FY 2016 DBCC Year-End Report - 092517 - Final Version

2016 YEAR-END REPORT
Republic of the Philippines

Development Budget Coordination Committee
Malacañang, Manila
Year-End Report on the 2016 National Budget
September 25, 2017
I. Introduction
The Philippine economy sustained its robust growth and registered among
the fastest growing economies in Asia in 2016 with a 6.9 percent expansion,
surpassing that of China (6.7 percent) and Vietnam (6.2 percent). The
economic growth was driven by a strong domestic demand boosted by
household consumption, increased government spending, and sustained
investment.
The country’s macroeconomic fundamentals remained strong, characterized

by broad based domestic growth, low and stable inflation and interest rates,
improved fiscal position, and broadly stable peso. However, external
pressures – such as the US Fed rate hike, the fluctuations of the China’s
economy, and the higher price of oil in the global market – continued to loom
over the short- and medium-term and stir volatility into the domestic market.
It is worth noting however that the sustained expansion and persistent

development efforts in previous years has brought about significant
achievements in the other socioeconomic areas. In 2016, unemployment rate
reached its lowest since 2006 at 5.5 percent, with the quality of employment
improving. Majority of workers found remunerative work and full-time
employment, thereby increasing the overall mean hours of work. In terms of
poverty, the Philippines made significant strides to reduce poverty to 21.6
percent from the baseline of 26.3 percent in 2009.
Overall, in terms of the delivery of public services directed towards achieving

a better life for the Filipino people, the government sustained the
implementation of relevant programs and projects which increased the access
to basic education, healthcare, and social protection services of the
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marginalized and poorest communities; improved the current state of public

infrastructure to attract more investments and generated employment;
supported and modernized the agriculture sector and provided greater
income opportunities for farmers and fisherfolk; and strengthened the
resilience of communities vulnerable to climate change hazards.
This report gives an overview of the country’s performance for the previous
fiscal year 2016, in terms of the fiscal, financial, social, and economic
objectives of the national government. In summary, the report tackles the
following:
 Overview of the policy and principles embedded in the 2016 Budget;

 Examination of the year's overall performance relative to the
macroeconomic, revenue, expenditure, financing, and debt targets;
 Discussion of national government’s expenditure performance by
program, sector, expense class, and department/agency; and
 Reporting of the physical performance of key departments and major
programs and projects against the performance targets submitted to
Congress.
II. 2016 National Government Budget
The FY 2016 National Government Budget was a transition budget – the last
budget crafted under the previous administration, and the first budget
implemented by the current administration – which was intended to sustain
government reforms. It is based on the principle that the budget is a key
instrument in implementing government reforms, from establishing
integrated systems in order to suppress corruption and promote transparency
and accountability to enhancing the capacity of government institutions in the
delivery of public services.
The FY 2016 Budget of P3.002 trillion, was almost double the FY 2010 Budget
of P1.541 trillion. This allowed the government to expand its programs and
projects, and to pursue its priority agenda, while remaining committed to the
principle of fiscal sustainability. Moreover, the government had managed to
cut the share of debt burden to 14 percent of total expenditures1, notably the
lowest in three decades, given the preceding years of fiscal discipline. This
freed resources to be allocated to address urgent needs for Social and
Economic Services, which got a combined share of 64.5 percent of the total
1 Share of Debt Burden to total expenditures based on actual figures is 24.2 percent in 2010.
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Budget, as well as for Peace, Security and General Services, which was given
the remaining 21.5 percent.
The implementation of the FY 2016 Budget was expectedly challenging. Given

that it was an election year, the government prepared to support the period
for election campaign activities through more intense pre-planning and the
early procurement of government-led investments in key public
infrastructures and social services. It is worth noting however that the
government underwent a smooth transition as the Aquino Administration’s
fiscal policies were adopted and taken a notch higher by the Duterte
Administration.
The new government took on board the “early procurement, short of award”
policy, which allows departments/agencies to bid out contracts right after the
National Expenditure Program is submitted to Congress in time for
implementation at the start of the year. The government also adopted the
GAA-as-a-Release document (GAARD) or GAA-as-Allotment Order policy to
streamline the lengthy and often repetitive budget execution process, while
fostering predictability and accountability among departments. It moved the
fiscal deficit limit to 3 percent from the previous 2 percent policy; and
continued the conditional strategy to funding and capacitating local
government units, and the Open Government and Participatory approach to
involve the communities and civil society organizations in the approval and
monitoring of programs and projects, especially in anti-poverty programs.
III. Macroeconomic and Fiscal Performance
III.1 Macroeconomic Environment
The Real Sector
The Philippine economy strengthened further and registered the second

fastest growth rate among major Asian emerging economies in 2016. The full–
year 2016 real GDP growth of 6.9 percent settled near the upper-bound of the
DBCC-approved target of 6.0 to 7.0 percent. The economic performance
surpassed that of China (6.7 percent) and Vietnam (6.2 percent), and was
second only to India (7.9 percent). The real GDP growth in 2016 is higher than
the 5.9% average growth for the period 2011-2015.
Domestic demand was visibly strong (11.0%), boosted by household

consumption (7.0% in 2016 from +6.3% in 2015), sustained government
consumption (+8.4% from 7.6%), and the continued robust expansion in
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investment (+23.7%). Notable expansions were recorded in durable

equipment (+34.5% from +21.8), consumption of food and non-alcoholic
beverages (+6.9% from +5.9%), and construction (+15.1% from +11.0%).
Household consumption was mainly supported by high consumer

confidence, modest inflation and interest rates, and improving labor market
conditions. Consumer confidence improved on the back of better employment
opportunities, and in part also, due to the continued government assistance
such as the Pantawid Pamilyang Pilipino Program (4Ps). Meanwhile,
government consumption was bolstered by election-related spending as well
as the implementation of EO 201 s2016 that upgraded the salary and granted
additional benefits to government employees. Strong growth in capital
formation was supported by the expansions of both public and private
construction as well as higher spending on durable equipment. Total exports
grew at a steady pace despite the slowdown in electronics, in part due to the
recovery of agricultural products exports and higher growth of other goods
exports. Providing additional boost is the strong services exports on account
of strong inbound tourism and stable BPO activities.
Table 1. Actual Performance versus Macroeconomic Assumptions, 2016

2016
Particulars 2016 BESF 2017 BESF
Actual
Initial Target Updated
Nominal GDP (In Php millions)
low-end 15,376,569 14,528,872
14,480,720
high-end 15,780,794 14,728,791
Real GDP growth rate 7.0-8.0 6.0-7.0 6.9
Nominal GNI (In Php millions)
low-end 18,399,098 17,561,396
17,430,420
high-end 18,858,839 17,818,403
Real GNI growth rate 6.7-7.6 5.9-6.9 6.7
Sources: Department of Budget and Management (DBM), NEDA
On the supply-side, as shown in the table below, full year output growth was
primarily contributed by services (+7.4 %) and industry (+8.4 %) sectors. In
particular, significant expansion came from manufacturing (+7.0% from 5.7%);
trade (+7.2% from +7.1%); real estate renting and business activities (+8.9%
from +7.1%); financial intermediation (+7.6% from +6.1%), and public
administration and defense including social security (+7.2% from +1.2%). On
the other hand, agriculture output (-1.3%) declined due to the impact of El
Nino during the first half as well as the typhoons in the last quarter, which
weighed down on crops and fisheries subsector.
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Consumer-based manufactures such as food and beverage drove the growth

of manufacturing in line with still upbeat household consumption. Strong
consumption also reflected in higher growth in trading activities, especially
retail trade, along with the increase in volume of car sales in 2016. The real
estate renting and business activities sector, on the other hand, expanded on
the back of the continued growth in the business process outsourcing (BPO)
industry, overseas remittances, infrastructure development, and favorable
demographics. Meanwhile, higher revenues from bank operations supported
the growth in financial intermediation as indicated by improvements in loan
performance, with non-performing loans continuing to settle at low levels.
Finally, public administration and defense including social security
performed well due to the higher personnel services accounting largely from
the release of the yearend bonus (YEB) of government employees,
requirements for the filling, upgrading or reclassification of positions, as well
as the creation of positions and the release of retirement and terminal leave
benefits.
Table 2. Recent Philippine Macroeconomic Performance
Particulars 2011 2012 2013 2014 2015 2016

GROSS DOMESTIC
3.7 6.7 7.1 6.1 6.1 6.9
PRODUCT
GROSS NATIONAL INCOME 3.0 7.1 7.8 6.0 5.8 6.7
By Industrial Origin
Agri, Fishery and Forestry 2.6 2.8 1.1 1.7 0.1 (1.3)
Industry 1.9 7.3 9.2 7.8 6.4 8.4
o.w. Manufacturing 4.7 5.4 10.3 8.3 5.7 7.0
Services 4.9 7.1 7.0 6.0 6.9 7.4
By Expenditure
Household Final Consumption
5.6 6.6 5.6 5.6 6.3 7.0
Exp.
Gov’t Final Consumption Exp. 2.1 15.5 5.0 3.3 7.6 8.4
Capital Formation 2.8 (4.3) 27.9 4.2 18.4 23.7
o.w. Fixed Capital Formation (1.9) 10.8 11.8 7.2 16.9 25.2
Exports (2.5) 8.6 (1.0) 12.6 8.5 10.7
Imports (0.6) 5.6 4.4 9.9 14.6 18.5
Source: PSA
The pattern of economic growth in 2016 basically reflects a continuation of the

trend of structural transformation seen over the last 5 years. That is, growth is
increasingly being driven by investments vis-à-vis consumption, and led by
the industry sector relative to the service sector. In other words, sources of
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economic growth have broadened. In fact, in 2016, the contribution of

investments to growth was larger than that of consumption. On the other
hand, higher growth in industry (particularly driven by the resurgence in
manufacturing and strong public construction program) versus services has
led to a rising share of industry in GDP, reversing the “de-industrialization”
experienced in previous decades.
Relative to the average performance over the last five years, the economy was
in better shape in 2016 with real GDP growth (6.9% versus 5.9%) rising by 100
basis points. Domestic demand (11.0% from 6.7%) had nearly doubled
supported by the robust expansions of capital formation (23.7% from 9.8%),
government consumption (8.4% from, 6.7%) and household consumption
(7.0% from 5.9%). External demand also displayed a more upbeat
performance though the balance showed a widening deficit. That is, while
exports growth nearly doubled (10.7% from 5.2%), faster growth of imports
resulted in a higher negative trade balance for the country. Imports had
grown almost thrice as fast as demand for imported capital goods continued
to rise – contributing to the further expansion of the productive capacity of
the domestic economy. Looking into the supply-side, both industry (8.4%
from 6.5%) and services (7.4% from 6.4%) demonstrated acceleration across all
its subsectors, offsetting the weaker performance of the agriculture and
fishery sector (-1.3% from 1.7%).
Monetary and External Trade Sectors
The Philippines’ macroeconomic fundamentals remain sound, characterized

by resilient domestic growth, low and stable inflation, low interest rates,
favourable fiscal position, and broadly stable peso. Headline inflation rose to
1.8 percent in 2016 from its 2015 full-year average of 1.4 percent. This was due
to tighter food supply arising from weather-related supply disruptions as
well as rising domestic pump prices caused by higher international oil prices.
Nonetheless, the 2016 inflation outturn fell below the government target
range of 3.0 percent ± 1.0 percentage point.
The Bangko Sentral ng Pilipinas (BSP) maintained appropriately calibrated

monetary policy settings amidst below-target inflation for the year. The BSP’s
steady monetary policy stance along with the favourable National
Government (NG) fiscal position resulted in low and stable domestic interest
rates. As shown below, the 364-day Treasury bill (T-bill) rate registered an
average of 1.8 percent in the twelve auctions offered by the Bureau of the
Treasury (BTr) in 2016, lower than the 2.1-percent average rate in 2015 and
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below the 2.0-4.0 percent DBCC assumption range for the year. The lower T-
bill rate in the primary market reflected strong market demand for short-term
government securities, amid slower-than-expected tightening in US monetary
policy.
Table 3. Actual Performance versus Macroeconomic Assumptions

