Closing remarks of FLORENCIO ABAD, Secretary of the Department of Budget and Management (DBM) during the Philippine Economic Briefing held on September 17, 2013 at the Philippine International Convention Center. The Briefing brings together the country’s economic managers, members of the business community, investors, diplomatic corps, academe, media and other stakeholders on how to achieve investment grade status and make inclusive the robust performance of the Philippines as it emerges as Southeast Asia’s fastest-growing economy. This year, the theme is “INVESTMENT GRADE PHILIPPINES: SEIZING OPPORTUNITIES TO ACHIEVE INCLUSIVE GROWTH”.
SPEECH OF DBM SECRETARY FLORENCIO B. ABAD
PHILIPPINE ECONOMIC BRIEFING
Reception Hall, Philippine International Convention Center
17 August 2013
Our Historic Moment for Change
Colleagues, partners in the private sector, ladies and gentlemen, on behalf of the Philippine Government and the economic management team, I wish to thank you all for participating in this Philippine Economic Briefing. Let me close this briefing by speaking about a subject that is not economic but underlies our ability to set in place credible public institutions that are critical to promoting a stable, consistent and predictable economic environment.
For those of you who read the headlines today, clearly, our country faces another critical crossroad in its difficult yet determined and increasingly successful struggle to instill the values of good governance and integrity in public service. The current turn of events has led to a disruptive situation that can put our nation to the brink, or lead it to a much better place, depending on the path we choose to take in the face of an unprecedented outpouring of our people’s rightful outrage. The people have spoken: abolish the pork barrel and all that it symbolizes—greed, arbitrariness and abuse of power; and hold those who have abused it accountable to our people.
President Aquino has committed to fulfilling both. Yesterday, the government took two critical steps in this direction:
♦ First, the Department of Justice filed cases of plunder and malversation of public funds not only against Janet Napoles and her minions but also against those who have broken their oath to the people. This is the start of a legal battle that can be protracted, but the Administration will be unrelenting in its quest for justice on behalf of the people.
♦ Second, the House Committee on Appropriations has begun sponsorship of the General Appropriations Bill for 2014, with the pork barrel fund deleted from the Budget. The P25.2-billion PDAF has been stricken out of the proposed Budget for 2014, and realigned to regular programs of key social and economic service delivery departments, which have been given full discretion to utilize them for poverty reduction programs. Of course, this is just one step of the many towards the timely approval of the 2014 General Appropriations Act before this year ends.
We must recognize that the people’s outrage goes beyond pork barrel. Beneath their indignation is their deep desire for bold, meaningful and sustainable change: to reform public institutions, to ensure that public funds are used to uplift people’s lives especially the poor, and to make public officials—as well as those who deal with them—act with conscience, compassion, and a strong sense of social justice. These are also the reasons why President Aquino was elected in 2010: to end the people’s powerlessness over their government, over the economy and even over their own individual and collective welfare.
Unprecedented reforms in various arenas—especially in the management of public funds—have been going on since 2010. But with our people’s renewed sense of collective outrage and militancy, this has had the effect of hastening and further deepening the reforms that will come, not at this time, but down the road. Our people are standing up to express their deep stake in their country and are claiming their right to co-govern. This alone is a great opportunity that we must not let pass.
Raising the Daang Matuwid to a Higher Plane
We in the Aquino Administration believe that these developments, harnessed well, present to us a great opportunity to raise Daang Matuwid to a higher plane. Guided by the Aquino Social Contract, we are leveraging all possibilities to induce more transparency, promote greater accountability and establish wider mechanisms for citizens to own the reforms now transforming our society; and to vigorously sustain them.
The National Budget is a primary arena of battle for the Daang Matuwid. President Aquino acknowledges the utmost importance of the Budget in achieving his Social Contract. Thus, we are pursuing a budget reform agenda which seeks to ensure that government spends within its means, on the right priorities and with measurable results.
Our public expenditure management reform journey started as soon as President Aquino assumed office in 2010, when he directed the adoption of the Zero-Based Budgeting approach to plug leakages and weed out inefficient and ineffective public spending. ZBB was our entry point into a new realm of budgeting, which supplants the old regime of discretion, abuse and impunity, and which puts primacy to rebuilding and sustaining public trust.
