Message

of
His Excellency BENIGNO S. AQUINO III
President of the Philippines
to
The Fifteenth Congress of the Philippines
on
The Budget for 2011
[August 24, 2010]
Ladies and Gentlemen of the 15th Congress of the Philippines:

Through the President of the Senate and the Speaker of the House
of Representatives, I have the honor to submit for your
consideration the proposed budget for 2011.

This is the first financial blueprint of my Administration. It has been

formulated to turn our vision for social reform into a tangible reality
for our fellow citizens.

The Filipino people have placed on our shoulders the responsibility

to make their government more responsive to their needs, to
reduce poverty and eliminate waste. With the help of Congress, we
can harness the restored confidence in our country as a result of
this year’s national elections. We have a new mandate from our
people. It is now incumbent on all of us to live up to that mandate.

When I accepted our people’s call for me to run for office, I pointed
out that the presidency is about the efficient allocation of resources.
The call of our times is for reform: to make this possible, we are
submitting a budget and corresponding resources to the programs
and policies that make real the changes we need to revitalize our
economy, while leaving no sector behind.

A CALL FOR GENUINE CHANGE

The P1.645 trillion National Budget we are proposing for Fiscal Year
2011 will be our vehicle to pursue these necessary changes.

Despite the meager increase of 6.8 percent from this year’s

appropriations, the proposed budget will nevertheless bring forth
vital outcomes that will make a difference in the lives of our fellow
Filipinos.

The 2011 National Budget focuses funds where they are most
needed and where these will yield the most benefits. We have
redesigned the budget to ensure that every centavo will be put to
good use. We are seeking new appropriations of P1.0 trillion,
inclusive of P66.9 billion of unprogrammed Appropriations.

At the opening of the present session, I said in my State of the

Nation Address that the budget will accurately identify problems
and will give attention to the right solutions.

We reviewed the crucial programs and projects of major

departments aided by the results of empirical studies, observations
from the field, and reports from the Commission on Audit (COA).

We arrived at priorities, with the concurrence of my Cabinet, to

address critical gaps in social services for the poorest segments of
our population.

We made some bold decisions to correct glaring inefficiencies,

terminated programs that no longer delivered their intended
outcomes, and reduced funding for programs that require redesign.

We fleshed out the use of lump sum funds for greater transparency,
and buckled down to working on implementing necessary reforms.
All of this was done to uplift the lives of our countrymen who are in
the direst need of government’s compassion and support – the
poor, the disadvantaged, the marginalized.

This is a Reform Budget.

To maximize the efficient use of our scarce resources, we are

proposing, along with this budget, more stringent measures to be
observed in the release of funds. Our goal is to curb inefficiencies
and corruption in the disbursement and utilization of public funds.

I ask Congress, as you proceed to scrutinize the details of this

proposed budget, to also take a thorough look at its proposed new
special provisions. They are meant to ensure that the budget will be
used effectively for its intended purposes.

For instance, a special provision is proposed requiring the

Department of Agriculture’s (DA) farm-to-market roads (FMRs), for
construction by the Department of Public Works and Highways
(DPWH) to be based on a network plan. The plan shall be supported
by a construction design submitted by the DA.

We cannot allow inefficiency or corruption to dissipate the limited

funds at our disposal. We need every centavo that we can generate
to address the many problems that beset our country.

I therefore appeal to the ladies and gentlemen of both chambers of

Congress, to join me in putting an end to the wanton waste of our
people’s money. By enacting this Reform Budget of 2011, you will
not only put your imprimatur on our people’s clamor for genuine
change, you will be a mighty ally in instituting reforms.

It is time that we listen to what our people have to say. In our

government, responsibility and response-ability must be
synonymous. In recent years, there has been increased cooperation
between the citizenry and the executive and legislative
departments, in the budgetary process. The good will, cooperation,
and mutual respect demonstrated by these efforts should be taken
a step further.

We need the help as well of civil society, the media, the academe,
public servants and private individuals, to track government
expenditures. I believe that the responsibility to check where the
funds go and how these are spent should not be left to the COA
alone. We are all tasked with looking after the public welfare, and
this includes prudence and accountability in the allocation and
spending of public funds.

Under the concept of responsible budgeting, it is possible to

accomplish key programs that will have a significant impact even on
a smaller budget.

THE BUDGET AS A TOOL FOR SOCIAL REFORM

Corruption and poverty have hounded us and continue to hound us
to this day.

Corruption, based on the estimate of Transparency International,

consumes 20 percent of the country’s budget. These are funds that
could have been used to build quality classrooms and hospitals,
good roads and bridges, or provide more livelihood programs.

In 2011, the budget has been calibrated to target the most

problematic areas. It has been focused to where it will have the
greatest impact on society.

When funds are limited, it is channeled where support is needed

most. Funds, if spread too thinly, cannot yield dramatic results.

Allow me to share with you the ideals and strategies behind our
blueprint for change and social reform.
The 2011 Budget Philosophy
The budget proposal that we are submitting mirrors my
Administration’s commitment to lift the nation from poverty through
honest and effective governance.

In the face of many competing demands for the government to take

on specific tasks, and given the tight finances, we had to focus on
the core responsibilities of government.

We anchored the crafting of this proposed budget on certain basic

principles that we believe will effect the changes our people expect.

Transparency and accountability. Transparency and

accountability are the twin pillars of good governance. They make
public services – and government itself – more productive.
We will use transparency and accountability as strategies to combat
corruption, as tools to achieve better public financial management.

These are the keys to generating confidence in government and

regaining the people’s trust in it. These essentials of good
governance will also encourage domestic and foreign investments.

Transparency complements accountability. It is easier to hold

government and its officials accountable for the use of public funds
if there are sufficient, understandable, and accessible data on which
the public can assess official performance.

Hence, under the proposed provisions for the execution of the 2011
budget, we will require implementing agencies to publish on their
respective websites the status of project implementation and fund
utilization. In the case, for example,of the Department of
Education’s Government Assistance to Students and Teachers in
Private Education (GASTPE), the names of beneficiaries/scholars
and participating private schools will be posted on the Education
department’s website.
For the 2011 budget, I have tasked the Department of Budget and
Management (DBM) to gradually transfer some lump-sum
budgetary items under the Special Purpose Funds, such as the
pension of the retired military personnel, and the Premium Subsidy
to Indigents, to the Departments of National Defense and Health,
respectively. As the lead agencies of these showcase programs,
they are responsible, therefore accountable, for the use of these
funds.

I also ordered the DBM to ensure transparency in budget processes

through an open information system and information flow by
posting all lump sum disbursements, such as those of the Priority
Development Assistance Fund (PDAF), the Calamity Fund, the
DepEd School Building Fund/Educational Facilities Fund, and the
Internal Revenue Allotment, on its website.

By posting data on releases, beneficiaries and the status of project

implementation, the public can easily monitor where and how their
taxes are spent. The PDAF will centralize all allocations for members
of the Legislature under this fund. It will now include the
infrastructure projects to be constructed by the Department of
Public Works and Highways (DPWH).

It is not enough, however, that pertinent budget-related

information be posted on websites; it is equally important for the
public to be able to understand the data being posted.

Greater public access to this information will be particularly helpful

to Civil Society Organizations (CSOs) who are at the forefront in
monitoring the budget. It will help them analyze the budget and
understand the ramifications of its provisions better.

We see CSOs as our partners in ensuring accountability and

transparency in public expenditures. There is an immediate need to
define and institutionalize mechanisms for their effective
participation in the planning and budgeting processes.

Bias for the poor and the vulnerable. The resources we allocate
to address the needs of the poor and the vulnerable must increase.
Studies have shown how our country’s per capita growth rates have
lagged behind those of our neighbors and how slow our methods on
poverty reduction have been.
We have increased the budget for social services to mitigate critical
gaps in education, health, social welfare, and housing to ensure
that those who have little or none at all will be provided greater
means to have a fighting chance to build a better future.

We have designed subsidy programs so that that they reach those

who need them most. We have the National Household Targeting
System (NHTS) of the Department of Social Welfare and
Development (DSWD) to identify and locate the 4.6 million
households in the country who are poor. We will use this as our
central database of our nation’s poor so that direct subsidies for
them – DSWD’s conditional cash transfer and rice subsidy, DA’s
farm input subsidies, Philippine Health Insurance Corporation
(PHIC) health insurance for indigents – can converge for maximum
impact.

We will generate jobs for the poor to uplift their living standards
and improve their economic standing.

And, here, lies one of the differences in our current commitment to

transform ourselves, our country and people.

From a government that spouts economic growth statistics that the

ordinary citizen barely understands, this government – my
Administration – will prioritize jobs that empower the people, not
just to put food on the table but to provide them with opportunities
to rise above poverty.
Fiscal responsibility. In my State of the Nation Address, I
mentioned that my Administration will push for the passage of the
Fiscal Responsibility Bill.
With the Fiscal Responsibility Bill, we intend to reach an agreement
with Congress to reduce the country’s debt to sustainable levels. Its
enactment into law, coupled with prudent spending and a better tax
effort, will help us contain the budget deficit to 2.0 percent of GDP
by 2013. At present, the deficit stands at 3.9 percent of GDP.

