THE House of Representatives on Monday adopted a resolution institutionalizing the 2022-2028 Medium-Term Fiscal Framework (MTFF) of the national government to maximize the government’s fiscal resources.
During the plenary sponsorships of the House Concurrent Resolution 2, House Committee on Ways and Means Chairman Joey Sarte Salceda and House Committee on Appropriations Vice Chairperson Stella Luz Quimbo both agreed that the framework is important to attain short-term macrofiscal stability while remaining supportive of the economic recovery and to promote medium-term fiscal sustainability.
The resolution mandates the adoption of a whole-of-nation approach to align all economic recovery programs and measures of the national government with the legislative priorities.
The resolution said the legislative agenda shall be guided by targets set in the 2022-2028 Medium-Term Fiscal Framework as follows: 6.5 percent to 7.5 percent real GDP growth in 2022; 6.5 percent to 8 percent real GDP growth annually between 2023 and 2028.
It also targets to reduce the poverty rate to single-digit poverty rate or by 9 percent by 2028.
It seeks to cut the deficit-to-GDP ratio from the current 6.4 percent to 3.0 percent by 2028; bring down the country’s debt-to-GDP ratio from 63.5 percent as of the first quarter of 2022 to less than 60 percent by 2025 and at least $4,256 gross national income per capita to attain upper middle-income status.
The resolution was authored by Speaker Martin Romualdez, Majority Leader Manuel Dalipe and Minority Leader Marcelino Libanan. The bill was strongly supported by the Department of Finance.
Once adopted, the MTFF will serve as an anchor for the annual spending and financing plan of the national government and Congress when preparing the annual budget and undertaking related appropriation activities.
Earlier, Finance Secretary Benjamin Diokno said the economic team is committed to implementing a MTFF, which will serve as the administration’s blueprint to reduce fiscal deficit, promote fiscal sustainability, and enable robust economic growth.
Moreover, Salceda and Quimbo said the MTFF is needed to consolidate the national government’s resources so that these are mobilized and utilized in order to gain the maximum benefit and high multiplier effects for the economy.
Salceda said a medium-term budget framework, if applied rigorously, provides a very clear statement of the revenue and expenditure effects of maintaining current government policies, and a mechanism for controlling the introduction of new policies and tracking budget implementation beyond a single year.
He said it also provides a transparent basis for accountability of the executive branch, and a necessary foundation for more detailed results-oriented budgeting.
“The Medium-term Fiscal Framework is a larger, more bird’s eye perspective, taking into account how revenues and expenditures can be optimized so that these are mobilized and utilized in order to gain the maximum benefit and high multiplier effects for the economy,” said Salceda.
Also, Quimbo added the government needs to immediately address the rising prices of commodities as well as the scarring caused by the Covid-19 pandemic.
“In the medium term, we need to create high-quality as well as green jobs. We create such jobs by investing more in infrastructure, human capital development, and digitalization,” she said.
Quimbo said the MTFF allows the country to adopt global practices.
“We did this in the past, the only difference is that it [now] is written. For the first time they [economic managers] have called the numbers. With this piece of paper, everybody is on the same page. Nothing in the rules prevent us from doing this, more importantly we are adopting global practices,” she added.
“That is exactly the objective of the MTFF: in the short run, keep the macroeconomy stable and provide adequate social services; in the medium term, generate more jobs, quality jobs, green jobs,” Quimbo said.
Quimbo explained that the MTFF contains an 8-point Socioeconomic Agenda aimed towards immediate job creation and poverty reduction.
“While challenges remain, the prospects for economic recovery are good, and arguably, even better with a plan guided by a sound framework. To fully recover and to achieve high, sustainable, and inclusive growth, what we need is a comprehensive and concrete plan that maps out the policy direction for this government in the near future. Hence, the MTFF. The implementation of the MTFF ensures we will build back better from the pandemic,” said Quimbo.
“Again, this framework shall be the anchor of the 2023 budget, which the Executive Department is expected to submit to this body in less than a month. We in the Committee on Appropriations will work hard to ensure that the budget bills will help achieve the goals laid out in the framework,” she added.
Under the resolution, the proposed overall goal of the Marcos administration’s Medium-Term Fiscal Framework is to reinvigorate job creation and poverty reduction by steering the economy back to its high-growth path in the near term and sustain the high but inclusive and resilient growth all through 2028.
Also, the resolution said the medium-term growth targets and the assumptions regarding key macroeconomic variables underpin the medium-term fiscal plan.
The resolution said the framework also seeks to recognize the importance of a fiscal consolidation and resource mobilization plan, to include measures such as rightsizing of government structures and personnel, and encouraging localized investment and growth programs.
It also seeks to prioritize legislative measures that are consistent with the long-term socioeconomic vision as embodied in Ambisyon Natin 2040, as well as the 2022-2028 Medium-Term Fiscal Framework, for a prosperous society, consistent with the achievement of macroeconomic stability and inclusive economic development, while continuing to allocate resources for health, disaster risk management, food and social security, digital economy, local government support, private sector participation and growth-inducing expenditures.
According to Speaker Romualdez, the recent past and the Covid-19 pandemic have beset the macroeconomic environment with challenges and a series of external shocks; and inflation has accelerated in recent months due largely to significant increases in international prices of oil and key commodities.
“Still, the economic growth momentum remains firm as demonstrated by the strong 2022 first quarter gross domestic product [GDP] growth at 8.3 percent. However, the recovery process from the impact of the pandemic is still on-going amid elevated uncertainty in the international economic environment,” he added.
Under the resolution, the Medium-Term Fiscal Framework shall be subject to review and updating in three years, or in 2025, prior the 20th Congress, to reflect current economic conditions and
Act Teachers Rep. France Castro, meanwhile, described the MTFF as “ambitious and unrealistic.”
“The growth compared to the early stages of the Covid-19 pandemic does not tell that the Philippine economy can overcome the slowing growth recorded since 2017. The Marcos administration targets 6.5-8.0 percent GDP growth rate in 2023 to 2028. The low-end target [6.5 percent] is already 0.2 percent and 0.4 percent higher compared to the growth rate recorded in 2018 and 2019 [pre-pandemic], respectively. The high-end target [8 percent] is more unrealistic considering that the highest recorded GDP growth rate since 2000 is just 7.3 percent in 2010,” said Castro.
“Since 2018, the government has failed to reach its targeted GDP growth rate, both the high-end and low-end projections. For example, in 2018, the targeted GDP growth rate is 6.5 percent but we only achieved 6.2 percent. In 2019, we targeted between 6 percent and 6.5 percent, but we only achieved 5.9 percent. In 2021, we only beat the targeted GDP growth rate after numerous revisions during the year. If we base it on the earlier 2021 targets, we will also fail. Given these facts, how can the Marcos administration say that by the end of 2022, we will achieve its target given that since 2000, the high-end target of 8 percent growth rate has never been reached?” asked Castro.