year to carry-over to the
succeeding year. This policy, we believe, encourages
departments and agencies to utilize their allocated funds as
early as possible, rather than to postpone the
implementation of programs and projects to the following
year. It also makes the accounting of the use of funds and
the implementation of programs and projects more
straightforward and transparent.
We also saw it fit to clarify the Definition and Use of Savings
and Augmentation in light of our policy to push agencies to
spend their budgets, or else, to "lose it." Given that this
proposed Budget will be valid for one year, it will be counterintuitive to allow the declaration of savings and augmentation
of deficient budget items only at the end of the year. Thus,
the proposed general provisions of this Budget seek to allow
the declaration of savings by the end of the first semestera
realistic timeframe, as it gives enough time for the
implementation of augmented programs and projects.
This Budget enhances the health of government's
finances. Finally, as we increase and speed-up public
14

The President's Budget Message

spending on development priorities, we will not burden future

generations with more indebtedness. Because we put our
fiscal house in order by reducing our deficit by plugging tax
leakages and improving our debt metrics, our country has
regained its Credibility among the investing community. Our
investment grade credit ratings only demonstrate our
commitment to our fiscal consolidation strategy.
We will not waste our newfound stature in the market, for
this is important not only in reducing the cost of financing but
also in enticing more foreign investments in our country.
Thus, this proposed Budget remains consistent with the
government's fiscal consolidation strategy of reducing
outstanding public debt from the 52.4 percent of GDP that
we inherited in 2010 to 46.6 percent by 2015; and keeping
our fiscal deficit to 2.0 percent.

FINANCING THE 2015 EXPENDITURE PLAN

Our honorable legislators, we hinged the financing plan for

the 2015 Proposed Budget on the robust macroeconomic
and fiscal environment that we have achieved and nurtured
since the beginning of my Administration.
Macroeconomic Environment

We prepared this Budget to sustain the strong

macroeconomic environment that we have attained in our four
years in officea vibrant GDP growth, a manageable
inflation, a stable foreign exchange rate, low interest rates,
and a sustained export growth.

15

The President's Budget Message

Hence, this Budget will provide the impetus for our economy
to post a 7.0 to 8.0 percent growth in 2015 and 7.5 to 8.5
percent growth in 2016 after our GDP in 2013 grew by an
outstanding 7.2 percent, among the highest in our region.
We look forward to drivers of growth in 2015, including
stable basic commodity prices, the influx of new
investments, a healthier manufacturing sector, buoyant
international and domestic tourism, stronger exports, and
improved external trade conditions.
Table 1: Macroeconomic Assumptions, 2013.2015
2013.
A ctual

Parameter
Real GDP Growth (%)
Inflation Forecast (%)
364-Day T-bill Rate (1'0
FORE, X (Ph .+U3$)
Brumes: BSP,

7,2
3,0
0.7

20 14

2.015

8,5-7
3.0-5.0

7,0-8,0
2,0-4.0
2,0-4.0
4 2.0-45,b

42,6-45,0

NSCB

Fiscal Program
We will maintain our budget deficit at 2.0 percent of GDP,
which is equivalent to P283.7 billion 3. This level will enable
us to balance the need for increased public investments
while keeping them within our means. To achieve this, we
will continue to pursue reforms to increase revenue
collections without burdening our people with additional
debt. We will leverage our investment grade credit ratings
to further reduce the cost of our borrowings and size of our
debt stock.
With a programmed disbursement level of P2.621 trillion and revenues of
P2.337 trillion, the projected deficit for 2015 is P283.7 billion. The P2.606
trillion is the proposed obligation budget for 2015.
3

16

PNoY015003

The President's Budget Message

Revenues. Our proposed Budget will be mainly financed by

our improved revenue generation amounting to P2.337
trillion. This revenue target represents a 15.8 percent
increase over the 2014 program, and is equivalent to a
higher 16.5 percent of GDP. Tax revenues amounting to
P2.194 trillion will account for 93.9 percent of the total
revenue inflow; and the remainder will come from non-tax
sources (P140.9 billion) and privatization (P2.0 billion).
Collections of the Bureau of Internal Revenue (BIR) are
projected to increase by 18.3 percent. The increase in BIR
collections to P1.72 trillion next year or 12.1 percent of GDP
will be realized as government continues to aggressively
plug tax collection loopholes and bring tax evaders to justice.
As of June 2014, the BIR has filed .a total of 253 cases with
the Department of Justice under the Run After Tax Evaders
(RATE) program.
Likewise, our continued pursuit of reforms at the Bureau of
Customs (BOC) will enable the agency to raise its collections
to P456.5 billibn, which is equivalent to 3.2 percent of GDP.
We will continue to build on our recent achievement of
recording monthly double-digit growth rates for the first five
months of this year. The organizational reforms we have
instituted at BOC, the intensified anti-smuggling campaign,
and the trade facilitation systems we have installed are
clearly breathing new life and energy into the agency.
Meanwhile, other revenues will come from the collections
remitted to the Bureau of the Treasury (BTr) such as BTr's
own income (P37.3 billion), fees and charges (P34.4 billion),
17