We will ask Congress not to pass appropriations measures or

revenue-eroding bills without identifying sources of funding or
offsetting expenditure cuts. By instilling discipline in the enactment
of new appropriations and revenue-eroding bills, Congress will not
only prevent the accumulation of unfunded laws, which at present
already involve the staggering amount of P104.0 billion, but will
also prevent the depletion of the budget. We will be promoting
responsive legislation in this manner, too.

It is easy to file – and pass – spending bills, especially those

earmarked for populist purposes. However, while such bills garner
positive public opinion, in the long run they erode the fiscal
situation of the state, and public confidence in government.

What use is a law if it is not put into effect because of a lack of

funding?

Public–private partnerships. With so many needs to fill, we are

constrained to find new and creative approaches to making ends
meet.
We have found the answer.

Public–Private Partnerships (PPPs) are an innovative way to address

our long-standing lack of funds.
We cannot rely on public funds alone to spur the country’s growth.
We need additional investments from our partners in the private
sector. As so many others before us have found and as many others
after us must discover for themselves, “working together works.”

Helen Keller was right: “Alone we can do so little; together we can

do so much.”

We are, therefore, eyeing more PPP engagements, particularly in

infrastructure where investments will yield a multiplier effect. In
2011, the Department of Transportation and Communications
(DOTC) will conduct feasibility studies on public-private partnership
for its light rail and airport projects as well as for its urban transport
program for highly urbanized cities. The DPWH will also do this for
roads and flood control projects.

The responsible use of the PPP as a method of funding traditional

public works and public services projects will reduce contingent
liabilities of government. Providing funds under the DOTC and
DPWH budgets as well as in the budget of the National Economic
and Development Authority (NEDA) for undertaking feasibility
studies on potential PPP projects will strengthen project
development.

Despite only a slight increase in the 2011 budget from the 2010
level, we are confident that we will achieve our 7-8 percent growth
target for next year. But Public-Private Partnerships must play an
active role in stimulating the economy.

Zero-based budgeting. The bedrock principle of this budget is

that the taxes paid by the people will be spent for the people.
Upon assuming office, I directed the DBM and all departments to
evaluate existing government programs and projects and see if the
program objectives/outcomes are being achieved.
This is the essence of the zero-based budgeting approach which we
applied both for the remainder of the 2010 and in formulating the
2011 budget – to ascertain the continued relevance of ongoing
programs, prioritize key projects, and justify the need for funding,
i.e., that programs/projects have an impact on the welfare of the
people and the economy – as opposed to the traditional practice of
incremental budgeting which relies on automatic increases or
augmenting the previous budget.

Programs and projects that did not perform well over the years and
that proved prone to leakages, based on COA reports and other
studies, were overhauled or redesigned.

We cannot continue with business as usual. We needed to evaluate

not just whether the right things were being done but, equally
important, whether these were being done right.

As a result of the zero-based approach, we terminated and cut

programs, such as the Department of Education’s Food for School
Program, which can be better administered by the DSWD by means
of the proper targeting and identification of beneficiaries; the
Department of Agriculture’s Input Subsidies, which we found
benefitted the rich instead of the poor; and the Kalayaan Barangay
Program, which no longer delivered its intended outcomes.

In the case of such programs as the Department of Education’s

Textbooks, Teacher Deployment and School Building Construction,
and the Technical Education and Skills Development Authority
(TESDA) Training for Work Scholarship, we had to resort to a
conditional release of funds pending resolution of bottlenecks in
project identification and implementation, and program
improvements.

Savings generated from these cuts/reductions were channeled to

existing programs that are performing well, such as the DSWD’s
Conditional Cash Transfer program, the DepEd’s scholarship
program (Educational Service Contracting), and the National Health
Insurance Program (NHIP).

These programs have, in fact, been expanded to address the critical

gaps in social services, particularly in the areas of education and
health. The NHIP, for instance, could, and should, include
preventive healthcare insurance under its coverage.

We have likewise rationalized spending of governmentowned and/or

controlled corporations, such as the National Food Authority (NFA),
to stop the bleeding of government funds due to inefficiencies.

The “buy high/store long/sell low” policy of the NFA for local and
imported rice has resulted in huge financial losses for the state.
Since 2003, the NFA has been the top subsidized GOCC of the NG to
partially cover its losses from trading,and to fund the rice import
tariff.

To rectify the situation, we shall undertake several reforms –

reduce rice importation, limit the selling of low-priced rice to the
poorest of the poor, and push for a Congressional amendment of
the NFA Charter to make possible the separation of its proprietary
function from its regulatory and buffer-stocking functions.

With zero-based budgeting, we can be assured that we are putting

the people’s money to where it ought to be.

The 2011 Budget at a Glance

At P1.645 trillion, our proposed budget for next year is 6.8 percent
higher than the 2010 budget of P1.540 trillion. It represents 18.2
percent of the country’s Gross Domestic Product (GDP), a bit lower
than the 18.5 percent share of the budget this year, indicating a
smaller but more efficient government.
This is a prudent level that is intended to bring the deficit down to
P290.0 billion, or 3.2 percent of GDP. This will be lower than the
budget deficits in 2009 and 2010 of P298.5 billion and P325.0
billion, respectively. The proposed budget assumes revenues of
P1.41 trillion, or 15.6 percent of GDP in 2011, and disbursements of
P1.70 trillion, or 18.8 percent of GDP, lower than the 19.5 percent
this year.

By expense class, current operating expenditures will grow by 8.3

percent from P1.32 trillion in 2010 to P1.43 trillion in 2011, due to
the salary adjustments for the 2nd and 3rd tranche implementation
of SSL 3 and the increased spending on social services, particularly
on education and health, and the expanded coverage of conditional
cash transfers.
Capital outlays, however, will decrease by 5.7 percent from this
year’s P224.4 billion to P211.6 billion taking into consideration the
P41.0 billion Congressional Initiatives incorporated into this year’s
budget. The decrease in outlays can be tempered and can be
mitigated by our efforts to attract greater public-private
partnerships and improve the implementation of government capital
projects.

Allocations to Local Government Units (LGUs) will increase to

P300.0 billion, slightly higher than the P297.5 billion allocated in
2010. The increase is due to the bigger share of LGUs from internal
revenue taxes in 2011.
On the other hand, allocations to GOCCs, in terms of equity and
subsidy contribution and net lending, will decrease by 40.7 percent,
from P39.3 billion in 2010 to P23.3 billion in 2011, in view of the
need to rethink government support of questionable GOCC
programs, particularly those implemented by such agencies as the
NFA, Light Rail Transit Authority (LRTA), Metro Rail Transit
Corporation (MRTC), and other GOCCs whose programs/projects
are still under evaluation. Reforms in this sector are at hand.
I said this in my State of the Nation Address and I will say it again:
we will protect the welfare of our people and look after the interest
of the majority.

Consistent with our bias for the poor, the social services sector will
be our top priority. It will get a significant portion of the budget,
some P560.8 billion or 34.1 percent of the total.

The economic services sector comes next with P361.1 billion, 22.0
percent of the total budget. It is followed by our debt burden, with
P372.1 billion (22.6 percent); general public services, with P273.5
billion (16.6 percent); and defense, with P77.5 billion (4.7 percent).

The 10 departments receiving the biggest share of the 2011 budget

are the same as in this year’s budget. There are changes, however,
in their program composition and ranking.

The Department of Education, with P207.3 billion (including the

Educational Facilities Fund) represents 12.6 percent of the total
budget, and retains the top position. There has been a sharp
increase of 18.4 percent (P32.3 billion) from its budget of P175.0
billion this year, attributed to the construction of 13,147 classrooms
and the creation of 10,000 teaching positions. This will be the
biggest increase allocated for education in over a decade.
The Department of Public Works and Highways remains in second
place, with P110.6 billion, or 6.7 percent of the total budget,
despite some P6.9 billion in Priority Development Assistance being
taken out from its budget.

The Department of National Defense (DND), third among the top

recipients of next year’s budget, gets an increase of 81.1 percent,
from P57.8 billion in 2010 to P104.7 billion in 2011. The increase is
attributed in part to the return of military pensions to DND’s
budget. The Armed Forces of the Philippines Modernization Program
fund of P5 billion is likewise transferred from the Special Purpose
Fund to the DND for greater transparency and accountability, and
better programming.

The Department of the Interior and Local Government (DILG)

exchanges places with the DND and is now ranked 4th. Its budget
increased by 32.6 percent, from P66.5 billion in 2010 to P88.2
billion in 2011. Again, for better programming and accountability,
the budget for police pensions has been placed under DILG
supervision.

