Gov’t revenues projected to reach P3.73T in 2023

Maharlika Fund won’t have negative impact on 2024 nat’l budget: Diokno

The proposed Maharlika Investment Fund (MIF) will not have a negative impact on next year’s national budget, Finance Secretary Benjamin Diokno said Friday.

Asked if the MIF has already been factored into the estimated P5.768-trillion national budget for next year, Diokno said, “There will be no negative impact on the budget.”

Earlier, Diokno said the MIF is expected to be operational before the end of the year, as he expressed optimism that the MIF bill, after being approved by Congress last week, will be signed into law by President Ferdinand Marcos Jr. before he delivers his second State of the Nation Address on July 24.

“The only contribution of the NG (national government) here will be initially the P50 billion that will come from BSP (Bangko Sentral ng Pilipinas). These are dividends, declared dividends by the BSP for the national government for the next two years. After that there will be no more contribution from the BSP,” Diokno said at a press briefing following the 185th Development Budget Coordination Committee Meeting.

The MIF bill states that the Maharlika Fund would be created using:

* P50 billion from the Land Bank of the Philippines (LBP)

* P25 billion from the Development Bank of the Philippines (DBP)

* P50 billion from the national government

The contribution from the national government would come from the following sources:

* Bangko Sentral ng Pilipinas’ total declared dividends

* National government’s share of the income of PAGCOR

* Properties, real and personal identified by the DOF-Privatization and Management Office

President Ferdinand R. Marcos Jr .’s economic managers on Friday estimated government revenues to reach PHP3.73 trillion in 2023 and PHP6.62 trillion in 2028.

* Other sources such as royalties and/or special assessments

“The contribution of Landbank is P50 billion and DBP is [P25 billion] … these are very small relative to their investible funds,” Diokno said, noting that the contributions of state-owned banks to the MIF are “only 3% of their total investible funds.”

“Why is it smart for them to invest in the Maharlika fund? Because right now they are investing in low returns. In fact, the 10-year ROI (return on investment) of Landbank is 4.23%, this is a combination of where they put their money, and for DBP it’s less than 4%,” the Finance chief said.

“But there’s a possibility that if they invest their money in Maharlika it could earn as much as 8.64%,” he added.

The Bureau of the Treasury and the Department of Budget and Management have said that the MIF will free up the government’s fiscal space as the burden of borrowing to fund infrastructure projects will be unloaded on the sovereign wealth fund.

The national government operates on a fiscal deficit—meaning state spending exceeds its income— which compels it to borrow from both domestic and foreign sources to plug the shortfall.

“I think it [Maharlika] will have a positive impact. If this succeeds, as I said, what is in the budget is around 5-6% [of GDP] spending for infrastructure. If our desire for public-private partnerships and Maharlika succeed, I think we can possibly look at around 10-12% infrastructure as a percent of GDP because we have already identified something like 194 projects,” Diokno said.

The latest projection was higher than last year’s forecast that revenues for 2023 and 2028 would be PHP3.63 trillion and PHP6.59 trillion, respectively.

“This is reflected in our strong fiscal performance for the first four months of the year with actual revenues inching up to PHP1.26 trillion, higher by 11.2 percent due to improved tax administration,” Budget Secretary Amenah Pangandaman said in a briefing held after the 185th meeting of the inter-agency Development Budget Coordination Committee (DBCC).

“This is projected to reach PHP3.729 trillion by the end of the year and further rise to PHP6.622 trillion in 2028 through the implementation of revenue-generating measures over the medium term,” she added.

The economic team also revised the revenue assumption for 2024 (PHP4.20 trillion from PHP4.06 trillion, 2025 (PHP4.69 trillion from PHP4.58 trillion), 2026 (PHP5.26 trillion from PHP5.16 trillion), and 2027 (PHP5.90 trillion from PHP5.82 trillion).

Pangandaman, chair of DBCC, said disbursements will remain above 20 percent of the gross domestic product over the entire plan period, with priority given to infra- structure and socio-economic development.

While it was retained to over 20 percent, disbursement was adjusted to PHP5.23 trillion from PHP5.09 trillion for 2023, PHP5.56 trillion from PHP5.40 trillion for 2024, PHP5.89 trillion from PHP5.76 trillion for 2025, PHP6.37 trillion from PHP6. 25 trillion for 2026, PHP7.02 trillion from PHP6.92 trillion for 2027, and PHP7.77 trillion from PHP7.71 trillion for 2028.

Pangandaman said deficit is also targeted to gradually reach pre-pandemic levels of 3 percent of GDP in 2028 from this year ’s 6.1 percent.

“The DBCC maintains its commitment to ensuring sound fiscal management guided by the Medium-Term Fiscal Framework,” she said.