The President's Budget Message

national government shares and dividends (P20.7 billion, of

which P5.5 billion are projected dividends from governmentowned or -controlled corporations) and sale of government
assets (P2.0 billion), among others.
Borrowings. In 2015, we will borrow P700.8 billion in a
manner consistent with our medium-term goal of reducing
our debt stock, particularly our external debt. In the process,
we help develop domestic capital markets. Of this amount of
gross borrowings programmed for next year, P283.7 billion
will be used to plug the projected fiscal deficit, P390.4 billion
to amortize the principal of our outstanding debt (P315.6
billion for domestic and P74.8 billion for external), and P26.7
billion for the national government's cash buffer account.
Out of our borrowing program next year, we will raise 86.3
percent or P605.1 billion from the domestic market.
Meanwhile, the remaining P95.7 billion, or 13.7 percent of
the total borrowing program, will be sourced externally
through concessional loans from development partners and
commercial borrowings from the global capital markets.

18

The President's Budget Message

INVESTMENTS FOR INCLUSIVE DEVELOPMENT IN 2015

Since the beginning, my Administration has worked to make

the Budget more biased toward the poor and marginalized.
Thus, social services will get a lion's share of the P2.606
trillion expenditure program at 37.1 percent or P967.9
billion; while economic services will get 26.9 percent or
P700.2 billion. As we make government more efficient and
our finances more stable, we will be able to reduce the debt
burden on our Budget to P399.4 billion, or a mere 15.3
percent share.
Table 2: The Budget by Sector, 2014 vs. 2015
Le,, I (PhP
14
Program

Social 5erices
Euunomiu
VIL:L4S
,
Ge e-ro I Public., SC r54C4n
Defense
Debt Burden
TOTAL

2015

2014

Propas'e.ct

Progrnn

641.9

967.9

15,0

709,2

37.2
26,2

37.1

593.1

20.9

3.62.6
99.5
377.6

423.1.

15.0

16.2

10;1
15,7'

115,5

4.0

4.4

2.9.0

399.4

16. 7

15.3

2,2 6 4,6

2..606,0

't CO, 0

100.0

.15.1

We will likewise continue to increase the portion of the

Budget allocated for developmental expendituresfor
operating expenditures for vital frontline services such as
social protection, education, and healthcare; as well as for
infrastructure. To support the former, maintenance and other
operating expenditures will increase by 11.3 percent to
P432.6 billion in 2015; and subsidies to government
corporations by 36.3 percent to P61.3 billion. Meanwhile,
infrastructure and other capital outlays will expand by 25.5
percent or to P506.4 billion, contributing to a total national

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The President's Budget Message

government infrastructure program of P562.3 billion,

equivalent to 4.0 percent of GDP and an increase of 27.2
percent over 2014. The infrastructure program of P562.3
billion includes subsidy to GOCCs and LGUs.
Table 3: The Budget by Expense Class, 2014 vs. 2015
Levels (PhP billion)
.Percent Share
Growth
Particulars:
2016
2014
2014
2015
Rate
Frograrn

FT0p05" C<J

Program

1,748.1)

1.665,9

77.2

75.4

12.4

662.5
360,0

751,7
432,0

29,
17,2

15.0

SubSICIY

45,0

61,3

2,0

29.2
10.0
2,4

AllotrnAnt in 1

27:4.7

111 14

12.1

I n t e r es t P a y m e n t s
fax Expenditure 1 - '-uncl

352.7
25.9.

372,6
25,

15.5

14,3

5.7

7.2

7.1)

(5.3)

C ap ita l Ou tla ys (C O)

400.5

613.6

21.7

29,5

25.0

I nfra, and Other C O.