The Department of Agriculture, retaining its position in 5th place,

has a slight decrease of 8.5 percent in its budget, from P41.2 billion
to P37.7 billion due to the reduction in the allocation for input
subsidies (e.g., seeds, fertilizers, farm implements and biologics)
for the production of rice, corn, fisheries, livestock and high-value
commercial crops with the better targeting of these subsidies.

The Department of Social Welfare and Development jumps to 6th

from 8th this year, its budget increasing by P18.9 billion or 122.7
percent, from P15.4 billion to P34.3 billion. The remarkable increase
provides for the second phase implementation of the KALAHI-CIDSS
Project in 96 municipalities, conditional cash transfers to 2.3 million
households, rice subsidy, and pensions for indigent senior citizens.

The Department of Health ranks 7th with P33.3 billion, up by 13.6

percent from the 2010 level of P29.3 billion.

The Department of Transportation and Communications is in 8th

place with a budget of P32.3 billion, an increase by 87.8 percent
from P17.2 billion in 2010.The additional allocations will go to the
expansion of infrastructure activities, particularly for the continued
implementation of both North and South LRT lines, and the
continuing subsidy to the MRT. Also included in the department’s
budget for 2011 are navigation surveillance/air traffic management
system and the Laguindingan Airport Development Project.
The budget for the Judiciary also increased to P14.3 billion and will
ultimately continue to constitute one percent of the budget after
consideration of the other personnel benefits.

On the other hand, the budget of the Department of Agrarian

Reform (DAR) decreased by 20.7 percent on account of the transfer
of the Tulay ng Panguloprogram and its fund allocation to the
DPWH.
Financing the 2011 Budget
The collection of revenue is a major requirement for the liftoff of the
Philippine economy. Our country direly needs revenues from taxes
and other sources to fund our programs for the public welfare.
However, we cannot bleed our people any further and add to their
suffering and hardship.

It will not be just to impose additional taxes on our people unless

we can prove that these will improve the quality of the Filipino’s life.

Collection efficiency, not the imposition of more taxes, will be our

main strategy to increase our revenues.

Revenues. We intend to raise some P1.41 trillion in revenues to

support our spending program for 2011.
The amount is higher by 8.9 percent than this year’s P1.29 trillion
and maintains this year’s revenue effort at 15.6 percent of GDP.
The collective tax effort of the Bureau of Internal Revenue (BIR)
and the Bureau of Customs (BoC) improving by 0.2 percentage
points of GDP in view of several administrative reforms being
implemented and technical assistance being received by both
agencies.

The attainment of our revenue goal for 2011 is critical. It will test
this government’s ability to bring down the deficit to manageable
levels over the medium-term, with less or no recourse to the
passage of new tax measures.
I believe this can be done. By strengthening our revenue centers,
by improving our tax administration, by rationalizing our revenue
structure, we will incrementally achieve the collection efficiency we
are aiming for.

Tax revenues will amount to P1.27 trillion, almost three-fourths or

P940 billion of which will be collected by the BIR, one-fourth or
P320 billion by the BoC, and the remaining to come from taxes
collected by other collecting agencies.

There was a time when the country achieved a 17 percent tax

effort. We can do it again. With the renewed vigor of our revenue
centers, I am confident that we will be able to increase our tax
effort from the present 13.9 percent to 15 percent.

The proven track record of our Finance and Justice officials will
boost revenue collection, complemented by benefits from the
Revenue Integrity Protection Service (RIPS), Run After the
Smugglers (RATS), and Run After Tax Evaders (RATE) programs.
With a forceful implementation of these programs, tax evasion will
become a thing of the past.

From now on, tax-related cases will not only be filed but pursued
relentlessly until those involved are prosecuted, the guilty punished,
and the government gets its tax dues. We have to enforce the law
and, in a manner of speaking, hold people’s feet to the fire.

We will continue to support BIR’s Tax Administration and

Computerization Project which has established an Integrated Tax
System (ITS) designed to provide a standard processing framework
for the Bureau’s tax collection and administration. Some P564
million will be allocated for this purpose.

This amount will be further complemented by the $434 million grant

from the US Millenium Challenge Corporation (MCC), part of which
will fund the BIR’s Revenue Administration Reform project that
seeks to boost revenue collection and reduce corruption through
computerization and streamlining of business processes.

We will also invest some P72 million in 2011 in the BoC’s Non-
Intrusive Container System Project (NICSP) to raise customs
revenues through the efficient scanning of both incoming and
outgoing containers and the correct classification and valuation of
goods.

We will infuse some P30 million for BoC’s Super Green Lane to fast-
track customs clearance of qualified very low risk importers,
thereby facilitating trade transactions.

I would like to commend BoC for its plan to conduct profiling per
industry to get a clearer picture of the total supply chain of top
import products, such as rice, oil, and steel as part of streamlining
operations and removing opportunities for graft.

Other sources of financing. Aside from the two largest earning

agencies – BIR and BoC – other revenue earners are expected to
contribute some P150.0 billion, or about 11.0 percent of the total
P1.41 trillion revenue target for 2011.
The amount, P3.3 billion lower than this year’s P153.3 billion, will
come from fee-collecting agencies (P66.7 billion), Bureau of the
Treasury income (P50.7 billion), and privatization proceeds (P6.0
billion).

Financing the projected P290.0 billion budget deficit for 2011 relies
mostly on domestic borrowings (P257.3 billion). The remaining
P49.5 billion will come from foreign sources.

The time to tap local markets as source of financing is now, as

stable and low interest rates make it attractive for the country to
sell domestic debt, reducing our vulnerability to foreign exchange-
rate movements. This strategy will also further develop the
domestic capital market.

The relative mix of foreign to domestic borrowings can reduce our

national debt to 57.0 percent of GDP, slightly lower than the 57.3
percent debt ratio at the end of 2009.

THE BUDGET AS A SOCIAL CONTRACT WITH THE PEOPLE

Our Social Contract with the Filipino People calls for a national
leadership that leads by example. The General Appropriations Bill
you are called upon to enact is the principal means by which our
people’s expectations will be met by government.

Through the budget, we hope to prioritize the needs of the

marginalized segments of our society, to restore the people’s trust
in government through good governance and other initiatives, to
accelerate growth via public-private partnerships, and to promote a
sound environment for future generations – today.

It is not enough that we provide for the needs of the poor and the
marginalized. We will create opportunities for them. We will
enhance practical, efficient approaches to delivering basic services
to fill our people’s requirements for education, healthcare, housing,
and other socio-economic necessities.

Education is the key to reducing poverty. We will use education as

the venue for harnessing our people’s skills and competencies, for
building and maintaining national competitiveness. Education must
be our central strategy for investing in our people.

Quality education at all levels is our priority. This includes

vocational training so that those who cannot pursue higher
education, either by choice or by circumstance, can find a dignified
livelihood.
But for too long, we have had a shortage of classrooms, school
furniture, textbooks, teachers; even a dearth in scholarships, all of
which impedes our quest for quality education.

Not anymore. We have raised the budget of the DepEd for 2011 to
P207.3 billion. This includes funding for its Educational Facilities
Program.

To respond to the acute classroom shortage, we have appropriated

P12.4 billion for the construction of school buildings where there are
none as well as in typhoon-stricken areas. The allocation is 57.0
percent higher than the P7.9 billion allotted in 2010, to enable us to
build more than triple the 6,000 classrooms normally constructed
yearly. We will partner with LGUs to build more schools so that we
will realize quality education for all.

The quality of education is influenced by the quality of textbooks

that our schools provide. We will ensure that our children get better
quality textbooks. We have allocated P1.8 billion for the purchase of
an estimated 32.3 million textbooks in 2011.

The universal objective of giving children quality education can be

achieved if they have motivated and well-trained teachers. We have
yet again set aside P1.6 billion in 2011 for the creation of 10,000
teaching positions to meet the ideal ratio of 5:3 teachers to classes.
We will involve all stakeholders in the streamlining of hiring
procedures to ensure that we have the teachers needed at the
opening of classes.

We have allocated P8.6 billion, an increase of 22.9 percent from

P7.0 billion in 2010, for scholarship grants, training programs, and
student loan programs under the Technical Education and Skills
Development Authority (TESDA), Commission on Higher Education
(CHED), Department of Science and Technology (DOST), and DepEd
to assist in the development of the next generation of business
leaders, academicians, medics, and engineers.

Of this 2011 amount, P5.8 billion, or 67.4 percent, will be used to

expand the number of GASTPE grantees to 1 million through the
Education Service Contracting (ESC) program. The remaining
amount will be apportioned to the TESDATraining for Work Program
for 50,000 beneficiaries, P700 million; the DOST-Science Education
Institute and Philippine Science High School (PSHS) for a total of
15,358 beneficiaries (P1.1 billion); and CHED for its 21,954 scholars
(P934 million).

Our objective is that, by 2016, every child completing preschool

must be a reader by Grade 1. To support this objective, we have
allotted to the Every Child a Reader Program (ECARP) the amount
of P21 million for 2011.