2016
Particulars 2016 BESF 2017 BESF
Actual
Initial Projections Adjusted/Updated
Inflation (%) 2.0-4.0 2.0-4.0 1.8
364-day T-bill rate (%) a/ 2.0-4.0 2.0-4.0 1.8
Foreign exchange rate (Php/US$1) 43.00-46.00 45.00-48.00 47.49
180-day LIBOR (%) 1.0-2.0 0.8-1.8 1.1
Dubai crude oil price (US$/barrel) 55.00-75.00 35.00-50.00 41.27
Goods exports growth (%) b/ 6.0 3.0 0.6
b/
Goods imports growth (%) 12.0 7.0 16.6
Notes:
a/ Based on primary market rates
b/ Based on the Balance of Payments and International Investment Position Manual, 6th edition (BPM6)
*Actual data for 2016
Sources: DBM, BTr, BSP
The Philippine peso weakened against the US dollar, recording an average

exchange rate of P47.49/US$1 in 2016 from P45.50/US$1 in 2015. This was
within the adjusted exchange rate assumption of P45.00-P48.00/US$1 in the
2017 Budget of Expenditures and Sources of Financing (BESF), but slightly
lower than the earlier assumption of P43.00-P46.00/US$1 in the 2016 BESF.
Global market developments, particularly in the US and China, have largely
influenced the trend in the peso-dollar exchange rate. The impact of US Fed
rate hike in December 2016, expectations of further US Fed rate hikes as well
as concerns over China’s economic slowdown contributed to the depreciation
of Philippine peso during the year. Nonetheless, the country’s strong
macroeconomic fundamentals along with ample international reserves,
sustained foreign exchange inflows from overseas Filipino (OF) remittances,
foreign direct investments inflows, tourist receipts, BPO receipts, and the
country’s investment-grade status helped provide sufficient cushion against
the volatilities caused by external developments, helping to counterbalance
depreciation pressures.
Moreover, expectations of a steeper trajectory of foreign interest rates,

reflecting the projected policy rate path of US Federal Reserve contributed to
the increase in the 180-day LIBOR. The average LIBOR rose to 1.1 percent in
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2016 from the 0.5-percent average in 2015, but within the revised assumption
range of 0.8-1.8 percent in the 2017 BESF and the initial assumption range of
1.0-2.0 percent in the 2016 BESF.
Meanwhile, the average per barrel price of Dubai crude oil further to
US$41.27 in 2016, from US$50.92 in the previous year. The said outturn was
within the adjusted assumption range of US$35-US$50 per barrel in the 2017
BESF, but lower than the initial assumption range of US55-US$75 per barrel in
the 2016 BESF. Global crude oil prices remained generally subdued in early
2016 due largely to the sustained glut in the global oil supply. However, it
rebounded in late 2016 following an agreement among major oil-producing
countries to reduce production in an effort to stabilize oil prices. Nonetheless,
the increase in prices in late 2016 was not enough to offset the substantial
decline recorded in the year.
Amid the generally weak demand in advanced economies and major

emerging economies, coupled with the softening of commodity prices, goods
exports grew slightly by 0.6 percent in 2016 to US$43.4 billion from the
US$43.2 billion in 2015. While it indicated recovery from the 13.3 percent
contraction in the previous year, it fell short of the projected initial and
adjusted growth rate of 6.0 percent and 3.0 percent in the 2016 and the 2017
BESF, respectively. Moreover, exports of manufactured goods declined year-
on-year by 7.1 percent due largely to lower shipments of machinery and
transport equipment, non-consigned electronics (including other electronics),
and garments on account of the continued sluggish demand from the
country’s major trading partners. Exports of mineral products likewise fell by
18.8 percent, while exports of agro-based products recovered with 2.3 percent
growth in 2016 from more than 20 percent contraction in 2015.
On the other hand, goods imports in 2016 rose by 16.6 percent, reversing the
slight contraction in 2015, and surpassing the initial and adjusted growth
projection of 12.0 percent and 7.0 percent, respectively for the year. The year-
on-year expansion in total goods imports was driven mainly by purchases of
capital goods and raw materials/intermediate goods, which increased by 41.6
percent and 16.8 percent, respectively. Imports under these two (2) major
commodity groups accounted for 15.5 percentage points of the 16.6 percent
aggregate growth in imports, pointing to the continued expansion in the
domestic economy’s capital formation and production. Growth in imports of
capital goods was supported by higher inward shipments of power
generating and specialized machines, and telecommunication equipment and
electrical machines. The increase in imports of raw materials and intermediate
goods was driven primarily by purchases of manufactured goods particularly
iron and steel and non-metallic mineral manufactures. By contrast, imports of
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mineral fuel and lubricants declined by 15.2 percent due mainly to the 29.6
percent contraction in the value of imports of petroleum crude as world
market prices of crude oil on the whole, remained low in 2016.
Employment
The higher pace and improved quality of economic growth have created more
and better employment in the last six years, leading to the significant decline
in unemployment rate and improvement in the quality of employment in
2016. The unemployment rate reached its lowest in the past decade at 5.5
percent. At the same time, the quality of employment improved in the past six
years, as majority of workers found remunerative work and full-time
employment, thus increasing the overall mean hours of work.
Table 4. Employment, actual versus target, 2014-2016

2014 2015 2016
Indicators
Target Actual Target Actual Target Actual
Unemployment rate (%) 6.7-6.9 6.6 6.6-6.8 6.3 6.5-6.7 5.5
Underemployment rate (%) 19.0 18.4 18.0 18.5 17.0 18.3
Source: Labor Force Survey, PSA
As shown in the table above, the unemployment rate targets in the last three
years were surpassed. This was achieved by the dramatic reduction in the
youth unemployment rate, from 16.6 percent in 2010 to 11.6 percent in 2016.
Apart from the increased labor demand in support of the faster economic
growth, a big factor was the expansion of the 4Ps to cover high school
students beginning 2016 and the implementation of the senior high school
program, which increased school participation (and, therefore, reduced labor
market participation) of those aged 15 to 17 years.
However, an equally serious concern is underemployment, where in 2015 and

2016, the country lagged behind in terms of attaining its underemployment
targets. The agriculture sector continues to account for a significant share in
employment – close to 30 percent. Nevertheless, given that the jobs available
in the agriculture sector were seasonal and low-paying, it is not uncommon to
see relatively high underemployment in the sector. For instance, in 2016,
underemployment in the sector was about 25.7 percent, which is higher
compared to around 18.9 percent in industry and 14.4 percent in services. The
high underemployment rate of the country can also be attributed to a
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considerable segment of laborers and unskilled workers, which make up one-

third of total employment.
Poverty
The Philippines significantly advanced in terms of bringing down its poverty

incidence. 2 From the baseline 26.3 percent poverty incidence in 2009, the
target was to reduce this to 22.5 percent in 2015 during the mid-term updating
of the Philippine Development Plan, 2011-2016. This was surpassed by the
actual rate of 21.6 percent in 2015, reaching a record-low since 2006. Among
families, the poverty incidence during this year, fell from 20.5 percent in 2009
to 16.5 percent in 2015. Consistent with this, extreme poverty, as measured by
subsistence incidence, or the proportion of the population who could not
afford to meet their basic food requirements, also declined from 20.9 percent
of individuals in 2009 to 8.1 percent in 2015.
Table 5. Poverty, Subsistence Incidence, and Poverty Treshold, 2006-2015

Indicator FY 2006 FY 2009 FY 2012 FY 2015
Poverty Incidence (%)
Families 21.0 20.5 19.7 16.5
Population 26.6 26.3 25.2 21.6
Subsistence Incidence (%)
Families 8.8 7.9 2.5 5.7
Population 12.0 10.9 10.4 8.1
Monthly Poverty Threshold for a Family 5,566 7,030 7,889 9,064
of Five (Php)
Monthly Food Threshold for a Family of 3,878 4,908 5,513 6,329
Five (Php)
Source: Family Income and Expenditure Survey, PSA
There were many factors at work that may explain this. First, the economy
experienced stable inflation environment in the period, as evidenced by
slower adjustments from an average of 12.1 percent in 2009-2012 to 8.8
percent in 2015. Second, per capita income growth for the bottom three deciles
of households (poorest households) grew faster at an average of 24.3 percent
in 2012-2015, relative to the average for all income groups (15.8 percent). The
stable prices in tandem with faster increase in per capita income of the poor
2
The latest poverty incidence used in the report is released in 2015. In the past, the poverty incidence in the
country is released every three years, although there are agreements made to release the poverty results every
two years, moving forward. The next release of poverty incidence is expected in 2018.
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resulted in higher purchasing power of the poor during the period. Lastly, the
continued implementation of the government’s social programs, particularly
the CCT, KALAHI-CIDSS, and the Sustainable Livelihood Program provided
additional support in coping up with major shocks and may have helped
some to diversify livelihood sources.
As mentioned, one contributing factor to the decline in the poverty rate is the
expansion of the 4Ps that provided cash transfers to family beneficiaries
conditional on the attendance in school of child members and in Family
Development Sessions of parent/s, and the healthcare seeking behaviour of
families. But the overall decline in poverty incidence may have been more
pronounced had individuals, families and economic sectors been more
resilient and prepared to withstand or at least recover quickly from the more
frequent natural and human-induced shocks and hazards that befell the
country.
The broad-based decrease in poverty incidence eased disparities across

regions. But NCR and its adjacent regions continued to post the lowest
poverty incidence while regions in Mindanao consistently recorded the
highest. Per capita income of the bottom three deciles rose across all regions
in the 2012-2015 period with seven regions posting per capita income growth
rates higher than the national average. Notably, Region I and Region III
brought down their proportion of poor families to single digit levels for the
first time since 2006. Nonetheless, the high proportion of poor families in the
Mindanao regions, particularly ARMM, could be linked to the large number
of conflict-related displacements in 2015 and the poor business environment
arising from such conflicts.
To further accelerate poverty reduction, it is important for the government to

leverage on employment as a tool for sustaining the momentum of decline,
while maintaining its effective poverty reduction program to more threshold
levels down by improving the efficiency of their implementation, ensuring
increased incomes, and sustaining low inflation.
III.2 Fiscal Performance
The DBCC revised the 2016 fiscal program on July 5, 2016 as the new
economic managers under the Duterte Administration adopted more realistic
fiscal targets on account of the following: a) prevailing macroeconomic
environment which could affect revenue outturns; b) absorptive capacity
issues of implementing agencies as reflected in their recent disbursement
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performance; and c) the expected temporary delays and slowdown in

spending due to the major transition to a new administration after a
presidential election.
The revised fiscal program consisted of P2,256.7 billion revenue collection

target equivalent to 15.5 percent of the revised GDP projection, and P2,645.6
billion disbursements projection, accounting for 18.2 percent of GDP. This
resulted to a P388.9 billion deficit limit for the year, equivalent to 2.7 percent
of GDP. This program is consistent with the 2016 Outlook presented in Table
A.2 of the 2017 BESF.
Table 6. 2016 Fiscal Program, Original vs. Revised

(In billion pesos)
2016 Program Variance
Particulars % of GDP
Original Revised Amount %
Revenues 2,696.8 2,256.7 15.50 (440.0) 16.3

Disbursements 2,995.4 2,645.6 18.20 (349.8) 11.7
Surplus/(Deficit) (298.6) (388.9) (2.7) (90.3) 30.2
The actual National Government (NG) fiscal deficit for 2016 increased to 2.4
percent of GDP, higher than 2015’s 0.9 percent ratio, and the highest level
attained for the past five years. In nominal terms, the NG deficit reached
P353.4 billion or 91 percent of the target. NG expenditure reflected a faster
14.3 percent growth from 2015, while revenue collections grew by 4.1 percent.
III.2.1 Revenue Performance
For 2016, total revenues amounted to P2,195.9 billion, 4.1 percent higher than
the 2015 collection of P2,109.0 billion. The 2015 collection includes non-
recurring privatization revenue from the transfer of the P60.1 billion Coconut
Levy Fund to the government’s general fund amounting to. Net of this Levy
Fund transfer, revenue grew by 7.2 percent in 2016. As percent of GDP, total
revenues reached 15.2 percent. Tax revenues made up 86.1 percent of total
revenues as can be seen below.
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Table 7. NG Fiscal Position

(In billion pesos)
% Variance Growth
2015 2016 2016 (2016 rate (Actual
Particulars
Actual Program Actual Actual vs. 2015 vs.
Program) 2016)
Total Revenues 2,109.0 2,256.7 2,195.9 -2.7% 4.1%
Total revenues less coco levy 2,048.9 2,256.7 2,195.9 -2.7% 7.2%
Revenue effort 15.8% 15.5% 15.2%
Tax revenues 1,815.5 2,044.0 1,980.4 -3.1% 9.1%
Tax effort 13.6% 14.1% 13.7%
Non-tax revenues 230.7 210.7 214.9 2.0% -6.9%
Privatization 62.8 2.0 0.7 -67.2% -99.0%
Expenditure 2,230.6 2,645.6 2,549.3 -3.6% 14.3%
Surplus/(Deficit) (121.7) (388.9) (353.4) -9.1% 190.4%
% of GDP -0.9% -2.7% -2.4%
Tax revenues reached P1,980.4 billion, 9.1 percent or P164.9 billion higher
than the P1,815.5 billion revenues in 2015. The tax effort increased to 13.7
percent in 2016 from 13.6 percent in 2015. The Bureau of Internal Revenue
(BIR) and Bureau of Customs (BOC) raised collections by 9.3 percent and 7.8
percent, respectively.
Non-tax revenues totaled P214.9 billion, which is lower than the 2015 level of
P230.7 billion. These include collections from fees and charges, income of the
Bureau of Treasury (BTr), collections from Government-Owned and
Controlled Corporations (GOCCs), and other non-tax revenues such as
Malampaya royalties. The decline in non-tax revenues resulted from the
lower income of the Bureau of the Treasury from BSF/SSF investments and
NG deposits, and also lower guarantee fee collection and dividend
remittance.
Total remittances from the government’s privatization program also

contracted by 99 percent in 2016, with the one-time transfer of the P60.1
billion Coco Levy Assets in 2015.
BIR Collection in 2016
The BIR collected P1,575.9 billion, an annual growth of 9.3 percent against
2015. BIR reached 97.3 percent of its revised target of P1,620.0 billion for FY
2016. BIR paid out tax refunds amounting to P8.3 billion in 2015 and P8.6
billion in 2016. Bulk of the refunds were for VAT in both years. In 2015,
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refunds were made on Taxes on Company/Corporate Enterprise (P103.0

million), Taxes on Individual (P8.0 million), Excise on Tobacco (P355.4
million), Excise on Petroleum (P0.05 million), VAT (P7,716.2 million),
Franchise Tax (P84.2 million), Tax on Property (P2.3 million) and
Documentary Stamp Tax (P1.9 million). For 2016, tax refunds were paid out to
Taxes on Company/Corporate Enterprise (P69.3 million), Taxes on Individual
(P7.6 million), Tax on Government Securities (P3,291.6 million), VAT (P5,198.8
million), Tax on Property (P2.3 million), Documentary Stamp Tax (P1.2
million), and Other Miscellaneous Tax (P0.3 million).
BIR attributed the increase in collections to the agency’s strict enforcement of

the country’s tax laws and continuing its priority programs, such as the Run
After Tax Evaders (RATE), Oplan Kandado and other enforcement activities,
including the Tax Compliance Verification Drive (TCVD), stocktaking
operations, post-evaluation of Cash Register Machines (CRM)/Point-of-Sales
Machines (POS), increased collection from delinquent accounts, and the
Bureau’s intensified audit program.
Table 8. BIR Collections