Etimity

4016
2,3

506,4
1,4

17.8
0.1

10.4 .
0. 1

(39.9)

84.9

105.0

3.7

Currant Operating Ex.p,.

Personnel Semices
MOOE

Capital Transfers 'to LGUs

Lendiny
TOTAL

26,5 1,

25.0
2,264,6

2,606..0

Proposed

12.0

100.0

11.3
36.3
/4,1

25,5

4.1

24,7

1.0

6.2

100.0

15.1

The following is a summary of the priority programs that we

will invest in through the 2015 Budget:

20
PNOY015007

The President's Budget Message

Job Generation and Economic Expansion

We have seen that inclusive and sustainable growth is built
on the backs of a vibrant private sector and a growing middle
class. Hence, we will sustain the growth trajectory that we
have nurtured since the beginning of my term, as we create
more jobs and livelihood opportunities while providing
strategic support for new investments and industries.
This proposed Budget thus invests in building a seamless
economy through world-class transport infrastructure; in
modernizing our agriculture sector and improving the lives
and incomes of farmers and fisherfolk; in the resurgence of
our manufacturing sector; and in maximizing the potential of
the tourism sector.
Transport Infrastructure. Part of our economic war chest is
the P230.4 billion transport budget that will lower the cost of
and reduce the time for transporting goods and people; link
farms to markets; facilitate access to tourism destinations;
allow the creation of more business and employment
opportunities;, and enable citizens with easier access to
social services.
We allocated P195.1 billion for road transport. We will not
just build roadswe will build them safe and strong and
maintained in good condition. The DPWH's budget for the
Roads and Bridges Program of P174.5 billion will consider
new construction design specifications, such as the increase
in concrete pavement thickness from 230 mm to 280 mm to
prevent the early deterioration of our roads caused by
overloading. The Philippines' ranking in the quality of roads
21

The President's Budget Message

indicator in the World Economic Forum Global

Competitiveness Index has significantly improved from No.
114 in 2010-2011 to No. 87 in 2013-2014, making our roads
at par with those in Indonesia and Vietnam. By 2016, we will
bring them to the level of those in China and Thailand. Our
roads will transport more people and goods, thereby spurring
more trade and investments in safer, faster, and cheaper
ways.
We will build more airports and seaports as they stimulate
and catalyze economic activity as well as provide
employment opportunities. They provide access to local and
global markets and trade, thereby fueling industries,
including tourism. We increased the 2015 budget for aviation
by 45.8 percent to P13.3 billion.
We increased our budget for ports development to P1.5
billion from P1.1 billion in 2014. The amount will be used to
construct, develop, repair and rehabilitate 40 seaports. To
bolster our maritime security, we will provide the Philippine
Coast Guard P3.5 billion to buy patrol vessels. These
vehicles will not only enhance our capability to patrol the
country's extensive shoreline but also support search-andrescue operations during calamities.
Our P16.9 billion subsidy for railways in the 2015 Budget will
enable us to reduce transfer time by 50.0 percent; transport
cost by 8.5 percent; lessen logistics costs of goods and
services from 23.0 percent to 15.0 percent; reduce transportrelated accidents by 2.0 percent; and generate time savings
equivalent to P54.0 billion. This will fund the rehabilitation of
LRT Line1 and 2 (P2.8 billion); LRT Line 1 South Extension
22

The President's Budget Message

(P4.8 billion); LRT Line 2 East Extension (P2.4 billion) and

West Extension (P200 million); MRT 3 subsidy (P4.7 billion)
and infrastructure outlay (P804 million); and PNR Main Line
South Rehabilitation (P547 million) and repair and
rehabilitation (P200 million), among others.
Agriculture Development. Ang pagpapalago sa agrikultura
at pangingisda ay mas epektibong panlupig sa kahirapan ng
ating mga kapatid na magsasaka at mangingisda sa
kanayunan. We endeavor to increase the productivity of the
agriculture and fisheries sector to 3.5-4.5 percent growth in
Gross Value Added by 2016 and improve the lives of 1.685
million poor farmers and 346,345 poor fisherfolk.
In line with the Budget Priorities Framework, and the need to
be more discerning of the differing requirements of the three
focus areas, we crafted the 2015 budget for agriculture
development differently:
a) All the services available for the Department of Agriculture
(DA) and attached agencies and corporations can be
harnessed to support the commodity production targets
in a more coordinated manner. Hence, the P86.1 billion
allocated for the Agricultural Development Program was
an integration of the budget of the DA for the rice
production and consumption targets, the budget of the
National Irrigation Authority (NIA) for irrigation, the
budget of the National Food Authority for buffer stocking,
the budget of the Agriculture Credit Policy Council for
credit requirements; and the budget of the Philippine
Rice Research Institute (PhilRice) for research and
development (R & D).
3