We have also increased the appropriation for the mass production

of science and mathematics equipment, from P500 million in 2010
to P727.5 million in 2011. The 45.5 percent increase will fund
science and math infrastructure in schools that we will build to
produce more scientists, technologists, and teachers in our
universities to make our country more globally competitive in
industry and manufacturing.

Almost half of our high school graduates seek employment rather

than pursue higher studies. Therefore, we will reintroduce technical-
vocational education (TVE) in our public high schools to better
prepare high school graduates for work as workers, craftsmen and
technicians in various industries. We have thus provided P734
million for technical-vocational schools.

We are studying the extension of the basic education cycle from 10

years to the global standard of 12 years. The addition of two years
of schooling is expected to enrich basic education and enable our
children to get into the best universities and, consequently, get the
best jobs.

We allocated P23.4 billion to 112 State Universities and Colleges

(SUCs) in 2011. This is 1.7 percent lower than the P23.8 billion
budget for 2010. We are gradually reducing the subsidy to SUCs to
push them toward becoming self-sufficient and financially
independent, given their ability to raise their income and to utilize it
for their programs and projects.

The CHED, which covers both public and private higher education,
will be allotted P1.7 billion. This will be used for research and
institutional development; scholarships; and rationalization of
programs, standards, and guidelines under the Higher Education
Development Fund.

We put importance on the advancement and protection of public

health. Equally important is making healthcare services accessible
to all.

The budget of the health department climbed by 13.6 percent from

P29.3 billion this year to P33.3 billion in 2011 to finance its major
programs and projects. The Expanded Program on Immunization,
for instance, almost tripled its budget, from P991 million to P2.5
billion to enable the country to move a step closer to meeting the
Millennium Development Goals (MDG) of reducing infant and child
mortality as well as maternal mortality.

Vaccines are among the most cost-effective interventions to reduce,

if not eliminate, infectious diseases. We are putting a significant
portion of our budget resources on this immunization program to
cover vaccines for measles, neonatal tetanus, Hepatitis B, and
hemophilis influenza type B. The program will cover 2.6 million
children.
Some 865,950 senior citizens, from 60 to 69 years old, will likewise
be covered by the immunization program. They will be given
pneumuccocal and influenza vaccines every five years.

To support the reduction of infant and child mortality rates and the
maternal mortality ratio, on the other hand, we have more than
doubled the allocation for the upgrading of health facilities from its
P3.2 billion allocation this year to P7.1 billion next year. Eighty
percent or P5.7 billion of this proposed amount will be used for the
establishment of 1,278 Basic and Comprehensive Emergency
Obstetrics and Newborn Care Facilities.

With these facilities strategically in place, we can encourage more

pregnant women to have a facility-based delivery attended by
trained health professionals. This will reduce the risk of maternal
deaths from a home-based delivery assisted by a traditional birth
attendant.

To combat tuberculosis, DOH will utilize more than a billion of its

funds for its Tuberculosis Control Program where TB cases in
293,643 adults and 65,000 children will be under the Directly
Observed Therapy Short Course (DOTS). As the name implies, the
patient’s intake of anti-TB medicine will be supervised or directly
observed by a health worker or a trained relative (of the patient) to
ensure that the medicine is taken as prescribed.

Aside from TB, other diseases, considered as Public Health Threats

(malaria, schistosomiasis, leprosy, filariasis, rabies) have been
targeted for elimination by DOH. Some P595 million is provided for
this undertaking. Through the zero based approach, we are
channeling more funds to the health sector to expand the health
insurance coverage of indigents as the more efficient mode of public
health intervention. Some P3.5 billion is being provided for the
Health Insurance Premium of 4.6 million indigent families, as
identified through the DSWD’s NHTS, and for the very first time, 1.4
million households in the informal sector. Small self-
employed/underground economy workers will be given preference
for this health care benefit.

We will also sustain the provision of low-cost medicines through the

establishment of an additional 3,931 Botika ng Barangay (BnB),
each BnB to be provided P25,000 worth of medicines. Some P98
million has been allotted for this endeavor as part of the P1 billion
allocation for DOH to support the implementation of the Cheaper
Medicines Act.
Sufficient and safe water and electricity sources. Whether
used for drinking or for some other purpose, water is essential to
life.
Based on a 2006 study made by the World Health Organization
(WHO) and the United Nations International Children’s Emergency
Fund (UNICEF), only six million of the more than 90 million Filipinos
have access to clean drinking water. We have infused some P1.5
billion into the health department’s Potable Water Supply project to
combat the ill effects brought about by inadequate access to safe
drinking water.

It saddens me that there are those who continue to squander the

increasingly limited water resources we have.

Just recently, water shortages and rationing was experienced in

some parts of Metro Manila. About 117 barangays in Manila,
Caloocan, Pasay, and Muntinlupa were affected. Through quick and
decisive action we were able to stem the problem before it became
a crisis.

Water resources and development will be a fundamental concern of

my Administration. The 2011 budget, in fact, provides some P14.6
billion for the purpose, to include flood control. With this amount,
and some P380 million for the water supply projects of the DPWH,
we will make sure that the water resources requirements of our
people, especially those living in waterless communities, will be
met.

We will take measures to provide sufficient electricity for more

people.

A total of P1.8 billion is allocated to the power and energy

subsector, the bulk of which (78 percent) represents the entire
budget of the Department of Energy (DOE).

Some P1.4 billion has been provided to fund DOE’s various

programs for attaining energy independence and implementing
power market reforms for the country. Included are the Rural Power
Project (provision of affordable and reliable energy services in rural
areas), and Electric Coop System Loss Reduction Project (promoting
the reduction of carbon dioxide emissions, etc. through private
investment in electric cooperatives).

For its Household Electrification Program in off-grid areas using

renewable energy, the DOE is provided some P117 million to benefit
2,000 households. The program aims to achieve 90 percent
household electrification by 2017.

Social protection and safety net for the vulnerable and the
poor. We expanded direct subsidies to the poor by supporting with
P29.2 billion thePantawid Pamilyang Pilipino Program (4Ps), a
poverty reduction and social development strategy that provides
conditional cash grants to extremely poor households to improve
the health, nutrition and education of family members, particularly
of mothers and children.
The allocation is nearly triple the P10.0 billion level in 2010. Of the
2011 amount of P29.2 billion, some P21.2 billion will be set aside
for the conditional cash transfers (CCT) to be given to 2.3 million
household-beneficiaries, 1.3 million more than the 1 million who
benefited from the program in 2010.
In addition, we will allot P881.2 million under the Food-For-Work
Program for internally displaced persons. Other social protection
programs that we will support are the Supplemental Feeding
Program (P2.9 billion), and the Rice Subsidy Program (P4.2 billion).
We will also improve centers and institutions geared towards the
protection and rehabilitation of women in particularly difficult
circumstances.

Over the past six years, the DSWD’s Kapit-Bisig Laban sa

Kahirapan-Comprehensive and Integrated Delivery of Social
Services (KALAHI-CIDSS) project has provided capacity building,
implementation support, and community grants to 4,583 barangays
in 200 of the poorest municipalities across the country. Recognizing
the importance of this project in empowering poor communities to
chart their local development, we are allotting P2.0 billion in 2011
for the second phase of the project under the World Bank to benefit
96 municipalities.

We will provide the vulnerable members of our society preferential

access to social assistance. Starting in 2011, we will give a monthly
pension of P500 each to 145,150 indigent senior citizens who are 80
years old and above. The assistance amounts to P871 million.

Homes for the homeless and low-income families. It is my

Administration’s resolve to provide decent and affordable homes for
low-income and homeless families.
Allocation for shelter agencies in 2011 is P5.4 billion, some P275
million higher than the P5.1 billion budget for this year. Of the P5.4
billion, the National Housing Authority (NHA) will corner the largest
share with P4.4 billion, or 81.5 percent. The amount represents an
increase of 22.2 percent from its present budget of P3.6 billion.

With its 2011 allocation, NHA plans to resettle 16,264 families

displaced by typhoon Ondoy; 2,500 families affected by road
projects under NLEX Phase 2; and 18,868 families residing in
government lands declared as socialized housing areas.

Consistent with our policy to tap the private sector and

nongovernment organizations, we will
Community Mortgage Program (CMP)
Mortgage Finance Corporation. Funds
increased from P170 million this year to
benefit 20,000 households.
continue to support the
of the National Home
for the purpose will be
P500 million next year to

Community based organizations play the lead role under the CMP
set-up. The community organization selects the project beneficiary,
negotiates with landowners, and collects repayment from its
member-beneficiaries.

Land to the landless. Since 1972, a total of 7,558,777 hectares of

the distributable 9,044,072 hectares of land have been awarded to
some five million agrarian reform beneficiaries.
There is more to distribute under the program.

The P16.7 billion budget of the DAR for 2011 includes P10.2 billion
for its Land Tenure Improvement/Land Acquisition and Distribution
program. This amount will contribute to the purchase of 300,000
hectares of private and public lands, representing 20 percent of the
remaining 1,485,295 hectares of land yet to be distributed.