(In billion pesos)
Growth % Variance
2015 2016 2016 rate (Actual (2016
Particulars
Actual Target Actual 2015 vs. Actual vs.
2016) Program)
Total BIR Collections 1,441.57 1,620.00 1,575.87 9.3% -2.7%
Taxes on Income and Profits 846.20 945.62 924.59 9.3% -2.2%

o.w. Individual Income Tax 309.21 325.43 343.86 11.2% 5.7%
Taxes on Property 5.64 5.33 6.64 17.8% 24.6%
Taxes on Domestic Goods 589.73 669.05 644.65 9.3% -3.6%
and Services
Value Added Tax 295.50 336.26 331.42 12.2% -1.4%
Excise taxes 158.32 178.00 163.51 3.3% -8.1%
Percentage taxes 58.38 65.92 64.62 10.7% -2.0%
Franchise taxes 0.61 0.56 0.51 17.6% 9.0%
Documentary stamp tax 72.07 83.31 80.20 11.3% -3.7%
Other taxes 4.85 5.01 4.40 -9.3% 12.1%
Page 14 of 66
Taxes on Income and Profits
The positive year-on-year performance of income taxes was driven by several

factors:
1. Strengthening of tax administration for individual income tax as

collections grew by 11.2 percent in 2016, higher than the growth of
compensation of employees in the income and outlay accounts
2. Higher growth in the Industry and Services Sectors in 2016. Industry and
Services account for 91.2 percent of GDP.
Excise Taxes
Excise tax revenues increased by 3.3 percent compared with 2016, mainly
coming from higher collections from alcohol products.
Excise tax revenues from tobacco products fell against 2015. The decline in
collections is attributed largely to the impact of the discovered widespread
use of fake stamps on cigarettes by a cigarette producer which now faces tax
evasion cases, and the implementation of Graphic Health Warning (GHW)
Law.
Value-Added Tax
The increase in VAT collected in 2016 by 12.2 percent results from higher
volume of sales by various taxpayers engaged in wholesale and retail trade,
manufacturing, automobiles, and alcohol sectors as well as election-related
spending. VAT collections grew much faster than nominal GDP growth,
indicating better administration and VAT buoyancy.
Percentage Taxes
Percentage tax collection in 2016 improved by 10.7 percent due to the higher
volume of loans of the banking sector driven by the expansion in both
production and household consumption loans.
Page 15 of 66
Other Taxes
The increase in loan activity in the financial sector in 2016 also resulted in an
increase in volume of transactions subject to Documentary Stamp Tax (DST).
Growth in DST offset the decline in donor’s tax collected in 2016.
BOC Collections in 2016
Total BOC collections grew by 7.8 percent in 2016, reaching a total of P398.4
billion. The bureau collected 97.4 percent of its revised target of P409.0 billion.
The BOC collection includes tax refund amounting to P2.0 billion which is
beneath the P6.5 billion allotted in the Special Provision for tax refund of the
BOC. Tax refund applied and claimed are mostly from Value Added Tax
payments.
As shown in the table below, import taxes, comprising of VAT and excise tax,
accounted for 83.6 percent of BOC’s collections. VAT on goods brought in
P291.7 billion for the year, 6.2 percent up than in 2015. The strong collection
from excise tax, which grew by P41.5 billion or 30.4 percent, was on account
of higher excisable imports, particularly motor vehicles.
The collection from crude oil and petroleum products, decreased from P62.2
billion to P51.5 billion due to the drop in oil prices up to the third quarter of
2016.
The improvement in valuation boosted duty collections by 3.8 percent,

despite lower average tariff rates and the higher share of non-dutiable
imports to total imports posted in 2016. The average tariff rate went down
from 6.49 percent in 2015 to 5.99 percent in 2016, while the ratio of non-
dutiable-to-total imports rose by 81 percent in 2016. Top commodities in
terms of duties and taxes paid include motor vehicles, foodstuff, petro
products, industrial machineries/equipment, iron/steel, crude oil,
organic/inorganic chemicals, plastic/resin, and pharmaceutical products.
Page 16 of 66
Table 9. BOC Collections

(In billion pesos)
Growth % Variance
2015 2016 2016 rate (Actual (2016
Particulars
Actual Target Actual 2015 vs. Actual vs.
2016) Program)
Total BOC Collections 367.53 409.00 398.41 8.4% -2.6%
o.w. TEF 10.13 10.00 7.75 -23.5% -22.5%
Import duties 57.14 51.88 59.31 3.8% 14.3%
Non-oil 57.13 51.88 59.31 3.8% 14.3%
Oil 0.01 - 0.01
Value Added Tax 274.70 322.10 291.72 6.2% -9.4%
Non-oil 225.68 273.90 251.06 11.2% -8.3%
Oil 49.02 48.20 40.66 -17.1% -15.6%
Crude 22.52 20.90 14.79 -34.3% -29.2%
Oil products 26.50 27.30 25.87 -2.4% -5.2%
Excise Taxes 31.82 35.02 41.49 30.4% 18.5%
Others 3.88 - 5.88 51.6%
III.2.2 Borrowing Performance
National Government Financing
For 2016, the National Government (NG) raised P507.0 billion in gross
financing to cover the budget deficit of P353.4 billion and refinancing
requirement of P176.1 billion, inclusive of the P53.9 billion used to buyback
outstanding expensive debt. As shown in the table below, the actual gross
financing is lower than the revised full year program of P695.4 billion, given
the actual deficit lagging behind program for most of the year. Domestic
borrowing was still heavily favoured, although settling at a lower ratio than
the target with an external-to-domestic financing mix of 29:71. But using the
net proceeds from the bond exchange transactions will lead to an adjusted
external-to-domestic financing mix of 21:79.
Page 17 of 66
Table 10. National Government Financing, FY 2016

(In million pesos)
2016 Actual vs. Revised
Particulars Revised
Program 1/ Actual 3/ Difference Variance
Program 2/
NET FINANCING 327,100 516,804 330,939 (185,865) -36%
Net External Borrowing (13,068) (18,219) (24,113) (5,894) 32%

4/
Gross External Borrowing 104,575 157,051 149,523 (7,528) -5%
5/
Less: Amortization 117,643 175,270 173,636 (1,634) -1%
Net Domestic Borrowing 340,168 535,023 355,052 (179,971) -34%

Gross Domestic Borrowing 570,228 538,373 357,497 (180,876) -34%
6/
Less: Amortization 230,060 3,350 2,445 (905) -27%
Amortization (Schedule 2) 312,780 311,875 (905) 0%
o/w Serviced by the BSF 7/ 309,430 309,430 - 0%
GROSS FINANCING 674,803 695,424 507,020 (188,404) -27%
Financing Mix (% of the Total)

External 15 23 29
Domestic 85 77 71
Note:
1/ Based on the BESF 2016 Table D.1 (This still follows the old reporting of debt amortization which includes
Contribution to BSF and payments to regular debt for both foreign and domestic.)
2/ Based on BESF 2017 Table D.1
3/ Based on 2016 Cash Operations Report
4/ Includes proceeds used to prepay outstanding bonds in bond exchange transactions
5/ Includes prepayments made through bond exchange transactions
6/ Domestic Amortization only includes A/R Bonds
7/ Actual redemption from Sinking Fund
Source: Bureau of the Treasury
Of the total amount, P149.5 billion or 29 percent was raised externally through
the availment of concessional loans from development partners and the
issuance of dollar bonds in the international capital markets. A new 25-year
global bond (or ROPs) in the amount of USD2.0 billion or P95.1 billion was
issued in March in line with debt management efforts to reduce interest
payments and extend portfolio maturities. Meanwhile, program loans from
the Asian Development Bank (ADB) comprised the bulk of loan availments,
specifically: (1) USD300 million or P14.1 billion from Encouraging
Investments through Capital Market Reform Program and (2) USD300 million
or P14.1 billion from Expanding Private Participation in Infrastructure
Program.
Page 18 of 66
Domestic borrowings through the auction of treasury bills and bonds

contributed P357.5 billion or 71 percent to the borrowing effort. Gross
treasury bills floatation amounted to P215.5 billion while redemptions
amounted to P192.0 billion, leaving P23.5 billion for financing. Meanwhile,
P234.0 billion came from the issuances of 5-, 7-, and 10-year treasury bonds. In
September, a total of P100.0 billion was also raised from the Treasury’s
issuance of its 18th tranche of retail treasury bonds as part of the
government’s initiative of reaching a wider investor base, promoting savings
and investment consciousness among Filipinos, and mobilizing domestic
savings.
For 2017, the National Government aims to borrow predominantly in local

currency to meet its funding requirements in line with the goal of reducing
the country’s exposure to foreign currency volatility and contribute to the
development of the domestic capital market. On the external financing side,
the NG will continue to take advantage of available concessional loans from
development partners. The program targets an 80:20 mix between domestic
and foreign sources of financing.
National Government Debt
By year-end 2016, NG outstanding debt was registered at P6,090 billion. Of

the total, 35 percent or P2,156 billion were sourced from external creditors
while 65 percent or P3,934 were owed to domestic creditors. From its level a
year ago, NG debt has increased by 2.3 percent or P135.73 billion, with
domestic and foreign debt registering increments of 1.3 percent or P49.72 and
4.2 percent or P86.01 billion, respectively.
Debt sustainability indicators such as the debt-to-GDP ratio has further

improved, narrowing to 42.06 percent as of end-December 2016 compared to
44.70 percent from the previous year.
Page 19 of 66
Table 11. National Government Debt

(In million pesos)
Particulars 2015 2016 Difference Variance
Total 5,954,917 6,090,262 135,345 2.3%
External 2,070,537 2,156,165 85,628 4.1%
Domestic 3,884,380 3,934,097 49,717 1.3%
% of Total
External 34.77% 35.40%
Domestic 65.23% 64.60%
% of GDP 44.70% 42.06%
External 15.54% 14.89%
Domestic 29.16% 27.17%
Currency Breakdown
Foreign 33% 34%
Domestic 67% 66%
Interest Rate Mix 100.00% 100.00%
Fixed 91.85% 91.23%
Floating 8.03% 8.64%
Interest Free 0.12% 0.13%
Weighted Average Interest Rate 5.19% 4.99%
External 4.67% 4.54%
Domestic 5.46% 5.24%
Average Maturity (years) 10.04 10.05
External 11.86 12.17
Domestic 9.16 8.73
Total Interest Payments (IP) 309,364 304,454 (4,910) -1.6%
External 93,775 99,028 5,253 5.6%
Domestic 215,589 205,426 (10,163) -4.7%
% of GDP
Total IP 2.32% 2.10%
% of NG Expenditures
Total IP 12.14% 11.94%
% of NG Revenues
Total IP 14.09% 13.86%
Domestic 10.22% 9.35%
Memo Items:
GDP 13,322,041 14,480,720
PESO/USD 47.15 49.77
Expenditures 2,230,645 2,549,336
Revenues 2,108,956 2,195,914
Note:
1/ Based on jurisdiction of issuance
2/ Based on currency of issuance
3/ Average Maturity measured in years on a residual basis
Page 20 of 66
Alongside improvements in the relative size of its debt, the NG was also
successful in shifting the profile of its outstanding debt in line with cost and
risk considerations.
• The currency mix of NG obligation indicates moderate exposure to

adverse adjustments in foreign exchange. Based on value, Peso-
denominated obligations account for 66 percent of the total, followed by
USD, JPY and EUR at 28 percent, 5 percent, and 1 percent, respectively.
Year-on-year, the currency mix has been kept fairly stable.
• The debt structure maintains minimal exposure to unfavorable swings

in interest rate. Only 8.64 percent of the total debt portfolio is subject to
resetting, which limits the sensitivity of interest payments to volatile
market conditions.
• Average residual maturity continues to be at the upper bound of the

medium-term target of 7-10 years. The average maturity of NG debt is
10.05 years long, with domestic and external debt having remaining
maturities of 8.73 and 12.17 years, respectively. Short term debt (less
than1-year maturity) based on residual maturity makes up a mere 8.92
percent of the total debt portfolio as of end-2016.
• The weighted average interest rate (WAIR) for total NG Debt has
remained low and stable at 4.99 percent from 5.19 percent a year ago.
The WAIR for both domestic and foreign borrowing has gone down to
5.24 percent and 4.54 percent as of end-2016 from 5.46 percent and 4.67
percent a year ago, respectively.
• Concomitantly, Interest Payments (IP) went down in absolute terms, to

P304.5 billion in 2016 from P309.4 billion in 2015. It eased to 13.9 percent
of revenues and 11.9 percent of expenditures, from 14.7 percent and 13.9
percent the year before, respectively.
Going forward, NG will continue with its strategic approach to debt issuance
to take advantage of opportunities to further improve the profile of its
outstanding obligations.
Page 21 of 66
III.2.3 Disbursement Performance
Year-on-Year Performance
National Government spending reached P2,549.3 billion as of December 31,

2016. Disbursements grew by 14.3 percent – the highest annual growth posted
since 2000 – and equivalent to about P320.0 billion additional outlays from the
P2,230.6 billion level recorded for the full year of 2015. The spending in 2016
was largely driven by strong infrastructure and other capital expenditures,
higher budgetary support to government corporations and substantial
transfers to local government units.
Table 12. National Government Disbursements, January to December 2016