The President's Budget Message

b) Agricultural production was focused on the top producing

provinces so that other farmers, including coconut
farmers who numbered among the poorest, could benefit
from crop diversification and the replanting of coconut
and high value crops by affording them larger incomes.
R&D extension and credit services for such crops were
also provided, with P14.5 billion allocated for farm-tomarket roads that would link poor farmers to markets and
trading centers.
We will invest P26.0 billion in agriculture infrastructure that
will cover 20,650 hectares with new irrigation and drainage
areas and restore existing ones in 23,200 hectares. This
investment, focused on the top 33 rice-producing provinces,
will help achieve a target production of 4.48 metric tons of
rice per hectare.
Similarly, the support for fish production was focused on the
top 52 municipal fishing sites, including infrastructure (fish
landings and fishports through the Philippine Fisheries
Development Authority), post-harvest facilities, credit
services, and farm-to-market roads. This provision will
address our production targets and help our fisherfolk rise
from poverty.
Thus, the allocation for the Bureau of Fisheries and Aquatic
Resources (BFAR) was increased by 28 percent to P6.02
billion over the 2014 budget of P4.92 billion. This budget will
mainly provide for the construction of 252 fish landings.

111i1111
1:1,

24

The President's Budget Message

Not to be forgotten are our coconut farmers who have been

reeling from low productivity and pest devastation. We
allocated P4.09 billion to the Philippine Coconut Authority,
an increase of 71.9 percent from its 2014 budget, for the
construction of farm-to-market roads, coconut planting and
replanting, eradication and control of pests, and
development of coconut enterprise sites and cocci agroindustrial hubs.
Manufacturing Resurgence. We will rebuild the existing
capacity of industries, strengthen new ones, and maintain
the competitiveness of industries with comparative
advantage. We will close the gaps in the supply chain,
provide access to raw materials, and expand domestic
markets and exports. We will likewise build-up agriculturebased manufacturing industries that generate employment,
and support small-holder farmers and agri-cooperatives
through product development, value-adding, and integration
to big enterprises for marketing and financing purposes.
We allotted P239.8 billion for the Manufacturing Resurgence
Program, P874 million of which will be used to promote and
develop small and medium industries; and P104.5 million to
the upgrading and continuous development of plans,
programs, and policies for industry development. The
amount of P662 million is earmarked for the Small
Enterprise Technology Upgrading Program, which will
generate 12,681 jobs and service 1,841 firms.
In addition, a fund of P1.1 billion, representing balances
from the 2013 and 2014 Budgets, is still available for 2015
for the development of Shared Service Facilities under the
25

The President's Budget Message

Department of Trade and Industry (DTI). This provision will

provide catalytic support to enterprising small and medium
industries needing vital equipment to expand their production
and reach.
Tourism Development. Since I assumed office, we have
made sure that the tourism industry plays a big part in
generating more employment. In 2013, the industry directly
employed 4.9 million, which was 32 percent higher than the
3.7 million employment generation in 2010. The industry
likewise contributed P748.3 billion, or 6.5 percent, to GDP in
2013, 42.8 percent higher than the P523.9 billion or 5.8
percent contribution to GDP in 2010.
Our tourism development budget for 2015 aims to employ
6.3 million workers, and increase its share to 5.7 percent of
GDP valued at P974.0 billion. We intend to achieve this
target by attracting 8.2 million international visitors and 51.7
million domestic travelers through improved market
accessibility, connectivity, and destination infrastructure.
Hence, we will infuse the DPWH with a fund of P16.2 billion
to construct, widen, and upgrade 966 kilometers of road and
1,227,6 lineal meters of bridges to airports, seaports, and
declared tourist destinations. This amount represents 10.3
percent increase from the 2014 allocation of P14.7 billion
covering 650 kilometers. We will likewise modernize and
expand the capacity of existing airports, such as the Ninoy
Aquino International Airport Terminal 1, under a
rehabilitation project worth P592 million.