We hope to substantially accomplish the targets under the CARPER

Law by the time it winds down in 2014. By that time also, we will
have corrected and rationalized the overlapping functions of DAR,
DA, and DENR.

Emergency employment/job generation. I have laid down the

key programs to help us get down to business.
Some P6.6 billion has been proposed for the Department of Labor
and Employment (DOLE) in 2011.
The amount will be used to fund various critical programs of the
Labor department such as the Labor Market Information and
Networking Program, P21 million; Capability-Building for
Employment Service of Students and Workers’ Income
Augmentation Program, P425 million; Employment
Placement/Facilitation Program, P300 million.

There will be plenty of employment opportunities for our people in

the coming years. The aggressive promotion of tourism activities in
the country is generating an influx of tourists that translates into
jobs. An allocation of P1.8 billion will be set aside for such activities.

The latest tourist data is encouraging. Tourist volume in the

country’s major destinations from January to May 2010 totaled 3.65
million or an increase of 5.4 percent vis-à-vis the same period in
2009. Our Tourism and Labor departments can partner and share
the fruits of this bonanza.

Infrastructure projects are another source for generating jobs. For

2011, some P148.2 billion will be set aside as the Infrastructure
Program to harness the construction industry to generate
employment.

There is a general provision in the proposed National Budget

directing infrastructure agencies to require contractors to adopt a
labor-intensive mode of implementation of their projects with
priority given to the socially and financially disadvantaged residents
of the LGUs where the project is located.

Restoring People’s Trust in Government

Corruption has eroded our spirit as individuals and as a people. We
have allowed anomalies in the bureaucracy to become the norm
rather than the exception. And such has been our despair that for a
time we ceased to trust even in ourselves.
We will not allow these things to happen ever again.

We will bring back what we lost – the people’s trust in government

and government’s reliance on the people. We owe that to ourselves
and to the Filipino nation.

Good governance and anti-corruption initiatives. We will not

let corruption consume our people and our people’s future. We will
strive to weed it out of government every way we can.
In the past, corrupt governments were overthrown by people
power. This time, we will use people power through civil society
engagement to conquer corruption.

Civil society and sectoral organizations will not only observe

government from a distance. They will be involved in its
undertakings, in ensuring that public funds are judiciously utilized.
We will empower CSOs by providing them access to information and
enabling them to understand how the budget process works.

There is a new provision under the proposed 2011 budget

mandating the publication in government websites of information on
the status of projects, list of project beneficiaries, and procurement
plans of major programs and projects. It was put there to enhance
transparency in the use of government funds. This is a necessary
adjunct to our efforts to put the entire corpus of government rules
and regulations online by means of the Official Gazette
(www.gov.ph).

Just recently, a Pera ng Bayan website (www.perangbayan.com)

was launched by the DOF to solicit public support of government’s
fight against corruption. Through this website, we are providing
every citizen who cares to have an alternative avenue to air
observations and solutions on public fund misuse.
Lump-sum funds, such as the PDAF, and the farm-to-market roads
and irrigation lump-sump, said to be more prone to corruption than
most other funds, will be rationalized. The use of these funds will be
justified according to master plans and government priority needs
to increase effectiveness and accountability, and to reduce
leakages.

In the case of the PDAF, we will limit its menu of project options to
the Administration’s priority concerns (education, health, social
protection, and public infrastructures) to help make this
development fund live up to its name and bring sustainable
progress, particularly in the countryside.

In line with our effort of rationalizing government funds, a new

program dubbed “Performance Challenge Fund (PC Fund)” will be
implemented by the DILG to align local development programs and
projects with the priority projects of the national government.
These projects will focus on the attainment of the MDGs and on the
maintenance of core road networks to boost tourism and local
economic development. The PC Fund will also be used to help
qualified LGUs under the Local Governance Performance
Management Program comply with the Philippine Disaster Risk
Reduction and Management Act of 2010 and with the Ecological
Solid Waste Management Act of 2000.

Some P500 million is provided for this Fund under the 2011 budget.
In implementing this financial subsidy, we will give priority to 17
provinces classified as 3rd to 5th class, 27 cities (4th and 5th class)
and 243 municipalities (5th and 6th class).

Indeed, good governance comes in many forms and faces.

Sometimes, it is just a matter of allocating limited funds for the
right undertakings and using these funds properly. And, there is, of
course, good governance through responsive and proper budgeting.

Swift and equal justice for all. The Department of Justice (DOJ)
is mandated to uphold the rule of law. I have instructed DOJ to be
true to its mandate and provide swift and equal justice for all. The
department will get a total budget of P7.7 billion in 2011.
To speed up the investigation and prosecution of all criminal cases,
full funding support for the creation of additional prosecutor
positions and the reclassification of other positions shall be
provided. We also granted P10 million to the Alternative Dispute
Resolution Program for the same reason – the speedy resolution of
court cases.

To promote transparency in DOJ operations, we have allotted P47

million for its computerization program.

A stumbling block to justice for human rights violations is the

intimidation of witnesses. In 2009 and 2010, some 95 percent of
cases with protected witnesses ended up in convictions. To
encourage prospective informants and crime witnesses to come out
in the open and testify, we are strengthening the Witness Protection
Program with a P151 million budget. The 79.8 percent increase of
P67 million from the 2010 level of P84 million will support 640
witnesses and whistleblowers.

We will institutionalize judicial reforms to address the deficiencies in

our judicial system. For this, we have allotted P14.3 billion to the
Judiciary, a 7.5 percent increase from the 2010 level of P13.3
billion. We are confident that, supported by enough funds, we will
be able to solve the extrajudicial killings that afflict our society.

The people’s security and safety is a top priority of my

Administration. We will strengthen the police and the armed forces.
The P88.2 billion we provided the DILG will enforce its functions on
local governance, peace and order, and public safety.

We are strengthening the operations of the Philippine National

Police (PNP) with P69.4 billion or 79.8 percent of the total DILG
budget. Of this amount, P2.0 billion is allotted for the purchase of
equipment for the PNP Modernization Program. To reinforce their
present manpower complement, the PNP has been provided some
P221 million to hire 3,000 Police Officers. An amount of P100 million
will fund the construction of police stations.

There is a need to reinforce the Bureau of Jail Management and

Penology (BJMP). We will spend a total of P1.3 billion for the hiring
of 500 Jail Officers, the purchase of 500 short firearms and 500
pieces probaton, as well as funding for subsistence and medicine
allowances of detainees.

The Bureau of Fire Protection (BFP), on the other hand, will get P8.2
billion. Of the said amount, P138 million will be for the salaries and
allowances of 500 Fire Officers who will be hired, as well as for the
acquisition of firefighting gear.

Of the P1.1 billion total budget of the Philippine Public Safety

College (PPSC), some P119 million will be spent on the mandatory
training of new recruits of the PNP, BFP, and BJMP. The Local
Government Academy (LGA) will train 3,163 newly elected
barangay officials of 4th to 6th class municipalities on competencies
they need to effectively manage their communities. The LGA will
receive the amount of P105 million for this purpose.

Partnering with the DILG in bringing peace and security is the DND
with a budget of P104.7 billion. Of this amount, P5.0 billion will be
expended for the modernization of the Armed Forces of the
Philippines (AFP). The Aircraft Restoration Program of the Philippine
Air Force will be allotted P130 million to restore the S-211 Aircraft.
The Philippine Army will be provided with some P28 million for the
upgrading of Trauma Management Infrastructure and Health
Services Equipment.

The Veterans Memorial Medical Center (VMMC) has an additional

budget of P84.0 million for the upgrading of diagnostic facilities;
expansion of the Renal Dialysis Unit; rehabilitation of Out Patient
Department; allocation for drugs and medicines, including medical
and laboratory supplies; and filling up the deficiency in the budget
for utilities. Some P458 million will likewise be given to the AFP
Medical Center for the increase in supply of drugs, medicines, and
medical supplies.

Inclusive, transparent, accountable and participatory peace

process. Our government is working on the political settlement of
armed conflict. Among these include facilitating the return and
rehabilitation of internally displaced persons (IDPs) in Mindanao,
affirming and strengthening the suspension of military offensives
between the government and the Moro Islamic Liberation Front
(MILF), and restarting peace negotiations.
We are committed to a peaceful and just settlement of conflict,
inclusive of the interests of all – may they be Lumads, Bangsamoro
or Christian settlers. We are providing the Office of the Presidential
Adviser on Peace Process (OPAPP) P236 million to strengthen these
peace efforts. Of this, P100 million will be given to the National
Unification Program (formerly a special purpose fund).

Accelerating Growth through Public-Private Partnerships

The need to hasten growth cannot take a back seat to addressing
the basic social service needs of our countrymen.