(In billion pesos)
2015 Jan to Dec 2016 Variance Increase/(Decrease)
Particulars
Actual
Rev. Program* Actual* Amount Percent Amount Percent
Current Operating Expenditures 1,782.2 1,957.7 1,909.3 (48.4) (2.5) 127.10 7.1
Personnel Services 664.4 726.2 723.2 (3.0) (0.4) 58.8 8.8
Maintenance Expenditures 400.3 478.3 419.8 (58.5) (12.2) 19.5 4.9
Subsidy 78.0 70.7 103.2 32.5 46.0 25.2 32.3
Allotment of LGUs 312.2 342.9 342.9 - - 30.7 9.8
Interest Payments 309.4 327.7 304.5 (23.3) (7.1) -4.9 (1.6)
Tax Expenditure Fund 17.8 11.8 15.7 3.9 32.9 -2.1 (11.7)
Capital Outlays 438.8 671.1 624.7 (46.3) (6.9) 185.9 42.4

Infrastructure/Other CO 345.3 533.1 493.0 (40.1) (7.5) 147.7 42.8
Equity 0.8 8.6 11.7 3.1 35.8 10.9 1,422.9
Capital Transfers to LGUs 92.7 129.3 120.0 (9.3) (7.2) 27.3 29.5
Net Lending 9.7 16.8 15.3 (1.5) (9.1) 5.6 57.8
Grand Total 2,230.6 2,645.6 2,549.3 (96.3) (3.6) 318.7 14.3

Memo Items:
Revenues 2,109.0 2,256.7 2,195.9 (60.8) (2.7) 87.0 4.1
Surplus/(Deficit) (121.7) (388.9) 353.4 35.4 (9.1) (231.7) 190.4
*The Local Government Support Fund was released under the Allotment to LGUs and Capital Transfers to LGUs. This was previously treated as part of the
NG MOOE.
Infrastructure and other capital expenditures surged by 42.8 percent to reach

P493.0 billion, almost half a trillion vis-à-vis the P345.3 billion outlays in 2015.
This was a result of the government’s acceleration of infrastructure projects of
the Aquino administration during the first half of the 2016 ahead of the
transition to the new administration, as well as the implementation of critical
infrastructure programs and other capital projects for the rest of the year.
Specifically, this include the following: a) road infrastructure network of the
DPWH (e.g., road widening, repair and rehabilitation of national roads); b)
modernization program of the DND-AFP and c) other capital outlay projects
in the DOH (e.g., health facilities and medical equipment), DepEd and some
SUCs (e.g., construction, rehabilitation and repair of educational facilities).
Page 22 of 66
Subsidy and equity to government corporations have likewise propelled the

growth of disbursements in 2016, increasing by 32.3 percent to reach P103.2
billion and more than a hundred percent to end at P11.7 billion, respectively.
Government subsidies in 2016 are largely composed of the P43.8 billion
support to the Philippine Health Insurance Corporation (PHIC) for the
premium payments of the indigents and senior citizens enrolled under the
National Health Insurance Program, P16.9 billion to the National Irrigation
Administration (NIA) for completed irrigation projects nationwide, and P12.0
billion to the National Housing Authority (NHA) for its housing programs.
Meanwhile, equity contributions include the capitalization requirements of
the Development Bank of the Philippines (DBP) and Land Bank of the
Philippines (LBP) amounting to P5.0 billion and P5.8 billion, respectively,
consistent with Basel III requirements.
Allotment and Capital Transfers to LGUs combined for some P463.0 billion
disbursements, expanding by P58.0 billion or 14.3 percent year-on-year as a
result of higher internal revenue collections and additional NG development
assistance through the Local Government Support Fund (LGSF) 3 . The
Allotment to LGUs is composed of the 80 percent of LGU Internal Revenue
Allotment (IRA) while the Capital Transfers consisted of the remaining 20.0
percent of the IRA allotted for developmental projects, the special shares of
the LGUs in the proceeds of the national taxes, and the LGSF intended for
capital outlay and local infrastructure development. In 2016, some P18.4
billion cash allocations under the LGSF were released to qualified LGUs
which had complied with the good governance conditions and public
financial management criteria of the said fund.
Other sources of growth were personnel services (P723.2 billion; 8.8 percent
year-on-year) and maintenance expenditures (P419.8 billion; 4.9 percent) due
to the higher salaries and benefits of government employees pursuant to E.O.
201 s. 2016 and expansion of social services programs, respectively. The
growth of maintenance expenditures, however, was muted by the delays
experienced during the transition period.
Program vs Actual Performance
Against the revised full year program of P2,645.6 billion, the underspending
was minimal at 3.6 percent equivalent to some P96.3 billion. This is
significantly lower when compared to the underspending recorded in 2014
(13.3 percent, P302.7 billion), in 2015 (12.8 percent, P328.3 billion) and in the
first semester against the original program (11.9 percent, P164.4 billion).
3
This was reclassified under the Allotment and Capital Transfers to LGUs. Previously it was treated as part of the NG
MOOE.
Page 23 of 66
Among the major factors that continued to cause the underspending were: a)
low obligations emanating from procurement issues (e.g., delayed, failed and
ongoing biddings) and expected and temporary delays during the transition
period (e.g., change in leadership in line agencies and evaluation of ongoing
programs/projects against the priorities of the new administration); b)
payment and billing issues due to incomplete and non-submission of
documentary requirements and liquidation reports; and c) unreleased
allocations of LGUs from the Special Shares in the Proceeds of National Taxes
pending release of certifications from collecting agencies.
The departments and expenditure items as well as the examples of programs

and projects where sizable underspending were recorded are summarized
below:
Maintenance expenditures (P58.5 billion or 12.2 percent)
Reason/s Department Programs/Projects Estimated Amt.

Banner programs and services such as hospital
DOH services, general administrative services and health P2.1 billion
Low sector policy services
Obligations DICT
(formerly Free Wi-Fi Project P1.6 billion
DOST-ICTO)
National Programs for Rice, Corn, High Value
DA Development Crops, Organic Agriculture and P4.0 billion
Livestock, BUB/PAMANA programs
Government Assistance to Students and Teachers in
DepEd P3.6 billion
Private Education (GASTPE)
Billing Issues
Student Financial Assistance and K-12 Transition
CHED P1.5 billion
Programs
DOTr MRT3 Maintenance and General Overhauling P690.0 million
SALINTUBIG (potable water supply proj.),
DILG P687.0 million
BUB/PAMANA Programs
Non-
completion of
acceptance and DOTr Acquisition of 48 new MRT3 coaches P2.2 billion
testing of
delivered items
Postponement
of SK and
COMELEC 2016 SK and Barangay Elections P4.8 billion
Barangay
Elections
Page 24 of 66
Infrastructure and other capital outlays (P40.1 billion or 7.5 percent)
Reason/s Department Programs/Projects Estimated Amt.
DOH Health Facilities Enhancement Program P7.6 billion
DOTr Various Locally-Funded Projects P2.7 billion
Procurement DOF-BIR Construction of buildings/offices P2.3 billion

Difficulties
Acquisition of properties, renovation of buildings
and purchase of furniture, fixtures and equipment
DFA P1.6 billion
for chanceries, residences and office space for
consular or diplomatic posts
Ongoing
construction
and/or
DND AFP Modernization Project P1.0 billion
pending
approval of
projects
Unrequested
transfer of DOTr, PNR Various rail and port projects under Memorandum
P1.8 billion
funds and PPA of Agreement with the DOTr
On a positive note, underspending also came from the P23.3 billion savings in
interest payments resulting from the debt liability management strategies
implemented by the BTr.
Disbursements for the following expenditure items, however, exceeded the

program: 1) subsidy (P32.5 billion, 46.0 percent); 2) tax expenditures (P3.9
billion, 32.9 percent); and 3) equity (P3.1 billion, 35.8 percent). The program
for the said expenses were significantly reduced during the revision of the
2016 full year program on account of their historically low fund utilization.
Hence, some items for the aforementioned expenditures which materialized
during the second half of the year were not considered in the revised
program.
Page 25 of 66
IV. National Government Expenditure Performance
IV.1 Allotment Releases and Obligations
As shown in the table below, the total appropriations available for 2016
amounted to P3,279.5 billion, consisting of the P3,006.8 billion program for the
year and the P272.7 billion continuing appropriations or the 2015
appropriations which remain valid until the end of 2016.
Allotment releases as of end-December 2016 totalled to P3,093.6 billion or 94.3

percent of the available appropriations for the year. This is comprised of some
P2,846.6 billion from current appropriations, and some P247.0 billion from
continuing appropriations, which is inclusive of the P204.5 billion
unobligated allotments released in 2015. The bulk of the releases pertains to
the budget of line agencies amounting to P2,075.3 billion or 67.1 percent.
Actual obligations in 2016, meanwhile, reached P2,682.8 billion or 86.7 percent

of the total P3,093.6 allotment releases. The total obligation rate for 2016
declined slightly from the 87.1 percent recorded in 2015 mainly due to lower
interest payments which merely reached 77.5 percent of the program
appropriations, down from 83.0 percent in 2015. The obligation rate for
National Government Agencies (NGAs), on the other hand, was recorded at
84.5 percent, almost the same as the 84.1 percent budget utilization rate
posted in 2015. Faster fund absorption were noted in some big-spending
agencies such as the Department of Agriculture (DA) (84.0 percent to 86.5
percent), Department of Education (DepEd) (86.0 percent to 89.2 percent), and
the Department of Transportation (DOTr) (58.0 percent to 67.1 percent).
However, the overall obligation rate was pulled down by the lower budget
utilization of the Department of Social Welfare and Development (DSWD)
(87.1 percent to 82.5 percent). The details of the financial and physical
performance of the big-spending agencies are discussed in the succeeding
sections.
Page 26 of 66
Table 13. Statement of Appropriations, Allotments and Obligations, FY 2016

(In billion pesos)
Allotment
Available Actual Obligation Rate
Particulars Releases
Appropriations 1/ 2/ Obligations 3/
National Government Agencies 2,137.9 2,075.3 1,753.3 84.5

Special Purpose Funds (SPF) 733.4 610.2 609.7 99.9
GOCCs 166.7 145.3 145.3 100.0
ALGUs 508.9 464.9 464.4 99.9
Other SPFs 57.9 - - -
Automatic Appropriations 408.1 408.1 319.8 78.4
Net Lending 15.3 15.3 15.3 100.0
Interest Payments 392.8 392.8 304.5 77.5
Total 3,279.5 3,093.5 2,682.8 86.7
By Funding Source 3,279.5 3,093.6 2,682.8

Current Year 3,006.8 2,846.6 2,501.5
Continuing Appropriations 272.7 247.0 181.3
1/ Includes adjustments per Special Provision in the GAA, realignments of allotment classes and releases to
implementing units from SPFs, Unprogrammed and Automatic Appropriations.
2/ Includes the P205.4 billion unobligated allotment released in 2015
3/ Percentage of obligations vs. allotment releases
Source: Statement of Allotments and Obligations, DBM
IV.2 Financial and Physical Performance of Selected Major Programs and Projects,
by Department, as of December 31, 2016
Department of Agrarian Reform (DAR)
2015 (in billion pesos) 2016 (in billion pesos)

Department
Allotment Obligation BUR Allotment Obligation BUR
DAR 14.97 8.40 56.1% 14.27 8.19 57.4%
Financial Performance. For 2016, DAR was able to register an obligation-to-

allotment rate of 57.4 percent. This is slightly higher than the 56.1 percent the
Department registered in 2015. By source of appropriation, the agency’s
Specific Budget recorded a 61 percent obligation rate while Foreign Assisted
Projects recorded a 30 percent obligation rate. The low obligation rate for the
Specific Budget can be attributed to the slow progress in Land Tenure
Services. Land Tenure Services (LTS) registered an obligation rate of 56.6
percent. In terms of disbursements, DAR spent about P7.23 billion or 88.3
percent out of their total obligations for the year, a tad lower than the P8.00
billion or 95.5 percent accomplished in 2015.
Page 27 of 66
Physical accomplishment. For 2016 as shown below, the Department was able
to distribute 28,636 has. of land which represents only 27.3 percent of the total
target of 105,000 has. This accomplishment represents those landholdings
which reached the final milestone activity of the distribution process which is
the Registration and Distribution of Emancipation Patents (EPs) and
Certificate of Land Ownership Award (CLOA). On top of the 28,636 has.
however, some 47,131 has. are in the advance stages of land acquisition and
distribution but has not reached the registration of EP/CLOAs at the LRA.
PHYSICAL TARGETS/ACCOMPLISHMENT
2015 2016
PARTICULARS
Actual Target Actual Accomplishment
Accomplishment* (GAA) Accomplishment** Rate**
MFO 2: Land Tenure Services

No. of hectares for distribution 189,933 has. 105,000 has. 28,636 has. 27.3%
No. of hectares for acquisition 155,217 has. 30,385 has. 19.6%
MFO 4: Technical Advisory

Services (Support Services)
No. of Agrarian Reform
Beneficiaries (ARBs)
Trained in ARCs and Non-ARCs 405,768 ARBs 397,604 ARBs 517,746 ARBs 130.2%
*Source: FY 2015 MFO Accountability Report Card
**Source: FY 2016 Agency Performance Review
In terms of land acquisition, DAR was able to prepare and document claim
folders for 19.6 percent of the 155,217 hectares targeted for the year. Again,
this accomplishment includes only those landholdings which reached and/or
passed the stage of claim folder documentation. The tedious Land
Acquisition and Distribution process has been identified as one of the reasons
for their below-target performance. The said process involves 19 steps and
according to the Department takes 195 days to do under normal conditions.
Another important activity of the DAR is the provision of support services to