111101 ifiE1r#1,1111111

26

The President's Budget Message

We allocated P2.2 billion to the Department of , Tourism

(DoT) for strengthening the Philippines' global brand as a
prime travel destination through aggressive promotional
campaigns and market development. To maximize the
employment generating benefits of tourism, the DOT is
solidifying its 'partnerships with the DSWD, the DTI, and the
DA to enable poor communities to benefit from tourism
either as direct employees, tourism operators, or suppliers of
agriproducts and handicrafts.
Training for Quality Workforce. To support our industries,
we allocated P2.0 billion for the Training for Work
Scholarship Program (TWSP) under the Technical Education
and Skills Development Authority (TESDA). This budget will
cover the training of 210,526 workers in agri-fishery,
Business
Process
Outsourcing-Information
and
Communications
Technology,
tourism,
general
infrastructure, semi-conductor and electronics, and
automotive. This allocation is 42.0 percent more than that in
2014.
For those who will attend college, we will make sure they
get the best deal out of their education. We will look into the
possibility of asking state colleges and universities (SUCs)
to offer degrees that are needed in their region or are best
for our students in order to maximize public resources.
Moreover, we will continue to restructure our public higher
education systemby pursing the amalgamation of SUCs
into
regional
universities,
developing
specialized
institutions, rewarding performing SUCs, among other
reformsso that it responds to the real needs of our
students and our economy.
27

PNOYO 1 501 4

The President's Budget Message

We allotted P43.3 billion for SUCs in 2015, a 13.8 percent

increase over the 2014 allotment, to provide for needed
faculty, operating funds, and capital outlays. This allocation
includes P3.5 billion for scholarships under SUCs. In
addition, P2.2 billion will be available to the Commission on
Higher Education for scholarships. P316 million was
allocated as research fund to improve the quality of higher
education.
We recognize that in these high-tech times, our students
need to be adept at science, technology, engineering,
agriculture, and mathematics so that they can match the
skills that employers require. To respond to this demand, we
will give our students science and math toolkits and
equipment. We will provide our college students upgraded
ICT facilities, laboratories, and R & D equipment so that they
can translate their great ideas into great products.
Social Protection and Social Services
We want this government to be remembered as one that
proactively intervened to uplift the poor, rescue them from
desperation, and empower them to create greater prosperity
for themselves. Through the social protection programs and
social services in which this Budget invests, I believe that we
will transform the silent numbers of sustainable growth to
real and tangible benefits for the people.
Social Protection. Our goal is to improve the well-being of
poor families 'while promoting the rights of this vulnerable
sector. Thus, as we work to further expand the economy,
we
28

The President's Budget Message

will provide our poor with social safety nets that they can
depend on in order to prevent them from sliding deeper into
poverty.
Therefore, we will continue to sustain the Pantawid
Pamilyang Pilipino Program because nothing is more
effective than giving direct help to poor families, who, in
exchange for cash grants, commit to keep their children in
school and seek healthcare for their pregnant women.
Last year, we expanded the program to help children
beneficiaries finish high school because studies say that
those who complete their secondary education have better
chances of getting employed. We also covered homeless
families and indigenous people who would otherwise be
untargeted under our current household-based survey.
We will continue to support 4.4 million poor households
under the conditional cash transfer (CCT) program with an
allocation of P64.7 billion. The DSWD has committed that by
2015, about 50 percent or 2 million families under the CCT
program will be uplifted from survival to subsistence, and
another 6 percent or 300,000 families will transition from
subsistence to self-sufficiency.
While the budget for the CCT program was increased
marginally by 3 percent, we greatly increased our
investments for community-driven development and social
pensions for indigent senior citizens.
We believe our poor can overcome poverty when they are
empowered. Therefore, this Budget will fund projects that
29

The President's Budget Message

people themselves will identify as solutions to their pressing

concerns. For instance, through a P17.5-billion proposed
allocation for the KALAH1-CIDDS National CommunityDriven Development Project, we will support 6,735
community projects that will cater to 1.5 million poor
households.
As we help our poor build their communities, we will provide
them with opportunities to earn a steady stream of income.
By funding our Sustainable Livelihood Program a sum of
P4.9 billion, which is 102.7 percent higher than this year's
allocation, we will support poor families in building their own
micro-enterprises or in obtaining training to facilitate their
employment.
We acknowledge our poor senior citizens, who toiled during
their younger years, for their contribution in building this
country. They, too, must have equal access to a better life. A
total of 739,609 indigent senior citizens will get a monthly
pension of P500, which will be implemented through the
DSWD with an allocation of P4.8 billion, which is 53.2
percent higher than the current year's budget.
Education. Our promise to achieve rapid and high economic
growth is likewise based on transforming our country to a
nation of highly-skilled workers. We know where to start
future workers will receive quality education now.
I believe that good education is the best investment in the
future of a child and of a nation. Our solution is the K to 12
Education Program because we know that children who get
early education have better chances of completing their
30