We have followed through on this first salvo by introducing critical budget reforms to ensure that we spend within our means, on the right priorities and with measurable results. For instance:
♦ Starting with the 2011 General Appropriations Act, and with the support of Congress, we have introduced a new tradition of early enactment of the National Budget. This alone, simple as it sounds, has prevented a significant amount of inefficiency and discretion caused by the frequent re-enactment of the budget in the previous Administration.
♦ Towards making public institutions truly driven by performance, we have transformed the face of our National Budget through Performance-Informed Budgeting. Starting with the 2014 Budget currently being reviewed by Congress, government agencies’ committed performance targets and outcomes are clearly indicated in the Budget, so that the public can hold government agencies to account for their performance.
♦ To create wide and formal spaces for citizens—down to the grassroots—to participate in the budget process, we have introduced mechanisms such as Bottom-Up Budgeting, where P20 billion in local poverty reduction projects crafted by the poorest 1,226 cities and municipalities with the participation of their citizens were included in the proposed 2014 Budget.
The Aquino Administration is committed to see through it that the Philippine budget process has significantly transformed by the time the President steps down in 2016. Meanwhile, it is our fervent hope that the people’s deepened stake in the budget process and in governance will find sustained and constructive expression. Our success depends not only on government’s unwavering commitment, but more importantly on our citizen’s unfettered vigilance and active engagement.
Private Sector as Engine of Growth and Co-Advocate of Reform
We believe that only through bold and meaningful governance reform can sustained and inclusive economic growth be attained. A regime of good governance is a key platform underlying the new prosperity that we want for our country: one built on fairness, driven by industry, and that leaves no one behind.
In particular, through good governance, we can truly enable the private sector to perform its rightful role as the engine of economic growth. We continue to set the stage for the private sector’s growth through a fair, stable and predictable policy, regulatory, physical and political environment.
We are committed to providing the private sector a stable macroeconomic and fiscal platform. Our commitment is proven by the investment grade credit rating that we finally achieved this year.
♦ We continue to pursue reforms to improve our country’s competitiveness and ease of doing business. As earlier stated, the recent Global Competitiveness Index speaks volumes about our commitment: from 2010, we have leapfrogged by 26 places to 59th. We acknowledge that we still have much work to do, but we are certainly in the right direction in further increasing competitiveness in order to make our country more attractive to investments.
♦ Moreover, we are committed to further increase investments in the needed public goods, especially in infrastructure, to connect the farthest margins of our country to opportunity. We will increase the rate of public infrastructure spending from 2.3 percent of GDP this year to 3 percent next year, 4 percent in 2015 and to the benchmark 5 percent by 2016.
But aside from driving economic growth, the private sector performs another critical role in our society. The private sector has a deep stake in the state of governance, of social stability and of the economy, which affect the viability of your enterprises. Because of this, I have always believed that the private sector is a powerful driver of reform. In fact, it has demonstrated this in various moments of our history. However, it can only be a driver of reform if it chooses the straight path, and not “business as usual.”
As we in the government are leveraging the unique opportunity we now have to deepen and accelerate governance reforms, so should you in the private sector truly perform your crucial role as a co-advocate for reform.
♦ You might ask: how can you intensify your stake? Let’s take a simple step: on Thursday, the third Integrity Summit will be convened. Have your companies signed the Integrity Pledge? We acknowledge that so far, the Integrity Initiative has grown fast to 1,700 Integrity Pledge signatories in its first three years. That, however, is still a speck in the total corporate roll. In our count, only 47 of the BIR’s list of top 200 corporate taxpayers this year have signed the Integrity Pledge. With many of you desiring to take part in transformation, it should be easy to expand the Initiative to at least 2,000 in the immediate. I think Ramon del Rosario and Henry Schumacher are here with the sign-up forms.
♦ The private sector, by the way, is a key sector in the broader constituency for reform—composed also of civil society, the academe, communities and other sectors. A strong constituency for reform is necessary for the success of our governance reform agenda. It can provide strong, widespread and sustained political support and demand for reforms, such that the reversal of reforms in the future becomes politically and economically costly.
In these extraordinary times, we have a momentous opportunity to effect real, game-changing and irreversible change. We have a President truly committed to leaving a legacy of good governance and an empowered citizenry by the time he steps down in 2016. We have reform constituencies who have become more assertive in claiming their right to co-govern this country. We have a nation which has found new hope, which has demonstrated its potential for prosperity, and which is now shining brightly in the world.
Thank you and good morning.