Agrarian Reform Beneficiaries (ARBs). For 2016, a total of 517,746 ARBs from
both agrarian reform communities (ARCs) and non-agrarian reform
communities were trained. This is 120,142 beneficiaries or 30.2 percent more
than the total target of 397,604 ARBs. However, it is important to note that
according to DAR ARBs may be trained more than once.
Page 28 of 66
Department of Agriculture (DA)

Department
DA 56.10 47.15 84.0% 51.96 44.94 86.5%
Financial Performance. Total obligations for DA amounted to P44.9 billion or

about 86.5 percent of the total allotments received by the Department, slightly
higher than their 2015 obligation rate of 84 percent. The bulk of the
obligations made by the Department was for the implementation of the
various programs and projects under the Office of the Secretary. DA-OSEC
obligated about P35.8 billion or 85.9 percent of its P41.7 billion total
allotments for the period. BFAR, on the other hand, achieved a slghtly higher
obligation rate amounting to almost P6.8 billion, which is 86.3 percent of its
allotments for 2016.
However, the Department’s disbursements rate for the period reached P34.8
billion or 77.4 percent of obligations, an improved level compared to 72.5
percent in 2015. DA-OSEC was able to disburse P27.2 billion or 75.9 percent
out of their total obligations, an improvement over the 69.9 percent of 2015.
BFAR disbursed 5.4 billion or 79.3 percent of obligations, also a slightly higher
rate than the 78.9 percent in 2015.
Physical Accomplishment. One of the major reasons given by the DA-OSEC for
its low physical performance was procurement delays. Another reason cited
was the occurrence of unforeseen events such as the insufficiency in water
supply in previously validated sites for small scale irrigation projects. This
led to the generation of 7,634 has. of service area which corresponds to 72.9
percent of the 10,476 has targeted for 2016. There were also difficulties
experienced in the distribution of planting materials due to the unavailability
of seeds brought about by the El Niño during the last quarter of 2015.
The DA is also supporting farmers through the provision of agriculture

infrastructures such as Farm-to-Market Roads. For 2016, 823.86 kilometers of
FMRs were validated for construction/ rehabilitation/repair. This is 86
kilometers or 11.7 percent more than the 737.72 kilometers targeted for 2016.
In terms of the validation and monitoring of DPWH-constructed FMRs, the
Department registered a 69.3 percent accomplishment, which is attributed to
the insufficient number of staff monitoring FMRs at the regional level. DA
also mentioned concerns on the coordination between the DPWH District
Office and the DPWH Central Office.
Page 29 of 66
For the other major agency under the Agriculture Department, the Bureau of
Fisheries and Aquatic Resources (BFAR likewise experienced a below-target
performance in the establishment of community fish landing centers. This
was attributed to the difficulty experienced by Local Government Units in
securing documentary requirements (i.e., permit, tenurial instruments,
Sangguniang Barangay Resolution authorizing local chief executive to enter
memorandum of agreement with BFAR. As a result, only 21 out of the 271
fish landings constructed were completed on time.
2015 2016
PARTICULARS
Accomplishment* (GAA) Accomplishment** Rate**
OSEC
MFO 3: Irrigation Network
Services
Service area generated
from
establishment and
installation of small-scale
irrigation projects
(hectares) 8,972 has. 10,476 has. 7,634 has. 72.9%
MFO 4: Farm-to-Market
Road (FMR) Network
Services
FMRs validated for
construction/ The appropriation
rehabilitation/repair for FMR was
(kilometer) directly released to
DPWH
737 kms 823.86 kms 111.8%
DPWH-constructed
FMRs validated and
monitored (percent) 96% 100% 69.3% 69.3%
BFAR
MFO 4: Supply of
Infrastructure Facilities
and Equipment for Fishery
Industry
No. of CFLC constructed 0 271 24 8.9%
MFO 5: Fisheries and

Aquatic Resources
Regulation Services
No. of violations or
complaints acted upon
and reports issued 189 20 122 410%
Page 30 of 66
Meanwhile, in terms of enforcement of laws and regulations, the BFAR

overshot its target fourfold (410 percent) which was attributed to the
additional prohibitions identified in RA 106544. This lead to an increase in the
number of cases being pursued by BFAR which also increased the number of
violations. The registered number of violations, however, were less than the
182 reported in 2015.
Department of Education (DepEd)
2015 (In billion pesos) 2016 (In billion pesos)

Department
DepED 360.52 309.90 86.0% 416.00 371.05 89.2%
Financial Performance. The Department of Education’s (DepED) mandated

function of providing access to quality formal and non-formal basic education
was sustained with a hefty amount of P416.0 billion released to the
Department in 2016. Of this amount, P31.2 billion is a carry-over fund from
the previous year. The DepEd budget being personal services (PS) intensive,
PS accounts for P300.0 billion or 72.1 percent of last year’s allotment; followed
by MOOE with P73.8 billion or 17.8 percent, and CO with P42.1 billion or 10.1
percent.
By the end of last year, obligation for the PS requirements, amounting to

P294.4 billion, mainly contributed to the department’s total year spending of
P371.0 billion or 89.2 percent of its total allotment. Of the total obligated
amount, DepEd disbursed 90.6 percent or P336.1 billion, compared to 93.4
percent in 2015. A considerable amount of P44.9 billion has remained
unobligated by the end of the year. This is attributed to challenges in
procurement particularly of textbooks and instructional materials (TX/Ims),
equipment for technical vocational laboratories (TVLs), and science and
mathematics equipment (SME). Likewise, only less than half of the budget
allocated for the Education Voucher System (EVS) for Senior High School was
obligated.
Physical Performance. DepED reached its 2016 education completion target

with 83 percent of the 13,048,563 students (ages 5 to 11 years old) enrolled in
kindergarten and elementary education completing the school year (SY) 2015-
2016. This improves over the 71-79 percent rates from 2010 to 2013. For the
same period, 77 percent of the 4,915,676 students (ages 12 to 15 years old)
enrolled in secondary education completed the SY, 3 percentage points shy of
4
An Act to Prevent, Deter and Eliminate Illegal, Unreported and Unregulated Fishing, Amending Republic Act
No. 8550, Otherwise Known as “The Philippine Fisheries Code of 1998,” and for Other Purposes
Page 31 of 66
its 80 percent target (93 percent accomplishment rate) but better that the 75
percent accomplished in 2010-2013.
Contributing to these achievements was the creation of a total of 58,720

teaching and 17,699 non-teaching and teaching-related positions in 2016. This
compares with the 62,320 new teaching positions planned to be created for the
year. DepED filled up 48,371 teaching (82.3 percent of positions created and
77.6 percent of the planned new teachers) and 5,288 non-teaching and
teaching-related positions (29.9 percent of created positions) during the year.
Under the Basic Education Facilities Program, 33,418 classrooms and 268
Tech-Voc laboratories were constructed; 21,509 classrooms were repaired; and
364,670 seats (sets) were procured. These exceed the 43,000 classrooms
constructed and the 96,789 procured new seats budgeted for in 2016 but not
the target 4,553 new Tech-Voc laboratories.
PARTICULARS 2015 2016
Accomplishment* (GAA) Accomplishment* Rate
MFO 2: BASIC EDUCATION SERVICES

Kindergarten and Elementary Education
No. of learners ages 5-11 years old enrolled in 13,367,442 13,600,329 13,048,563 95.9%
kindergarten and elementary education (in any
learning system)
83% 83% 83% 100.0%
% of learners who completed the school year
Secondary Education
No. of learners ages 12-15 years old enrolled in 5,972,294 4,521,418 4,915,676 108.7%
kindergarten and elementary education (in any
learning system)
77% 80% 74% 92.5%
% of learners who completed the school year
Alternative Learning System

No. of learners ages 15 years old served thru 506,573 348,656 469,623 134.7%
Alternative Learning System (ALS) Program
MFO 3: REGULATORY AND DEVELOPMENTAL

SERVICES FOR PRIVATE SCHOOLS
No. of grantees 910,342 1,808,554 1,548,019 85.6%
Ratio of completers to grantees 79% 84% 76% 90.5%
*Consistent with the Agency PBB Form A, Major Final Outputs
Likewise, 16 million TX/Ims and 3,129 TVL packages were delivered to

various schools last year. In addition, 20,713 schools were also provided
Information and Communications Technology (ICT) packages through the
DepEd Computerization Program. The 2016 budget had targeted some 103.2
million of textbooks purchased for 2016.
Page 32 of 66
Moreover, 1,800,884 severely wasted and wasted learners were served

nutritious meals through the School-based Feeding Program. It is intended to
address malnutrition and short-term hunger among public school children.
This accounts for 91.8 percent of the 1.385 million wasted and 533 thousand
severely wasted students planned to be fed under the School-based Feeding
Program.
Meanwhile, the Department exceeded its 324,565 out-of-school youths (OSYs)

target by reaching out to a total of 469,623 OSYs through programs on
education, employment, and entrepreneurship under the Alternative
Learning System (ALS) Program. Essentially, the Program aims to provide
OSYs who do not have access to formal education in schools the chance to
complete basic education through non-formal and informal sources of
knowledge and skills.
Lastly, the Expanded Government Assistance to Students and Teachers in

Private Education (EGASTPE) benefitted 932,090 junior high school grantees
through Education Service Contracting (ESC), nearly meeting the 1 million
targeted for 2016. Another 581,511 senior high school (SHS) students from
Private SHS availed of the EVS compared to the 708,883 budgeted for in 2016.
However, only 34,418 or 47.0 percent of the 2016 target of 73,185 students
from non-DepED SHS applied and were granted said vouchers. Hence, it was
only able to meet 86 percent of its total target of 1,808,554 grantees. In
addition, only 76 percent of the total 1,548,019 grantees completed the SY,
lower than the 79 percent ratio of completers to grantees in 2015 and its 84
percent target in 2016.
Commission on Higher Education (CHED)

Department
CHED 7.44 7.04 94.5% 8.23 6.66 81.0%
Financial Performance. To sustain efforts in promoting accessible quality

tertiary education, P8.2 billion was allocated to the Commission on Higher
Education (CHED) in 2016. Of the said amount, P2.1 billion was sourced from
the Higher Education Development Fund (HEDF) while P331 million was a
continuing appropriation from 2015. For the period, CHED obligated 81
percent of its total budget amounting to P6.7 billion, achieving a lower
obligation rate in absolute and relative terms compared to 2015. The bulk of
the obligated amount is comprised of obligations done for the K to 12
Transition Program - P2.5 billion; Students Financial Assistance Programs
Page 33 of 66
(StuFAPs) - P2.4 billion; and the Philippine-California Advanced Research

Institute (PCARI) - P549 million. Hence, an amount of P1.6 billion has
remained unobligated by the end of the year.
For the same period, P5.7 billion or 84.8 percent of the agency’s total obligated
amount was disbursed due to the undisbursed funds for second semester
school bills which starts in November (January in some schools) and the late
submission of necessary documents by students, faculty and Higher
Education Institutions (HEIs). This is an improvement from the 2015
performance of P4.6 billion or 65.2 percent of obligations disbursed.
Physical Performance. Last year, the agency exceeded its 2016 target of 155,690
with 211,776 scholarships and students grants awarded through the StuFAPs.
Of the said total, the Tulong Dunong Program covered 71,049 deserving
student beneficiaries. Under the Student Grant Program of the Payapa at
Masaganang Pamayanan (PAMANA) Project, 1,090 grantees from conflict-
afflicted areas also received a maximum of P10,000 per year per student to
cover tuition and other fees. Moreover, the implementation of the new Iskolar
ng Bayan Program provided scholarship grants to 6,363 top ten (10) graduates
of all public high schools enrolled in SUCs. Moreover, 10,315 or 88 percent of
the 11,782 scholarship holders completed their degree in 2016.
MFO 2: HIGHER EDUCATION DEVELOPMENT SERVICES

Number of scholarships and student grants 81,553 155,690 211,776 136.0%
% of scholarship holders who complete their 100% 87% 88% (10,315/11,782) 100.6%
degree
MFO 3: SUPERVISION OF THE HIGHER EDUCATION DEVELOPMENT FUND

Number of project proposals funded 77 80 93 116.3%
Meanwhile, CHED provided scholarships in graduate degree programs

covering 5,604 faculty members and awarded 4,613 grants for development of
faculty and staff under the K to 12 Transition Program. In addition, HEIs
availed a total of 88 innovation grants under the Program for the said period.
In addition, the agency promoted and supported seven (7) high-end Research
and Development outputs through the PCARI Project. These include the
Chemical and Environment-Portable Sensor Technologies, AIRSCAN:
Collaborative Aerial Robotics in Large-Scale Urban Infrastructure
Page 34 of 66
Management, and the Philippine Cancer Phenome-Biobanking System and

Biomonitoring Program, among others.
Similarly, the HEDF funded 93 project proposals (116 percent of its 80 project
proposals target) from HEIs and SUCs on the 17 Sustainable Development
Goals clustered into six platforms (Food Production and Security;
Environment Disaster Risk Reduction, Climate Change and Energy;
Terrestrial and Marine Resources: Economy, Biodiversity and Conservation;
Smart Analytics and Engineering Innovations; Health Systems; and Education
for Science, Technology, Engineering, Agriculture and Mathematics
[STEAM]). These are investments in HEIs aimed to develop their capacity and
capability to systematically and sustainably work with communities on
development issues such as a) entrepreneurship/livelihood development, b)
adult education, c) environmental management, and d) role of women, among
other development concerns.
Department of Energy (DOE)