The President's Budget Message

primary education and that those who finish high school are
better prepared to take on jobs of the 21st century economy.
With this Program, we have adopted the international
standard for primary education.
The K to 12 Education Program provides our children, the
best possible education, and we have achieved important
milestones early in its implementation. We have completed
the curriculum guides. We have trained our Grades 3 and 9
public school teachers. We have begun the licensing process
for private schools, and we are in the process of identifying
possible Senior High School implementers.
To support the implementation of the K to 12 Education
Program, 39,066 more teachers will be hired, and 31,728
classrooms will be constructed in 2015. These
augmentations will address the backlogs in critical inputs
that are anticipated from an increase in student population
as well as from the requirement of incoming senior high
school enrolment. Additionally, we will provide our students
with quality textbooks and well-equipped laboratories and
classrooms. We will fine-tune our curriculum and connect
our schools to the Internet so that early on, our basic
education program will fit the needs of local industries and
global markets.
Thus, with a budget allocation of P364.9 billion for 2015, the
Department of Education will make sure all of our children
will be in kindergarten, 98 in every 100 will be enrolled in
elementary, and 70 in every 100 will attend high school. By
2015, we want the Grade 10 achievement rate to increase to
62 percent. We want to see that the percentage of
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The President's Budget Message

alternative learning system completers who pass the

Accreditation and Equivalence test will increase by 2
percent.
While a good education system builds the skills of our future
workers, a good healthcare system builds their stamina to go
through the daily grind of fuelling our economy.
Universal Healthcare. I have seen how a broken
healthcare system affects our people. Most of them pay for
their own treatment because they have no adequate health
insurance coverage. Most of them have not seen a medical
professional in their entire life because there are no health
facilities in their communities. Due to lack of proper health
care, mothers have died due to absence of prenatal and
postnatal care, and children, too, even before entering
school.
Our health care system was in this state when we were
vigorously demanding for reform in our sin tax law and our
reproductive health system. With your help in Congress and
with our determination, the reproductive health bill was
passed, and the sin tax reform law continues to generate
additional revenuesmuch more than the projected
allowing us to provide adequate and better preventive
health services, protect our people from diseases, and most
importantly, provide them with financial protection.
In 2015, we will cover more than 15.4 million indigents under
our PhilHealth to significantly reduce out-of-pocket health
expenses of Our poor. My administration will sustain the 100percent coverage rate of indigent families identified through
32

The President's Budget Message

the National
Reduction.

Housing

Targeting

Survey for

Poverty

With a P13.1-billion allocation for Health Facilities

Enhancement Program, we will upgrade 1,242 barangay
health stations, 587 rural health units/city health centers,
128 LGU hospitals, 19 DOH hospitals, and 11 treatment
and rehabilitation centers. As we build better facilities, we
will likewise provide more healthcare providers on the
ground by deploying additional 398 doctors, 480 dentists,
12,540 nurses, and 5,749 midwives.
At the end of day, we are hiring more health workers and
building better facilities, because we want to prevent our
people from getting sick and from paying for more costly
treatment and cure.
Along with providing better facilities and more healthcare
providers, the Department of Health will ensure that 95 in
every 100 of children get full immunization and that 8 in
every 10 of pregnant women deliver in health facilities. With
a P3.3 billion allocation, we will immunize 2.2 million children
and provide pneumococcal vaccines to 1.4 million senior
citizens and 429,000 infants. We allocated P3.3 billion to
implement the Reproductive Health Law, especially in
providing vitamin A supplements for children below 5 years
old and making available family planning commodities to
women as well as services to local government units.
Socialized Housing. The 2015 Budget supports our
commitment to enable poor Filipinos to own safe and
affordable homes. We allotted a total of P7.3 billion for the
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The President's Budget Message