We need to modernize our roads, bridges, airports, transportation

and communications systems for the efficient movement of goods
and people. We need to invest in other critical infrastructure, such
as water supply projects and more efficient irrigation systems to
increase farm productivity. We need to invest in all these and other
market support services if we are to perk up our economy.

Given our very tight expenditure space, however, the government

needs to engineer creative strategies in budgeting and governance
in order to do more while investing less.
Government’s partnership with the private sector is an option we
are looking into. Public-private partnership (PPP) will be developed
as an innovative policy tool to put dynamism into traditional public
service delivery, particularly for infrastructure. We will make PPP
work to create better value for our taxpayers’ money.

Strategic public infrastructure development. Infrastructure has

played a major role as a catalyst of growth especially in the tourism
and agriculture sectors.
The increase in infrastructure spending in 2007-2009 has been
instrumental in assisting the country weather the global crisis better
than some of its neighboring countries. The resolution of
infrastructure gaps is also critical to the country’s competitiveness.

Not only does the state of infrastructure development create

opportunities for growth. Infrastructure also equalizes economic
opportunities and access to social services in a manner that
significantly reduces poverty.

We will thus pursue a high-level investment in the nation’s

infrastructure system that will promote a healthy economy, create
jobs, and make the Philippines globally competitive, with poverty
reduction as the ultimate goal. Following the zero based budgeting
approach, we have carefully reviewed our infrastructure priorities
and zeroed in on the most vital projects for funding in the 2011
budget.

Infrastructure spending for next year will get some P148.2 billion. A
big chunk of this total, amounting to P72.0 billion, is for the
rehabilitation/ construction of some 2,346 km. of roads. The
amount represents a 6.2 percent decrease over this year’s
allocation of P76.8 billion.

The two infrastructure agencies – DPWH and DOTC – will get a

combined budget of P142.9 billion next year, with the DOTC getting
an 88.4 percent increase, from P17.2 billion this year to P32.4
billion.

The increase in the DOTC budget comes from the allocation of some
P2.0 billion for the construction of the Laguindingan Airport and
some P7.3 billion representing government’s fare subsidy of P47.77
per commuter for the Metro Rail Transit. Another big-ticket item
that contributed to the increase in the DOTC budget is the allocation
of P2.6 billion for its New Communication and Navigation
Surveillance/Air Traffic Management System Development Project.

Projects under road transport services include the routine (30,865

km.) and preventive (732 km.) maintenance of roads costing P16.3
billion.

Revitalization of road systems will underpin the acceleration of

economic activity in Metro Manila and serve as a basis for a more
vibrant private sector. For this reason, some P11.7 billion will be
allocated to DPWH not only to decongest traffic but also to address
critical infrastructure bottlenecks along roads and bridges in Metro
Manila.

We will continue to support the implementation of both LRT Lines

North and South Extension Projects (P4.2 billion) and the MRT (P8.3
billion). We can, however, reduce this support for the LRT and MRT
by the National Government, at the same time improve its
maintenance, if we share costs with the riding public, gradually
increase fares, and explore PPP arrangements in future projects.

We are targeting some P180.0 billion worth of PPP undertakings in

2011 to bridge the gap between the 5.0 percent historical GDP
growth rate and the envisioned 7-8 percent growth target. Initially,
we are allocating some P15.0 billion in the budgets of the DPWH,
the DOTC, and the DA to provide for the catalytic GOP support for
these departments’ projects, such as Road Right of Way, land or
other infrastructure facilities, etc. to encourage private investors to
undertake BOT arrangements with these agencies.

Agri-agra, tourism, and business process outsourcing

development. The country’s economic growth is expected to be
spurred by food productivity, tourism, and business process
outsourcing.
Although food prices have fallen steeply since the financial crisis
began at the end of last year, the cost still remains above the long-
term average. The Food and Agriculture Organization (FAO) warns
that this temporary relief to ordinary people must not provide a
false sense of security.

We must, therefore, continue to modernize the agriculture sector by

investing in agricultural inputs and infrastructure to increase
farmers’ income and farm yields and provide food for our people.

Consistent with this goal, the agriculture and agrarian reform sub-
sector will be allocated P54.4 billion for 2011, some P37.7 billion, or
roughly 69.3 percent of the total, going to the DA.

Agricultural production can only be secured if we increase and

intensify crop productivity, expand crop areas, and raise crop
diversification. For this purpose, we have set aside some P13.3
billion for the construction, rehabilitation and restoration of
irrigation systems covering 183,124 hectares of agricultural land.
Our rice target for 2011 stands at 19.4 million metric tons. We
intend to develop farmers’ capacity to increase yield and income.
Sustainable rice production will assure us of a 100 percent rice self-
sufficiency by 2013.

Tourism impacts on most sectors of the economy.

A robust tourism industry means more sales, profits, jobs, tax

revenues, and income in an area or locality and to the country as a
whole. The most direct effects occur within the primary tourism
sectors – lodging, restaurants, transportation, amusements, and
retail trade.

We will promote the Philippines as a prime tourist destination that

offers world-class tourist facilities and products through sustainable
economic development while protecting and preserving the
environment.

Our major concern in the immediate and succeeding years is how to

aggressively close the gaps between the state of our existing
tourist-related facilities and world class standards for the same
facilities. An amount of P1.4 billion for tourism will be provided in
2011 for this purpose.

The amount includes some P500 million for tourism promotional

services for both international and domestic tourists.

Also included in the DPWH budget is some P1.8 billion for

maintenance of roads in tourism-declared destinations.

Anti-red tape and business facilitation measures. Economic

growth will create jobs. But, growth can only be possible if we
streamline the processes in our industries and in our systems to
make them predictable, reliable, and efficient – therefore, attractive
– for those who want to invest in our country.
Our country has to catch up with our Asian neighbors in terms of
business competitiveness. If we are to attract investors to support
our PPP programs, we have to improve our existing business
environment.

For this purpose, some P250 million is allocated to the Department

of Trade and Industry (DTI) for the upgrading of business name
registry system/development of ICT facilities aimed at streamlining
business procedures. The amount also includes funding the
development of an anti-corruption information system and the
development of ICT facilities which are at the frontline and back-
end services of the DTI.

PPP center and one-stop-shop. Government has a responsibility

to create a stable and predictable environment. Only in such an
atmosphere will the private sector flourish as main engine of
growth.
Given the constraints in the lack of public funds, we are
aggressively pursuing public-private partnerships with a difference.
Having learned from our own experiences and those of other
countries on how to minimize contingent liabilities, we are now
setting up a PPP Center, attached to the NEDA, which will provide
technical assistance and help facilitate the development of PPP
proposals for high projects.

Through the PPP Center, we will be able to improve the quality of

PPPs that will be up for tendering. It will also ensure that the
approval process for PPP engagement will be completed within six
months, instead of the usual tedious process that sometimes takes
years to complete.

The NEDA will be given an additional P50 million for value

engineering studies to ensure that projects developed are at the
least cost and at the most efficient option. The agency and DOF will
also get P5 million and P2 million, respectively, for capacity-
building projects related to Contingent Liabilities Management in
PPP projects.

The DPWH and the DOTC will likewise be provided P500 million and
P100 million, respectively, for the conduct of their own PPP
feasibility studies.
To entice investors into public-private partnerships, we are
committed to providing a level playing field for business, thereby
ensuring healthy competition.

We will put up client-friendly one-stop shops and convenient

information centers for business permit applications and processing.

We will streamline business procedures, including the approval

process for business permits, and make them effective, efficient,
and graft-free, thus encouraging domestic and foreign investments.

Promoting a Sound Environment Today and for the future

Instead of being the culprits in environmental destruction, let us be
advocates of conservation and preservation.

Let us be a government that encourages the sustainable use of

resources, a people living in productive, healthy, and safe
communities.

Climate change adaptation and mitigation. Climate change is a

global environmental problem we have to meet with swift and long-
term actions.
To mitigate the effects of climate change and ensure a sound
environment for our present and future generations, we have
provided the DENR a budget of P13.1 billion for 2011.

Of this amount, P1.3 billion will be used for the reforestation of

52,039 hectares of denuded forests nationwide. Not only are we
going to plant more trees, we will also protect trees from illegal
loggers. We will hire 2,220 personnel to guard our forests under
the Bantay Gubat Program. Some P80 million has been provided for
this undertaking.
We have also provided P39 million to support the National Climate
Change Commission to pursue its mandate of monitoring and
evaluating government programs and action plans concerning
climate change.

Experts predict that storms with extreme rainfall will be more

common as the climate heats up.

We have seen such extreme rainfall in recent past. Who can forget
the havoc wrought by Typhoon Ondoy? Who can forget the lives
that were lost, the damage to properties that reached billions of
pesos?

We cannot prevent another Ondoy from coming and devastating our

land. But, we can minimize, if not prevent, losses to lives and
properties by being prepared when disasters strike.