Department
DOE 7.40 2.83 38.2% 4.62 1.80 38.9%
Financial Performance. The total obligation of DOE stood at P1.8 billion, only
38.9 percent of its P4.6 billion allotment for FY 2016, though it is a slight
improvement over its FY 2015 obligation rate of 38.2 percent. In contrast, the
department’s obligation rate for its total current year appropriation alone
yields an 88.2 percent obligation rate. The cause for the low rate remains the
same as with the previous years—the non-obligation for the Market
Transformation through the introduction of Energy-Efficient Vehicles (E-
Trike) Project, amounting to an accumulated P2.6 billion from previous years.
As a result of this non-obligation, coupled with a low disbursement rate for its
locally-funded projects attributed mainly to delays caused by the change in
administration, the agency’s disbursement rate sat only at P 1.2 billion or 65.9
percent. It must be noted that in December 2016, the loan covering the
production of more E-Trikes has already been cancelled with the agency
tasked to distribute units that were already procured.
Physical Performance. The DOE achieved all of its Major Final Output (MFO)
targets for 2016, which includes the endorsing of 317 certificate of
endorsements (COE) and the provision of 34 technical advisories. However,
four indicators, namely (1) the number of energy efficiency audits provided to
government agencies, (2) the number of applications for permits,
Page 35 of 66
service/operating contracts and accreditations processed and (3) number of

analytical tests conducted in support of energy exploration activities, and (4)
number of energy establishments and facilities/power plants monitored and
inspected with reports issued, achieving more than 200 percent of its set
targets.
Actual Target Actual
Accomplishment Rate
Accomplishment* (GAA) Accomplishment**
MFO 1: Energy Sector Policy Services
% of applications for certificate of endorsement (COE) for investment in100%
the energy sector
(406 out processed
of 406) 100% 100% (317 out of 317) 100.0%
MFO 2: Promotion of Energy Sector Innovation
Technical Assistance
No. of technical advisories provided to entities 48 18 34 188.9%
Energy Efficiency and Conservation
No. of energy efficiency audits provided to government agencies 189 40 142 355.0%
MFO 3: Energy Sector Regulatory Services
Registration and Processing
No. of applications for permites, service/opreaying contracts and
accreditations processed 9,305 2,000 11,959 598.0%
No. of analytical tests conducted in support of exploration
activities, Biofuels Law, RE Law and Clean Air Act within the
prescribed period 12,921 8,000 16,527 206.6%
Supervision and Monitoring
No. of energy establishments and facilities/power plants
monitored and inspected with reports issued 3,845 1,000 3,439 343.9%
**Source: FY 2016 Agency Performance Accomplishment
In general, the cause of this overperformance was identified to be the non-

updating of the targets despite the agency’s increased capacities to handle the
activities in the past years. The agency has been informed of the need to
update their targets and has worked toward improved target setting for 2017.
The overachievement for the processing of applications and conducting of
analytical tests were specifically attributed to the Malampaya Phase 3
Development Project projects and additional necessary site validations for the
former while it was a management directive for expansion of coverage for the
latter.
Page 36 of 66
Department of Environment and Natural Resources (DENR)

Department
DENR 26.85 23.85 88.8% 28.47 25.67 90.2%
Financial Performance. The DENR exhibited an obligation rate of 90.2 percent

for 2016, an improvement from the 88.8 percent obligation rate registered in
2015. Around 80.3 percent of the total obligations incurred by the
Department is for the implementation of the various programs and projects
under the Office of the Secretary. One such program is the National Greening
Program (NGP). For 2016, some P7.8 billion was obligated for NGP, this is
93.9 percent of the P8.2 billion allotment released for its implementation. The
P476 million which was not obligated was attributed to the adoption of a new
approach/strategy introduced by the new management for the
implementation of the program.
As far as disbursements are concerned, the Department was able to disburse

P21.6 billion out of the P25.7 billion obligations or 84 percent. The lower
disbursement rate vis-à-vis obligation rate is due to some difficulties the
Department experienced in the implementation of foreign-assisted projects
under the Office of the Secretary and some procurement challenges
encountered by the attached agencies notably, the Environment Management
Bureau (EMB), Mines and Geoscience Bureau (MGB), National Mapping and
Resource Information Authority (NAMRIA) and the National Water and
Resources Board (NWRB).
Physical Accomplishment. One of the main thrusts of the Department is the

provision of Ecosystem Management Services. For 2016, the Department was
set to rehabilitate 246,524 has. of ecosystems. The Department’s
accomplishment of 284,039 has. is 15 percent more than the target area for the
year.
With the issuance of EO 193 s.2015, NGP continues to be one of the banner
programs of the DENR especially for ecosystem management and regulation.
For 2016, the total area planted under the NGP was 284,089 has. This is 36,406
has. or 14.7 percent more than the target area of 247,683 has. In terms of the
number of seedlings planted, almost 415,564,211 seedlings were planted for
2016. This is 99,802 seedlings more than the target of 415,464,409 seedlings.
The DENR also ensures that the seedlings planted survive by targeting an 80
percent survival rate. For 2016, the survival rate recorded was 82 percent, this
is higher than the 2016 target but slightly lower than the 85 percent registered
in 2015.
Page 37 of 66
The Department’s mandate also includes pollution prevention and control,

and environmental impact assessment with the EMB being at the forefront of
this endeavor. For 2016, EMB targeted to issue 27,030 permits and clearances.
The Bureau was able to surpass this target with the issuance of a total of
39,828 permits and clearances or 47.3 percent more. Aside from issuing
permits and clearances, EMB is also tasked to monitor compliance to
environmental laws and regulation. For 2016, the Bureau was able to
monitor/inspect 60,342 sites/ facilities. This is 13 percent above the 53,281
sites/ facilities targeted for the period.
2015 2016
PARTICULARS Actual
Actual Target Accomplishme
Accomplishment*
Accomplishment* (GAA) nt Rate**
*
OSEC
MFO 2: Ecosystem
Management Services
Number of hectares of
ecosystems under
management for rehabilitation 334,364 has. 246,524 has. 284,039 has. 115%
MFO 3: Ecosystem
Regulation Services
Percentage survival rate of
planted seedlings 85% 80% 82 % 103%
EMB
MFO 1: Environmental
Regulation Services
Number of permits and
clearances issued 32,770 27,030 39,828 147%
Number of sites/facilities
monitored and/or inspected
with reports submitted 31,255 53,281 60,342 113%
Number of Notice of Violations

issued arising from regular
monitoring/survey or
cases/complaints acted upon 169 3,588 6,308 176%
MGB
MFO 1: Mineral Resource
Development Services
Percentage increase in Peso
value for royalty payments
collected -3% 10% -18 % -180%
Percentage of Philippine
territory surveyed (geological
exploration) at least once in the
last 3 years 0.12% 0.10 % 4.10 % 4100%
MFO 2: Mining Regulation

Services
Number of sites and facilities
monitored and/or inspected
with reports issued 1,172 1,067 1,124 105%
Page 38 of 66
In terms of the management and development of the country’s mineral

resources, the MGB was able to monitor and/or inspect 1,124 sites and
facilities versus the 1,067 target or 5.3 percent more for 2016. The MGB is also
tasked to survey 0.1 percent of the country’s territory at least once in the last
three years. For 2016, the Bureau was able to survey 4.1 percent of the
country’s territory. However, the Bureau suffered a lower performance in
terms of the royalty payments collected. For 2016, it registered an 18 percent
decline in the royalty payment collections. This is a reversal from the 10
percent growth targeted for the year. According to the reports submitted by
MGB, the decline was brought about by the series of suspensions of mining
companies’ operations and moratorium on the acceptance, as well as
processing and approval of new mining applications.
Department of Health (DOH)

Department
DOH 73.75 64.51 87.5% 90.75 78.68 86.7%
Financial Performance. To support the DOH’s mandate to provide equitable,

sustainable and quality health for all Filipinos, an allotment of P90.7 billion
was provided to the Department in 2016. Of this amount, P78.7 billion or 86.7
percent was obligated by the Department by the end of the year, which was
slightly lower than its obligation rate of 87.5 percent in 2015.
By expense class, current operating expenditures made up for P55.6 billion or

70.6 percent of the total obligations incurred with maintenance and other
operating expenses at P31.1 billion and personnel services at P24.5 billion,
respectively.
Of the total obligations of the DOH, P77.8 billion or 98.9 percent was incurred
by the Office of the Secretary (DOH-OSEC), and the rest by its attached
agencies, namely, the National Nutrition Council (NNC) at P505 million or 0.6
percent, and the Commission on Population (POPCOM) at P401 million or 0.5
percent. POPCOM registered the highest obligation rate at 98.6 percent,
followed by NNC at 91.3 percent and the DOH-OSEC at 86.6 percent.
Under the DOH-OSEC, some P30.9 billion or 39.3 percent of the total
obligations of the Department were spent for the implementation of the
following major programs in 2016: a) Health Facilities Enhancement Program
Page 39 of 66
(HFEP), P15.8 billion; b) Implementation of the Doctors to the Barrios and

Rural Health Practice Program, P6.6 billion; c) Expanded Program on
Immunization, P3.9 billion; d) Family Health and Responsible Parenting, P1.9
billion; e) Program on Other Infectious Diseases and Emerging and Re-
Emerging Diseases including HIV/AIDS, dengue, food and water-borne
diseases, P860 million; f) TB Control, P823 million; g) Program for Elimination
of Diseases as Public Health Threat such as Malaria, Schistosomiasis, Leprosy
and Filariasis, P558 million; h) Rabies Control Program, P486 million; and i)
Non-Communicable Disease Prevention and Control, 17 million.
The DOH disbursed some P76.8 billion in 2016 or 97.6 percent of its
obligations, significantly larger than the P 49.2 billion (or 76.3 percent of
obligations) it disbursed in 2015.
In addition to the P90.7 billion allotment to the DOH, a huge amount of P42.3
billion was released and obligated to the Philippine Health Insurance
Corporation (PHIC) to cover the health insurance premiums of the following:
a) 14.45 million indigent families listed under the National Household
Targeting System (NHTS) – P34.7 billion; b) 2.8 million senior citizens – P7.6
billion; and c) family beneficiaries identified by the OPAPP under the
PAMANA and Bangsamoro Programs – P37 million and P34 million,
respectively.
Physical Accomplishment. In pursuit of its training support services to Human

Resource for Health (HRH) development in 2016, the DOH as shown in the
table below, trained 163,295 HRH from LGUs and other health partners or
110.7 percent of its target of 147,457 HRH. Moreover, it provided health
facilities to 1,388 LGUs and other health partners under the HFEP, but fell
short of its target by 50.1 percent. For its support to disease prevention, the
DOH provided 476,384,100 commodities and human resource services
(vaccination, doctors/nurses/midwives’ hours) to LGUs, and met in full
within 48 hours, 93.3 percent of said requests – accomplishing more than its
targets of 18,560,794 commodities and services and 86.0 percent of requests,
respectively. Meanwhile, for its support to direct health care delivery under
hospital services, the DOH managed 6,155,368 out-patients (out of the target
4,497,508 out-patients) and 1,461,500 in-patients (out of the target 1,300,597 in-
patients), greatly exceeding its demand projections.
Page 40 of 66
MFO 2: TECHNICAL SUPPORT SERVICES

Training Support
Number of Human Resources for Health
from LGUs and other partners trained 240,418 147,457 163,295 110.7%
Funding Support (HFEP)

Number of LGUs and other health partners
provided with health facilities 371 2,773 1,388 50.1%
Disease Prevention
Number of commodities and services to
LGUs: Vaccination, Doctors Hours, Nurses
and Midwives 641,259,910 18,560,794 476,384,100 2566.61%
% of requests for commodities and human
resources met in full within 48 hours 84.6% 86% 93% 108.14%
MFO 3: HOSPITAL SERVICES

Direct Health Care Delivery
Number of out-patients managed 5,243,805 4,497,508 6,155,368 136.86%
Number of in-patients managed 1,338,271 1,300,597 1,461,500 112.37%
For 2016, the PHIC reported accomplishments of 93.5 percent of its target
indigent families listed under the NHTS, representing 14.4 million families
out of the target 15.4 million families; 100.0 percent of its target 2.8 million
senior citizens; and 60.7 percent of its target families identified under the
PAMANA Program, representing 13,547 families out of the target 22,319
families .
Department of the Interior and Local Government (DILG)

Department
DILG 175.69 167.86 95.5% 178.25 170.56 95.7%
Financial Performance. In support of its mandate to promote peace and order,

ensure public safety and strengthen the capability of local government units,
the DILG was released P178.3 billion in 2016. Of the said amount, P170.6
billion or 95.7 percent was obligated for the same period – a very slight
improvement over its 95.5 percent obligation rate in 2015. Meanwhile,
disbursements amounted to P163.0 billion or 95.5 percent of obligations.
By expense class, obligations incurred for personnel services reached P 139.0

billion or 81.5 percent of the total obligations of the Department. This is
mainly due to the large number of police, firemen and jail personnel tasked to
Page 41 of 66
maintain peace and order and public safety nationwide. Maintenance and
other operating expenses and capital outlays, on the other hand, comprised
14.3 percent and 4.2 percent of the Department’s total obligations,
respectively.
By implementing agency, the Philippine National Police (PNP) made up

P 128.9 billion or 75.6 percent of the total obligations, followed by the Bureau
of Fire Protection (BFP) of P15.0 billion (8.8 percent) and the DILG-Office of
the Secretary (DILG-OSEC) of P14.1 billion (8.3 percent).
Physical Accomplishment. With the resources given to the PNP in 2016, police
visibility improved through the increase in the number of its manpower
complement to 168,472 from 162,364 in 2015. This brought the police-to-
population ratio to 1:614 from the 1:625 ratio of the previous year. The
improved police visibility helped the PNP to conduct 8,281,059 foot patrol and
5,516,998 mobile patrol operations or a total of 13,798,057 patrol operations,
accomplishing 112.1 percent of its targeted number of 12,304,350 foot and
mobile patrol operations for the period. Moreover, in pursuit of its crime
prevention and suppression services, the PNP expanded its police programs
to innovative and responsive police activities as follows: Community
Oriented Policing System (COPS); Search and Rescue Operations; VIP
Security Operations; Vital Installation Security; Traffic Management
Operations; Airports and Seaports Security Operations; and Security
Preparations of the PNP for Secure and Fair Elections (SAFE) 2016.
MFO 1: CRIME PREVENTION AND SUPPRESSION SERVICES