Socialized Housing and Finance Corporation and the

National Housing Authority (NHA) to be able to relocate at
least 15,862 families in danger zones to safer areas.
Likewise, we set aside P736 million for the NHA to provide
emergency housing assistance to 26,426 victims of
Typhoon Yolanda.
The resettlement program for informal settlers will continue
with the P577 million provided to the NHA. This budget will
enable the agency to relocate 7,215 families, which is more
than twice the 3,089 families targeted this year, to better
communities. We will continue the successful Community
Mortgage Program with a P1 billion proposed allocation to
assist 16,500 families in acquiring their own lots and houses.
Climate Change Adaptation and Mitigation
None of our efforts to create more opportunities for our
people to uplift their lives will matter unless we protect them
from the harm that may be caused by natural disasters.
Recent calamities have shown us how easily devastation
can put people back in poverty. While we cannot stop
another Yolanda from hitting our shores, together, we can
fight the threats natural calamities pose to our country and
our people.
Kalikasan, katatagan, kaunlaran, ating isusulong!
Build Back Better. Being a disaster-prone country with
resource constraints, we cannot afford to be snared in the
'vicious cycle of destruction and reconstruction.' Hence, we
will build resilient communities in safe zones where the most
34

The President's Budget Message

vulnerable can be better protected from the onslaught of

disasters and calamitiesboth natural and man-made.
With a P20.5-billion budget in 2015 under various funds 4 to
enable quick, if not immediate, response, we will battle
calamities and disasters by taking the reconstruction of
affected areas a notch higher. Through our "Build Back
Better" policy, we will consider enhanced designs and
standards in reconstruction to ensure the survivability of
infrastructure as well as the safety of location.
Risk Resiliency Program. To build our country's risk
resilience, we will focus our efforts on strengthening the
country's natural ecosystems and on building the adaptive
capacity of communities, consistent with our National Action
Agendas for Climate Change.
We will intensify the National Greening Program with a
proposed budget of P7.0 billion. Since 2011, we have
greened more than 1.1 million hectares of land and planted
about 800 million seedlings. Our revitalized environment,
especially our forests, will be our shield during typhoons and
droughts. A greener ecosystem will help sustain the
watersheds of our major river basins and battle the global
warming phenomenon and other geohazards. Moreover,
projects to protect environmental integrity will get a boost
through the Air and Water Quality Programs: P139 million to

National Disaster Risk Reduction Management Fund (formerly Calamity

Fund, P13 billion net of the People's Survival Fund that will finance
climate change adaptation programs and projects at the local level);
Quick Response Funds under 8 departments and agencies (P6.5 billion);
and Rehabilitation and Reconstruction Fund (P1.0 billion)
4

35

The President's Budget Message

ensure cleaner air; P99 million for waterways, of which P6

million is allocated for Adopt-an-Estero Program.
Enabling the adaptive capacities of local communities,
particularly in areas most vulnerable to shocks and
disasters, is another preventive strategy we will employ in
dealing with climate change and disasters. To do this, we
apportioned P45.1 billion for flood control, lodged under the
budget of the DPWH (P44.8 billion) and the MMDA (P281
million) to ease, if not prevent, the destructive effects of
flooding.
Additionally, we will bolster the country's early warning
systems with state-of-the-art technology to ensure that
communities are cautioned when disasters strike.
We will complement the formulation and implementation of
our Risk Resiliency Program as we initiate the tagging of
climate change expenditures in the 2015 Budget. This
initiative will ensure that our climate actions are not only
backed up by funds but also monitored effectively.
Enabling Environment for Inclusive Development
Finally, we will nurture an environment that enables inclusive
developmentan environment of social stability. We look
forward to the day when communities will no longer be left
vulnerable to the vagaries of violence, when small
entrepreneurs will no longer be stifled by predatory interests,
or when taxpayers will no longer be shortchanged by
syndicates who pillage the nation's coffers. The rule of law
will prevail when government exists only to protect the
36

PNOYO 15023

The President's Budget Message

people's interests and not the interests of the few and

powerful.
This proposed Budget for 2015 bolsters our efforts to build a
government worthy of the people's trust, one that is credible
enough in its agenda for peace and in its struggle to reform
public institutions.
Just and Lasting Peace. We believe that the way to
inclusive development includes an important processthe
settlement of internal conflicts through peaceful means. We
will continue to address the lack of social and economic
services in conflict-affected communities. We will intensify
the presence of the government in these areas by nurturing
the economic potential of these places where violence and
distrust previously thrived.
The signing of the Comprehensive Agreement on the
Bangsamoro (CAB) with the Moro Islamic Liberation Front
on March 27, 2014 was a landmark achievement. The
government anticipates the next major milestone in the
peace processthe passage of the Bangsamoro Basic Law
(BBL) by the end of the year.
In anticipation of the enactment of the BBL, a total proposed
budget of P2.7 billion, to be lodged in various agencies 5, is
being set aside to implement the law, which will include the
disarming of combatants, the conversion of bases into
productive economic hubs, among other interventions
agreed upon in the peace treaty. The regions that will be