Flood control. Some P15.5 billion has been allotted under the
proposed 2011 budget for flood control. The amount is 76.1 percent
higher than the 2010 allocation of P8.8 billion.
Ninety-seven percent of the said amount will go to DPWH for the
construction/rehabilitation of 868,592 lineal meters of flood control
(FC) facilities and repair and maintenance of 250,635 lineal meters
of FC facilities.

The Metro Manila Development Authority (MMDA), on the other

hand, will use P434 million of its budget for the maintenance,
repair, and rehabilitation of flood control-related projects/activities.
Of this P434 million, some P50 million will be used for the Urgent
Disaster Flood Control Works under the Pasig-San Juan-Marikina
River Systems and other areas in Metro Manila, another P58 million
for the Flood Control and Drainage Projects in the National Capital
Region, and P100 million for Mitigating Flooding at Buendia/South
Superhighway area and vicinity.

The MMDA will likewise utilize P519 million of its budget for solid
waste management.
For Search and Rescue (SAR) operations, we will provide P1.6
billion to the Philippine Coast Guard for its Maritime Disaster
Response Acquisition of Helicopter Project.

TOWARDS THE STRAIGHT AND RIGHTEOUS PATH

There is an old and wise saying, “If you want your child to walk the
righteous path, do not merely point the way – lead the way.”

That is what we are doing – leading this government and this nation
in the firmest way we can towards genuine change and social
reform. We believe that the straight and righteous path, while
narrow and difficult at times, is still the shortest and the surest.

This budget holds the basic tenets and elements of our financial
development plan that will push our agenda for change. It will guide
us in our day-to-day toil to put our envisioned reforms in place.

But, before we can offer this budget plan, this plan for action, to our
countrymen, it must pass through the democratic process of
deliberation from the two houses of Congress, with the participation
of bona fide CSOs.

Ladies and gentlemen of the 15th Congress, in submitting my

Administration’s budget proposal for your evaluation and approval, I
invite you to scrutinize it, but even as you do so, I ask you to listen
with your hearts to the 90 million Filipinos who have waited so long
for change.

As a reform budget, the National Budget for 2011 reflects a choice.

It may not be an easy one but we believe it is the right – maybe,
the only – choice if we are to stay on a responsible, prudent path to
economic growth and, yes, opportunity.
By helping our people enjoy an equitable share of the country’s
resources, we provide each and every one the opportunity to lead a
good though frugal life.

Katuwang ang 2011 badyet, sama-sama nating lakbayin ang landas

tungo sa paggugol na matuwid!
Respectfully,

(Sgd.) BENIGNO S. AQUINO III

President of the Philippines

August 24, 2010

Prepared by the Presidential Communications Development

and Strategic Planning Office and by the Department of
Budget and Management
On August 24, 2010 the President submitted the proposed national
budget for 2011. This was pursuant to his constitutionally-
mandated duty (Article VII, Section 22) to submit the proposed
budget to Congress within thirty of the opening of every regular
session.

This is the 70th Budget prepared by the Department of Budget and

Management. The first modern budget submitted by a President
was on June 23, 1936 to the National Assembly[1]. It was also the
first budget prepared by the newly-created Budget Commission,
today’s Department of Budget and Management.
Highlights of the President’s Budget Message to Congress:
• Proposed budget level for 2011 is P1.645 trillion, a modest
increase of 6.8 % over the 2010 budget of P1.54 trillion. It
represents 18.2% of GDP, slightly lower than the 18.5% share
this year, indicating a smaller but more efficient government.
• Of the total proposed expenditure program, only some P1.0
trillion represents New General Appropriations, which require
legislative authorization. This includes the P66.9 billion standby
 authority (unprogrammed appropriations) which could only be
released when revenue collections exceed revenue targets.
• By source of appropriations. The P1.645 trillion includes
programmed new appropriations of P933.5 billion and P711.5
billion of automatic appropriations. The latter include debt
service and interest payments of P357.1 billion; net lending of
P15.0 billion; IRA of P 286.9 billion; and government
contribution for employees’ retirement and life insurance
premiums of P 22.4 billion. Other automatic appropriations are
the special accounts in the general fund, grant proceeds and
donations.

• Revenues. The 2011 budget will be supported by P1.41

trillion revenues. Of this amount, P1.27 trillion or 90% will
come from taxes while the remaining P137.2 billion will be
derived from non-tax sources such as fees and charges,
income and foreign grants.
• Deficit level. Deficit for 2011 will decrease to P290 billion or
3.2% of GDP, lower than the 2010 budget deficit of P325
billion. This will be financed by P257.3 billion of domestic
borrowings (83.9%) and P49.5 billion of foreign borrowings
(16.1%).
• 2011 expenditure allocation framework:
1. Support for PNoy Priority Programs

• Transparency and accountability/good governance

• Social services (education, public health, social protection)
• Economic services (public infrastructure, private-public
partnerships)
• Stable and safe environment
2. Application of zero-based budgeting (ZBB) approach

• ZBB involves the review/evaluation of major ongoing

programs to determine their continuing relevance,
effectiveness and efficiency.
 • Fund transfers, termination or cutting of programs that are no
longer delivering intended outcomes (e.g., Food-for-School
Program, Agricultural Input Subsidies, Kalayaan Barangay
Program)
• Fund release of certain programs contingent of
resolution/removal of bottlenecks in project identification and
procurement (e.g., DepEd Critical Inputs, TESDA scholarship)
• Expansion of well-performing programs to alleviate/mitigate
critical gaps (e.g., DSWD’s CCT, DepEd’s ESC, NHIP of DOH)
• GOCC reforms (e.g. NFA, LRTA, MRT)
• Deactivation of certain agencies and GOCCs (e.g., OP-Task
Forces and Locally Funded Projects which have finished their
mandates)
3. Transparency provisions for implementation of major programs

• Rationalization and greater transparency lump-sum funds

according to master plans and government priority needs (e.g.,
PDAF, farm-to-market roads, irrigation lump sums)
• Posting in agency and DBM websites of status of
program/project implementation, program beneficiaries,
procurement plans
4. Adoption of fiscal responsibility

• Urge Congress not to enact new appropriation measures or

revenue-eroding bills without identifying source of funding or
offsetting expenditure cuts.

• By expense class
• Personal Services will account for 32.8%, or P540.4
billion of the total budget for 2011. Its increase of 9.6%
from the 2010 level of P493.1 billion is mainly due to the
2nd and 3rd tranche implementation of the Salary
Standardization Law III.
• Maintenance and Other Operating Expenses will likewise
increase from P823.0 billion this year to P893.0 billion
 next year due to the larger funding for social services such
as the conditional cash transfer.
• Capital Outlays will get 12.9% share of the total budget
or P211.6 billion. While the amount is slightly lower than
the 2010 level, the government expects the private sector
to fill in the gap in lower CO spending through public-
private partnerships.
• By recipient entity
• Allocations to Local Government Units (LGUs) will
increase to P300.0 billion from its 2010 level of P297.5
billion due to the bigger share of LGUs from internal
revenue taxes in 2011.
• Allocations to GOCCs, on the other hand, will decrease
by almost 41%, from P39.3 billion in 2010 to P23.3 billion
in 2011, in view of the GOCC reforms that will be
implemented. In the case of the NFA, for instance, the
government has removed P8.0 billion of its subsidy to NFA
for rice procurement and has transferred the funds to
DSWD’s rice subsidies for the poor to enable better
targeting based on the National Household Targeting
Survey.
• By sector
• In line with the priorities of the Aquino Administration to
provide more for the marginalized and vulnerable sectors
in society, social services will get a hefty funding of
P560.8 billion or 34.1 percent of the total national budget.
• Economic services sector, on the other hand, will get the
22% of the budget pie with P361.1 billion. It is followed
by debt burden, with P372.1 billion (22.6 percent);
general public services, with P273.5 billion (16.6 percent);
and defense, with P77.5 billion (4.7 percent).