5% increase
Number of foot and mobile patrols conducted 11,718,429 (12,304,350) 13,798,057 112.1%
5% reduction
Percentage change in Crime Rate 16.55% (15.68%) 11.24% 128.3%
Percentage of crime incidents responded

within 15 minutes (in urban areas) 99.40% 100% 98.37% 98.4%
MFO 2: CRIME INVESTIGATION SERVICES

Number of crime investigations undertaken 675,816 802,201 583,774 72.8%
Percentage of most wanted persons/high 5% increase

value targets arrested 39% (41.04%) 41.99% 102.3%
Percentage of arrested persons within 30 5% increase

days upon the receipt of the warrant of arrest monthly arrest
31.89% (60%) 25.64% 42.7%
Page 42 of 66
As shown in the table above, the PNP was also able to reduce the crime rate
from 16.6 percent in 2015 to 11.2 percent in 2016 (out of its target of 15.7
percent). However, in terms of its response within 15 minutes to calls for
police assistance in the urban areas, the PNP fell short of its target of 100
percent with an accomplishment of 98.4 percent due to calls not related to
crime incidents or prank calls. As to its crime investigation services, the PNP
undertook 583,774 crime investigations or 72.8 percent of its target of 802,201
crime investigations inasmuch as the total number of crimes reported in the
PNP blotter in all police stations in 2016 was 583,774. Moreover, the PNP
arrested 42.0 percent of most wanted persons/high value targets, exceeding its
target of 41.0 percent; and arrested 25.6 percent of persons within 30 days
upon the receipt of the warrant of arrest, falling short of its target of 60.0
percent.
MFO 1: FIRE PREVENTION SERVICES

Percentage of Fire Safety Inspection
Certificate-Rated building or structure that
are not affected by fire 93.75% 95% 99% 104.2%
% of buildings/establishments inspected out

of the total number of buildings and
establishments registered 93% 88% 103.31% 117.4%
Number of buildings or structures inspected

within the prescribed time from the receipt of
Mission Order by the Fire Safety Inspector 90% 85% 94% 110.6%
MFO 2: FIRE SUPPRESSION AND INVESTIGATION SERVICES

Number of fire and emergency medical
services and rescue calls responded 86% 86% 100% 116.3%
nationwide
For 2016, the BFP stepped up its fire prevention services through the greater
inspection of 1,443,568 buildings/establishments, 103.31 percent of the
1,397,332 establishments registered/to be inspected nationwide, exceeding its
target of 88.0 percent. Of the total number of buildings/establishments
inspected, 1,306,675 buildings/establishments were found compliant with the
provision of the Fire Code and issued with the Fire Safety Inspection
Certificate (FSIC). Of the total number of FSIC-rated buildings/establishments,
99.0 percent (or 104.2 percent of the target) were not affected by fire and 94.0
percent (or 110.6 percent of the target) were issued with FSIC within the
prescribed time of 3 and a half days from the receipt of the Mission Order by
the Fire Safety Inspector. Moreover, the BFP’s fire suppression and
investigation services responded to 100.0 percent or 24,500 fire (19,292) and
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emergency medical services (EMS)/rescue calls (5,208) nationwide, exceeding

its target by 14.0 percent.
Meanwhile, the DILG-OSEC provided technical assistance to 1,674 LGUs and

assessed 1,672 provinces, cities and municipalities (PCMs) on the Seal of Good
Local Governance (SGLG) - achieving more than its 2016 targets of 1,665
LGUs and 1,653 PCMs, respectively. Likewise, the DILG-OSEC exceeded its
performance targets in terms of the percentage of LGUs that passed the SGLG
(20.5 percent increase from 5.0 percent increase) and the percentage of LGUs
provided with incentives for good governance performance (32.0 percent
from 20.0 percent).
Actual Target Actual
Accomplishment Rate
Accomplishment* (GAA) Accomplishment*
MFO 2: LG CAPACITY DEVELOPMENT AND PERFORMANCE OVERSIGHT AND INCENTIVE AND AWARDS SERVICES
Number of LGUs provided with technical
assistance 100% All LGUs 1,665 LGUs 1,674 LGUs 100.5%
SGLG Assessment
Number of LGUs assessed on Seal of Good Postponed
Local Governance (SGLG) 1,653 PCMs 1,672 PCMs 101.1%
SGLG Assessment
% of LGUs that passed the Seal of Good Postponed
Local Governance (SGLG) 5% increase 20.5% increase 114.6%
% of LGUs provided with incentives for good 95% of qualified 20% of qualified 32% of qualified
governance performance LGUs LGUs LGUs 159.0%
Department of Labor and Employment (DOLE)

Department
DOLE 8.25 7.73 93.6% 13.18 10.44 79.2%
TESDA 6.10 5.58 91.6% 7.53 6.42 85.3%
Financial Performance. To ensure that the Department of Labor and

Employment (DOLE) will fulfill its mandated function of formulating and
implementing policies and programs on labor and employment, the
Department was released a total of P13.2 billion in 2016, inclusive of P745
million continuing appropriation from previous years. Of this amount, P10.4
billion, representing 79.2 percent of its allotments, was obligated and P9.5
billion, 90.7 percent of its obligation, was disbursed as of December 31, 2016.
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The Office of the Secretary (OSEC) accounted for the biggest share of the total
DOLE obligation, amounting to 7.6 billion and it was able to disburse P7.0
billion of these obligations. The amount supported DOLE’s major programs
such as the Tulong Panghanapbuhay sa Ating Disadvantaged/Displaced
Workers (TUPAD) and the Government Internship Program (GIP) with an
obligation of P2.7 billion; DOLE Integrated Livelihood Program (DILP) – P785
million; Special Program for Employment of Students - P589 million; Rural
and Emergency Employment Program - P44 million; and the Jobstart
Philippines Program- P10 million. A balance of P2.6 billion remained
unobligated at the end of the year mainly due to low utilization of funds for
the K to 12 Adjustment Measures Program (AMP) 5 and Jobstart Philippines
Program which had obligation rates of 3.6 percent and 9.3 percent,
respectively. However, the low utilization of K to12 AMP is a positive
indicator of the employability of affected personnel. As for the Jobstart
Philippines Program, the Department had to prioritize the use of the 2015
remaining grants6.
MFO 2: EMPLOYMENT FACILITATION AND CAPACITY BUILDING SERVICES
Number of youth-beneficiaries provided with JobStart services - 3,200 3,421 106.91%
Number of beneficiaries provided with livelihood assistance (P10,000 on the average 71,607 150,000 113,316 75.54%
Number of beneficiaries under Special Program for Employment of Students (SPES) 207,898 203,000 213,912 105.38%
MFO 3: LABOR FORCE WELFARE SERVICES

Number of workers served 4,540,069 4,467,519 4,640,998 103.88%
Percentage of affected workers provided services within the prescribed PCT 100% 100% 100% 100.00%
MFO 4: EMPLOYMENT REGULATION SERVICES

Number of establishments inspected 50,161 76,908 60,379 78.51%
Number of workers covered as a result of inspections conducted 1,805,683 4,556,674 2,274,649 49.92%
Meanwhile, the Technical Education and Skills Development Authority

(TESDA) obligated P6.4 billion or 85.3 percent of its total allotment of P7.5
billion and disbursed P5.6 billion or 85 percent of its total obligations in 2016.
5 The K-12 AMP is a safety-net linked to active labor market programs (ALMP) and provides unemployment-related benefit
schemes, such as financial support, employment facilitation, and training and livelihood to displaced personnel who will not
qualify or avail of the Department of Education (DepED) and the Commission on Higher Education (CHED) mitigation
measures for the impact of the K-12 Program.
6 The Government of Canada funded the pilot implementation of the Jobstart Philippines Program while the Asian
Development Bank provided technical assistance. Because of Jobstart’s success in its pilot implementation, it was allocated
P106.5 million in the General Appropriations Act for the first time in 2016 intended to support the scaling up of the program.
Page 45 of 66
Of the total obligated amount, P2.1 billion was accounted to the Training for
Work Scholarship Program (TWSP). The delay in the procurement of capital
outlays (e.g., motor vehicle, information system and tools and equipment for
CENTEX scholars) is the primary reason for the unobligation of P1.1 billion at
the end of the year.
Physical Performance. The Department exceeded most of its 2016 targets as

indicated by the table below. Through the Jobstart Philippines Program, 3,421
vulnerable youths were provided school-to-work transition assistance
through trainings and employment opportunities, 221 youths more than
targetted.
The DILP which provides various skills trainings, tools and jigs and/or
financial assistance (made available through: Kabuhayan Formation,
Kabuhayan Enhancement and Kabuhayan Restoration) fell short of its original
target of 150,000 beneficiaries but surpassed its 90,962 revised target
beneficiaries to reach 113,316 beneficiaries. The General Appropriations Act
(GAA) target of 150,000 was adjusted downwards due to the re-alignment of a
portion of the DILP funds for the implementation of TUPAD in areas affected
by El Niño particularly in Regions CAR, 1, 2, 4A, 4B, 5, 6, 7, 9, 11, 12, and 13.
Moreover, 213,912 poor but deserving students and out-of-school youths

benefited from the employment assistance of SPES. This represents 105
percent of the targeted 203,000 beneficiaries for 2016.
In addition, DOLE served a total of 4,640,998 workers which includes

displaced workers resulting from weather and regulatory shocks including
internal conflicts given short term employment under the DOLE-OSEC’s
TUPAD. Likewise, the GIP provided three (3)-month internship opportunity
for high school, technical-vocational and college graduates pursuing a career
in government. Both programs served a total of 374,245 beneficiaries or 120
percent of their targets for the said period.
On the other hand, only 142 displaced teachers and non-teaching personnel,
0.6 percent of its 23,739 target, availed of the assistance provided through the
K to 12 AMP. This indicates that not as much personnel in universities and
colleges affected by the K to 12 Program were in need of assistance and that
the impact of the Program on the retrenchment of teaching and non-teaching
personnel was not as extreme as anticipated.
However, the Department inspected only 60,376 establishments for

compliance to workplace regulations and covered 2,274,649 workers as a
result of the inspections conducted. While the actual number of workers in
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assessed establishments is beyond DOLE’s control, the target of 76,908

establishments inspected was actually reduced to 52,074 in consideration of a
enhanced checklist of requirements (e.g., specialized checklist to detect
violations and prohibit practices that circumvent the right to security of
tenure) that resulted to additional number of days for the assessment process.
MFO 2: Technical Education and Skills

Development Services
No. of trainees 318,208 257,621 258,826 100.47%
Average no. of training hours per trainee 363 356 421 118.26%
No. of graduates who are employed 90,484 79,000 82,597 104.55%
6 (six) months after completion of training
Percentage of training applications acted 89% 90% 100% 110.70%
upon within two (2) weeks
Percentage of graduate in programs with 92% 84% 62% 73.25%
training regulations certified withi 5 days
after graduation
Percentage of training program that are 54% 80% 82% 101.88%
delivered within one month of the
original plan
No. of TWSP subsidized enrollees 260,136 231,579 209,882 90.63%
No. of TWSP subsidized graduates 184,575 208,421 181,124 86.90%
In the case of TESDA, the agency served a total of 258,826 trainees which
represents 100 percent of its target. Likewise, it also reached its target in terms
of the number of graduates employed within six (6) months after completion
of training with an accomplishment of 82,597 employed graduates. Moreover,
211,562 students were granted scholarships through the TWSP, about 9
percent shy of its 231,579 target. Some 181,124 or 87 percent of the enrolled
students were able to graduate in 2016, lower than its 208,421 target and its
184,575 graduates accomplished in 2015. This can be attributed to the revision
of guidelines for the TWSP which resulted to its implementation starting only
on the 4th quarter of last year.
Page 47 of 66
Department of National Defense (DND)

Department
DND 162.21 151.78 93.6% 181.30 172.35 95.1%
Financial Performance. To be able to fulfill its mandate of maximizing its

effectiveness in guarding against external and internal threats to national
peace and security, promoting the welfare of soldiers and veterans, and
providing support for social and economic development, the DND was
provided an allotment of P181.3 billion in 2016. Of this amount, P172.4 billion
or 95.1 percent was obligated for the same period, higher than its obligation
rate of 93.6 percent in 2015. Disbursements, on the other hand, reached P158.5
billion or a disbursements to obligations rate of 92.0 percent.
By expense class, personnel services amounted to P123.8 billion and

comprised 71.8 percent of total obligations, while combined maintenance and
other operating expenses and capital outlays added up to P48.6 billion or 28.2
percent.
Of the total available allotment to DND, about P66.5 billion or 36.7 percent
was released to General Headquarters (GHQ), out of which P62.9 billion or
94.6 percent was obligated. Other than GHQ, fairly large releases were also
made to the three major services of the Armed Forces of the Philippines (AFP)
as follows: a) Philippine Army (PA) – P54.9 billion; b) Philippine Navy (PN) –
P20.1 billion; and c) Philippine Air Force (PAF) – P19.6 billion. Likewise, a
sizeable P15.1 billion was released to the Philippine Veterans Affairs Office
(PVAO). Similar to GHQ, high obligation rates were recorded by the PVAO
at 99.9 percent; the PA at 97.1 percent; the PN at 93.9 percent; and the PAF at
92.5 percent.
Physical Accomplishment. For 2016, the PA achieved three out of its five
performance targets for the delivery of its MFO 1, namely, Territorial Defense,
Security and Stability Services as shown in the table below.
In terms of the number of tactical units, the PA maintained only 188 tactical
battalions or 99.5 percent of its target of 189 tactical battalions inasmuch as the
activation and operationalization of battalions are based on strategy and
actual requirement on the ground. In terms of the readiness level and effective
strength of tactical units, the PA achieved its targets of 72.0 percent
operational readiness and average of 90.0 percent effective strength that can
be mobilized within one hour as dictated by higher authorities. As to the
number and readiness level of reserve units, the PA maintained 81 ready
reserve battalions or 100.0 percent of its target, but posted only 65.0 percent
Page 48 of 66
operational readiness as against its 2016 target of 72.0 percent and 2015
accomplishment of 73.0 percent. The above-target rate of operational
readiness was due to the following: a) low personnel fill-up in the Regional
Community Defense Groups (RCDGs) to handle reservist-related trainings
which caused delay in the completion of the programmed unit trainings; and
b) reservists’ constraints to attend the programmed trainings. The ready
reserve battalions do not only serve as force multiplier to the PA, but also
provide combat support and service support such as disaster rescue and relief
services, and community service.
MFO 1: TERRITORIAL DEFENSE, SECURITY AND STABILITY SERVICES