DSWD, DA, TESDA, DepEd, PHIC, CHED)

37

111111111111111'1111111111111111111111111111111111111lI11111
PNOYO 15024

The President's Budget Message

covered by the BBL have a potential to become a new point

of economic interest. These interventions, which will be
undertaken through this law, will allow the people in the
region to create the road toward their own prosperity.
What we achieved in the signing of the CAB would serve as
an inspiration in continuing to push for the peaceful
settlements of other internal conflicts, as well as in
implementing social and economic interventions, such as
the Payapa and Masaganang Pamayanan (PAMANA)
program that was allocated P7.3 billion for 2015 .
Good
Governance.
Our work toward inclusive
development is anchored on a transparent and accountable
administration. We saw the plea of our people with the
recent turn of events. They heightened their challenge for
good governance and call for anti-corruption. The Aquino
Administration
responded
with
transparency
and
accountability.
Through the Department of Budget and Management
(DBM), the Department of Finance (DoF), with the Bureau
of Treasury (Btr) and the Commission on Audit (COA), this
Administration
established
the
Public
Financial
Management (PFM) Reform Program to create a
transparent, accountable, and efficient government financial
system. Government financial systems will be harmonized
for efficient financial reporting, thus lessening the incidence
of corruption and making each government agency
accountable for their financials.

38

The President's Budget Message

In implementing the PFM, we adopted the Unified Account

Code Structure, which created a common classification
system for budget and accounting transactions, allowing the
more efficient tracking of government transactions from
proposal to auditing. We likewise implemented the Treasury
Single AccoLint, which enabled the government to save
P437.8 million as of end-2013, by closing 266 dormant
government bank accounts.
The programs implemented through the PFM Reform
Roadmap are prerequisites of the Government Integrated
Financial Management Information System (GIFMIS), which
will create an automated processing system and a
centralized database for government financial management.
Our goal is to be able to use the GIFMIS in 2015 to craft the
proposed Budget for 2016.

1111111111111I!IIl111111111111111111II111111111il!III

39
P N P Y 0 1 5 0 2 6

The President's Budget Message

PAGGUGOL NA MATUWID: KAUNLARAN PARA SA LAHAT

My fellow public servants, as you examine each budgetary

item and committed result contained in this proposed Budget
for fiscal year 2015, I invite you to commit with me to the
long-term prosperity of our country and our people.
Let us remember the pains our people suffered through the
decadesa progress that they can only see but not own; an
unending cycle of promise and disappointment; a seemingly
permanent state of insecurity, scarcity, and despair. They
endured all these because of governments and leaders who
only concerned themselves with short-term gratification and
a myopic desire to hold onto power.
We have pledged, when we were installed to power, to be
the opposite, to use our power only for the sake of those
who vested this power unto usthe Filipino people.
Our people long to break free from the cycles of boom and
bust, from uncertainty and vulnerability, from the shackles of
poverty, inequality, and lack of opportunity. We, as public
servants, are accountable to them.
We will be held
accountable for how we are able to finally free them from
hopelessness and empower them to define their own
destiny. Only a government that exists for their sake and by
their will can make this possible.
Pananagutan natin sa taumbayan ang pagsiguro na kalahok
ang bawat isa sa kanila, lalo na ang mga kababayan nating
kapos-palad, sa patuloy na pagsulong ng ating bansa tango
sa higit na kaunlaran. Pananagutan natin bilang isang
40

The President's Budget Message

pamahalaan na gawin ang lahat ng nasa ating

kapangyarihan upang maibigay sa ating mga Boss ang
makabuluhan at pangmatagalang kasaganaan.
Now more than ever, our collective effort to establish a
proactive and reformist government will give our people the
great and unique chance to irreversibly change their
fortunes. Our people are now beginning to reap the gains of
our refusal to merely coast along, of our doggedness in
disrupting the status quo.
Ladies and gentlemen of the 16 th Congress, as we all
commit to establishing a legacy of inclusive and sustainable
development, I hereby ask you to peruse, scrutinize, and
eventually approve this proposed Budget for fiscal year
2015.
In the spirit of People Power,

BENIGN S. AQ INO III

President of the Philippines

41