• Top Ten Departments

(In billion pesos)
 2010 2011

Departments Level Rank Level Rank

DepEd (inc. Educational

Facilities Fund) 175.0 1 207.3 1

DPWH 135.6 2 110.6 2

DND (inc. Pension and

AFPMP) 96.2 3 104.7 3

DILG (inc. pension) 78.8 4 88.2 4

DA 41.2 5 37.7 5

DSWD 15.4 9 34.3 6

DOH 29.3 6 33.3 7

DOTC 17.2 8 32.3 8

DAR 21.1 7 16.7 9

The Judiciary 13.3 10 14.3 10

• Support
for PNoy’s Priority Programs
a. Good governance and anti-corruption initiatives

Provision of:

1. P500 million for the Performance Challenge Fund to assist

qualified LGUs under the Local Governance Performance
Management Program
2. P47 million for the DOJ’s computerization program

3. P10 million for the DOJ’s Alternative Dispute Resolution Program

to expedite resolution of court cases

4. P151 million for the Witness Protection Program to support 640

witnesses and whistleblowers

5. P221 million under the PNP budget for the hiring of 3,000 Police
Officers, and P100 million for the construction of police stations

6. P1.3 billion under the BJMP budget for the hiring of 500 Jail
Officers, purchase of 500 short firearms and 500 pieces of probaton

b. Social services

Education
Provision of:

• P12.4 billion under DepEd’s budget for the construction of

school buildings. The amount is 57% higher that the 201
allocation of P7.9 billion
• P1.8 billion for the purchase of some 32.3 million textbooks
• P1.6 billion for the creation of 10,000 teaching positions to
attain the 5:3 teachers to classes ideal ratio
• P8.6 billion for scholarship grants, training programs, and
student loan programs under TESDA, CHED, DOST, and DepEd
• P21 million for the Every Child a Reader Program (ECARP) to
help ensure that every child completing pre-school is able to
read by Grade 1 in 2016
• P727.5 million for mass production of science and
mathematics equipment
Health
Provision of:
 • P2.5 billion for the Expanded Program on Immunization to
help attain the MDG of reducing infant and child mortality and
maternal mortality
• P5.7 billion for the establishment of 1,278 Basic and
Comprehensive Emergency Obstetrics and Newborn Care
Facilities
• P1.5 billion for potable water supply in waterless communities
Direct subsidies
Provision of:

• P3.5 billion for the Health Insurance Premium of 4.6 million

indigent families as identified under the National Household
Targeting System of DSWD. Some 1.4 million households in
the informal sector will also be covered by the program
• P29.2 billion for the implementation of the Pantawid
Pamilyang PilipinoProgram (4Ps) to provide conditional cash
grants to extremely poor households. Of the said amount,
some P21.2 billion will go to conditional cash transfers. This
will benefit 2.3 million household beneficiaries, 1.3 million
higher that the 1 million beneficiaries in 2010
• P871 million to finance the P500 monthly pension of 145,150
indigent senior citizens age 80 years old and above
c. Economic services

Public infrastructure development

Provision of:

• P148.2 billion for Infrastructure Program. Of this amount, P72

billion will be for the rehabilitation/construction of some 2,346
km. of roads.
• P2.0 billion for the construction of Laguindingan Airport
• P2.6 billion for the New Communication and Navigation
Surveillance/Air Traffic Management System Development
Project of DOTC
 • P4.2 billion to support the implementation of LRT Lines North
and South Extension Projects. Some P8.3 billion, on the other
hand, will be provided for the MRT.
• P13.3 billion for the construction/rehabilitation and restoration
of irrigation systems covering 183,124 hectares of agricultural
land.
• P1.8 billion for the maintenance of roads in tourism-declared
areas.
Public-Private Partnerships (PPP)
• Setting up of a PPP Center attached to the NEDA. The Center
will provide technical assistance and help facilitate the
development of PPP proposals for high impact projects.
• Provision of P500 million to DPWH and P100 million for DOTC
for the conduct of their own feasibility studies on PPP.
• Provision of P15 billion under DPWH, DOTC, and DA to
comprise NG counterpart requirements for PPP projects (e.g.,
for right of way)
Anti-red tape and business facilitation measures
• Streamlining of business procedures (e.g. approval process for
business permits) to make them effective and efficient.
• Some P250 million has been provided to DTI for the upgrading
of business name registration system/development of ICT
facilities to support the government’s effort to minimize red
tape and promote good governance.
d. Sound environment

Climate change adaptation and mitigation

Provision of:

• P13.1billion for DENR. Of the said amount, some P1.3 billion

will be used for the reforestation of 52,039 hectares of
denuded forests.
• P80 million for the Bantay Gubat Program
• P39 million to the National Climate Change Commission to
enable it to perform its mandate of monitoring and evaluating
 government programs and action plans concerning climate
change.
Flood control
Provision of:

• Some P15.5 billion for flood control projects, higher than the
P8.1 billion allocation in 2010
• P434 million under the budget of MMDA for the maintenance,
repair, and rehabilitation of flood control-related
projects/activities. Of this amount, P50 million will be used for
the Urgent Disaster Flood Control Works under the Pasig-San
Juan-Marikina River Systems and other areas in Metro Manila,
another P58 million for the Flood Control and Drainage Projects
in the National Capital Region, and P100 million for Mitigating
Flooding at Buendia/South Superhighway area and vicinity.
• P519 million for the solid waste management of MMDA
This proposed 2011 budget is the first financial blueprint of the
Aquino administration.

The P1.645 trillion National Budget proposed Fiscal Year 2011 is a

Reform Budget.

It contains a meager increase of 6.8 percent from this year’s

appropriations, with new appropriations of P1.0 trillion, inclusive of
P66.9 billion of unprogrammed Appropriations.

The President and his Cabinet reviewed the crucial programs and
projects of major departments aided by the results of empirical
studies, observations from the field, and reports from the
Commission on Audit (COA).

The administration’s proposed budget aims to address critical gaps

in social services for the poorest segments of our population.
Transparency and accountability are the twin pillars of budgetary
reform.
Under the proposed provisions for the execution of the 2011
budget, implementing agencies will be required to publish on their
respective websites the status of project implementation and fund
utilization.

• For example, the Department of Education’s Government

Assistance to Students and Teachers in Private Education
(GASTPE), the names of beneficiaries/scholars and
participating private schools will be posted on the Education
department’s website.
• Some lump-sum budgetary items under the Special Purpose
Funds, such as the pension of the retired military personnel,
and the Premium Subsidy to Indigents, will be gradually
transferred to the Departments of National Defense and
Health, respectively. As the lead agencies of these showcase
programs, they are responsible, therefore accountable, for the
use of these funds.
• The Department of Budget and Management will be posting all
lump sum disbursements, such as those of the Priority
Development Assistance Fund (PDAF), the Calamity Fund, the
DepEd School Building Fund/Educational Facilities Fund, and
the Internal Revenue Allotment, on its website.
By posting data on releases, beneficiaries and the status of project
implementation, the public can easily monitor where and how their
taxes are spent. The PDAF will centralize all allocations for members
of the Legislature under this fund. It will now include the
infrastructure projects to be constructed by the Department of
Public Works and Highways (DPWH).

The 2011 proposed budget has a bias for the poor and the
vulnerable.
• An increased the budget for social services to mitigate critical
gaps in education, health, social welfare, and housing to
ensure that those who have little or none at all will be provided
 greater means to have a fighting chance to build a better
future.
• Subsidy programs designed to reach those who need them
most. We have the National Household Targeting System
(NHTS) of the Department of Social Welfare and Development
(DSWD) to identify and locate the 4.6 million households in the
country who are poor. This will be the central database of our
nation’s poor so that direct subsidies for them – DSWD’s
conditional cash transfer and rice subsidy, DA’s farm input
subsidies, Philippine Health Insurance Corporation (PHIC)
health insurance for indigents – can converge for maximum
impact.
This is a budget that promotes fiscal responsibility. With the Fiscal
Responsibility Bill, the administration aims to achieve an agreement
with Congress to reduce the country’s debt to sustainable levels.

• The administration plans to contain the budget deficit to 2.0

percent of GDP by 2013. At present, the deficit stands at 3.9
percent of GDP.
• The President ask Congress not to pass appropriations
measures or revenue-eroding bills without identifying sources
of funding or offsetting expenditure cuts. By instilling discipline
in the enactment of new appropriations and revenue-eroding
bills, Congress will not only prevent the accumulation of
unfunded laws, which at present already involve the staggering
amount of P104.0 billion, but will also prevent the depletion of
the budget.
The Budget also identifies areas in which Public-Private Partnerships
can free up critical resources for addressing the needs of the poor
and vulnerable and other expenses of the government.

For example, in 2011, the Department of Transportation and

Communications (DOTC) will conduct feasibility studies on public-
private partnership for its light rail and airport projects as well as
for its urban transport program for highly urbanized cities. The
DPWH will also do this for roads and flood control projects.

This Reform Budget is a historic budget in that it has adopted zero-

based budgeting on the bedrock principle that the taxes paid by
the people will be spent for the people.
Programs and projects that did not perform well over the years and
that proved prone to leakages, based on COA reports and other
studies, were overhauled or redesigned.

• As a result of the zero-based approach, the administration

terminated and cut programs, such as the Department of
Education’s Food for School Program, which can be better
administered by the DSWD by means of the proper targeting
and identification of beneficiaries; the Department of
Agriculture’s Input Subsidies, which we found benefitted the
rich instead of the poor; and the Kalayaan Barangay Program,
which no longer delivered its intended outcomes.
• In the case of such programs as the Department of
Education’s Textbooks, Teacher Deployment and School
Building Construction, and the Technical Education and Skills
Development Authority (TESDA) Training for Work Scholarship,
we had to resort to a conditional release of funds pending
resolution of bottlenecks in project identification and
implementation, and program improvements.
• Savings generated from these cuts/reductions were channeled
to existing programs that are performing well, such as the
DSWD’s Conditional Cash Transfer program, the DepEd’s
scholarship program (Educational Service Contracting), and the
National Health Insurance Program (NHIP).