Number and Readiness level of tactical units
Percentage of operational readiness of
tactical battalions 69% 72% 72% 100.0%
Average percentage of effective strength of

tactical battalions that can be mobilized
within 1 hour as dictated by higher
authoritiies 90% 90% 90% 100.0%
Number of tactical battalions maintained 187 189 188 99.5%
Number and Readiness level of reserve units

Number of ready reserve battalions
maintained 81 81 81 100.0%
Percentage of operational readiness of ready

reserve battalions 73% 72% 65% 90.3%
The PAF, on the other hand and as indicated in the table above, exceeded its
performance targets for 2016 as to the number of supportable aircraft
maintained (150 out of 140) and the percentage of accomplishment of one
hour response time to flight-directed mission (99.0 percent out of 85.0 percent)
except for the aircraft maintenance readiness rate (AMRR), which registered a
low 61.0 percent out of the target of 70.0 percent. The low AMRR was due to
the following: a) increase in the operational tempo of 6,470 flying time or 15.0
percent of the total programmed for the year for Internal Security Operations
(ISO) based on the pronouncement of President Duterte, which entailed
higher scheduled and unscheduled maintenance activities and led to longer
period of downtime; and b) longer lead time for delivery of most aircraft
spares which were not readily available in the market or required export
licenses from Defense Departments of foreign suppliers.
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Aircraft Maintenance Readiness Rate 60% 70% 61% 87.1%
Percentage of accomplishment of one (1)

hour response time to flight-directed mission
99% 85% 99% 116.5%
Number of Supportable Aircraft Maintained 138 140 150 107.1%
Meanwhile as shown in the table below, the PN achieved four out of its six
performance targets in 2016. It was able to maintain 124 mission-ready fleet
marine units and 59 mission-ready support and sustainment units; and was
able to achieve the targeted average response time of fleet units (24 hours) and
marine units (6 hours) that can be mobilized as instructed by higher
authorities. The PN, however, fell a bit short of its targets as to the percentage
of readiness of fleet marine units (78.02 percent) and support and sustainment
units (61.97 percent) with actual accomplishment of only 75.0 percent and 58.0
percent, respectively. This was due to the following: a) insufficiency of
personnel deployed to units as compared to the fill-up based on the approved
PN Table of Organization; and b) mismatch in rank and rating of personnel
currently assigned in the units and personnel accretion due to death and
retirement, among others.
Page 50 of 66
Number of mission-ready fleet marine units 116 124 124 100.0%
Percentage of readiness of fleet marine units

72.0% 78.02% 75.0% 96.1%
Number of mission-ready support and

sustainment units 58 59 59 100.0%
Percentage of readiness of support and

sustainment units 58.0% 61.97% 58.0% 93.6%
Average response time of fleet units that can

be mobilized as instructed by higher
authorities 24 hours 24 hours 24 hours 100.0%
Average response time of marine units that

can be mobilized as instructed by higher
authorities 6 hours 6 hours 6 hours 100.0%
Department of Public Works and Highways (DPWH)

Department
DPWH 447.95 351.26 78.4% 549.54 425.84 77.5%
Financial Performance. As of December 31, 2016, the Department of Public

Works and Highways (DPWH) received a total allotment of P 549.5 billion.
Out of the total allotment, 77.5 percent obligation was recorded equivalent to
P 425.8 billion, and was slightly lower by 0.9 percentage points over the 2015
obligation rate of 78.4 percent. Furthermore, the DPWH disbursed an amount
of P 311.8 billion in 2016, or 73.2 percent of its obligated budget, compared to
63.5 percent rate in 2015. The level of disbursements was however 39.8
percent more than in 2015.
For National Road Network Services, the Department obligated P 156.1 billion
while for Flood Management Services, the DPWH obligated P 51.1 billion.
Further, under Maintenance and Construction Services of Other
Infrastructures involving construction of access roads to airports, sea ports
and tourist destinations, a total of P 25.2 billion was obligated in 2016. The
total budget obligated for the three major final outputs (MFOs) comprised
54.6 percent of the total obligated budget of DPWH, inclusive of the capital
transfers from other agencies.
Page 51 of 66
Physical Performance. As shown below, the DPWH did not fully meet all its
targets. Under the National Road Network Services, the Department
constructed, maintained, and paved 1,121.1 kilometers of national road out of
the committed target of 3,500.9 kilometers, recording a 32.0 percent
accomplishment. This was lower compared to 35.3 percent accomplished in
2015 or 1,565.1 kilometers. On the other hand, the DPWH constructed 4,594.7
lineal meters of bridges out of the target 18,273.4 lineal meters or a 25.1
percent accomplishment. Said accomplishment was significantly lower
compared to 60.7 percent in 2015 equivalent to 10,774.5 lineal meters.
Meanwhile, under Flood Management Services, the Department committed to

construct and maintain 1,090 flood control projects, of which 996 were
constructed and maintained; thus, recording an accomplishment of 91.4
percent. This was higher compared to 78.7 percent in 2015 or 759 flood control
projects.
Accomplishment* (GAA) Accomplishment* Rate **
MFO 1: NATIONAL ROAD NETWORK SERVICES

Length of National Roads Maintained (Km.) 598.9 857.8 503.4 58.7%
Length of National Roads Constructed (Km.) 723.9 1,431.4 362.2 25.3%
Length of National Roads Paved (Km.) 242.4 1,211.7 255.5 21.1%
Total accomplishment for National Roads 1,565.1 3,500.9 1,121.1 32.0%
Length of Bridges Constructed (Lm.) 10,774.5 18,273.4 4,594.7 25.1%
MFO 2: FLOOD MANAGEMENT SERVICES

No. of Flood Control Structures and Drainage 759 1090 996 91.4%
Systems constructed /maintained
MFO 3: CONSTRUCTION AND MAINTENANCE

SERVICES OF OTHER INFRASTRUCTURE
Length of Access Roads leading to Airports 19.3 83.0 7.2 8.7%
constructed/improved (Km.)
Length of Access Roads leading to Sea Ports 30.9 169.0 26.2 15.5%
constructed/improved (Km.)
226.0 1,200.0 133.7 11.1%
Length of Access Roads leading to declared
Tourist Destinations constructed/improved (Km.)
Total accomplishment for Access Roads 276.2 1,452.0 167.2 11.5%
No. of Septage/Sewerage/Rain Water Collectors 504 620 3,208 517.4%
constructed
Notes:
* Consistent with the actual accomplishment of DPWH as reflected in BAR-1
** The actual accomplishment rate of DPWH was computed as the percentage of actual accomplishment of DPWH as reflected in BAR-1
over its committed target in the GAA.
Finally, the DPWH constructed and improved 167.2 kilometer-access roads

leading to airports, sea ports, and tourist destinations out of the committed
target of 1,452.0 kilometers, or a 11.5 percent accomplishment. This was lower
Page 52 of 66
compared to 28.7 percent in 2015 equivalent to 276.2 kilometers. However, the

Department also constructed 3,208 septage/sewerage/rainwater collectors out
of the committed 620 units or 517.4 percent accomplishment, which was
significantly higher than the 84.7 percent accomplishment in 2015 or 504 units.
The reasons for low physical accomplishments of DPWH include issues on

Right-of-Way (ROW) and relocation, procurement, coordination with relevant
agencies, and challenges faced by the Department in the construction industry
sector. To address low physical performances, the DPWH plans to strictly
impose calibrated sanctions/penalties on contractors with negative slippages,
and integrate the analysis of physical and financial accomplishments to
existing DPWH systems for an integrated real time monitoring and reporting
of projects.
The Department encountered several ROW and relocation issues such as the
transition to the new ROW Act of 2015, and delay in relocating informal
settlers. In some of its projects, the DPWH encountered resistance from
residents in areas where projects were to be implemented. Likewise, the
removal and relocation of public utilities posed as a challenge for DPWH. The
Department is committed to deal with these issues by expediting ROW
resolution based on the ROW Act of 2015.
The DPWH also encountered government procurement difficulties in terms of

the involvement of foreign contractors in public-private partnership (PPP)
projects and other big-ticket projects, as well as other procurement issues such
as late compliance by contractors of pertinent documents, and the need to re-
advertise some projects due to failure of bidding. There were also instances
where there are no bid takers for small value projects. To address such issues,
the DPWH is committed to streamline procurement process consistent with
the revised IRR of the procurement law (R.A. 9184).
The Department also pointed out coordination with relevant agencies as a

major issue in project implementation. The disapproval and difficulty in
securing approvals and clearances from authorities and other agencies for big-
ticket projects, as well as issues raised by LGUs prior to project
implementation caused delay in the project implementation.
There were also factors beyond the control of the Department that affected its
physical performance, particularly the performance of the construction
industry sector in 2016. The DPWH confronted challenges on the shortage of
raw construction materials and insufficient manpower, which affected its
capacity to implement massive infrastructure projects. Likewise, the
modernization of the construction industry has yet to be realized in terms of
Page 53 of 66
equipment, technology, and advanced construction methodology for

construction, operation and maintenance of tunnels and inter-island bridges.
Other reasons for low physical accomplishments of DPWH include: (a) peace
and order situation in some areas; (b) intermittent weather condition during
project implementation; (c) problems on sub-soil exploration caused minimal
project accomplishment, (d) late submission and approval of some project
modifications; and (e) late filing of claims by some contractors with
accomplishment rates of 85.0 percent and above, who tend to submit claims
during the final billing.
Department of Science and Technology (DOST)

Department
DOST 20.41 16.95 83.1% 22.45 18.93 84.3%
Financial Performance 11 . The DOST System obligated 84.3 percent or P18.9

billion of its P22.4 billion allotment for FY 2016, slightly higher than its 83.1
percent obligation rate for FY 2015. It is noteworthy that of its 20 agencies, 18
achieved obligation rates higher than 80 percent. Only missing the mark
narrowly, PHIVOLCS obligated 74.7 percent or P404.8 million of its total
allotment due to delays in procurement and technical problems encountered
in some projects/programs. Meanwhile, ICTO obligated 58.2 percent or P3.8
billion of its budget releases, wherein its current year obligation rate of 32.4
percent was buoyed by its high obligation rate 99.9 percent for its continuing
appropriations, a pattern similar to its FY 2015 performance. At the
disbursement side, the DOST System spent 15.3 billion or 81.0 percent of its
obligations wherein difficulties in procurement (e.g. procuring specialized
equipment, failed biddings) were cited as one of the reasons for their
performance.
Physical Performance. The DOST continued its S&T education efforts through
its scholarship programs. The Science Education Institute (SEI) provided a
total of 20,618 scholarships for tertiary education, 4.4 percent over its full-year
target, due to its support of an additional 860 undergraduates, so that a total
of 17,491 undergraduates were assisted. Some 3,127 postgraduates were also
supported, composed of 2,407 students taking a Masters program and 720
11
The financial performance of DOST still includes those of ICTO. It will be transferred to the new agency
created by RA 10844, the Department of Information and Communications Technology (DICT), as its Office of
the Secretary.
Page 54 of 66
taking a Doctorate program. Supplementing the SEI’s efforts on S&T

education is the Philippine Science High School (PSHS), which covered 6,389
scholars for SY 2016-2017. Both the SEI’s Doctorate and PSHS’ scholarship
numbers fell below their targets of 794 and 6,493 students, respectively, partly
due to the lower number of its applicants (e.g. non-enrolment of students).
Accomplishment* (GAA) Accomplishment** Rate
OSEC
MFO 3: Regional S&T Services
Technology Transfer
No. of firms/other entities provided with S&T assistance 4,510 2,150 4,524 210.4%
No. of jobs created (in terms of person) 34,512 17,431 40,076 229.9%
No. of technology interventions 7,021 4,715 7,668 162.6%
S&T Services
No. oftechnical/consultative services rendered 33,526 19,940 32,980 165.4%
PSHS
MFO 1: Provision of Specialized Secondary Science Education
No. of students supported 4,923 6,493 6,389 98.4%
SEI
MFO 1: Provision of Specialized Secondary Science Education
No. of students supported 18,765 19,758 20,618 104.4%
Undergraduate level 15,858 16,557 17,491 105.6%
Masters Program 2,282 2,407 2,407 100.0%
Doctoral Program 625 794 720 90.7%
PAGASA
MFO 1: Weather, Climage and Flood Forecasting/Warning and Other Related Services
No. of weather and flood warnings issued 3,201 2,190 4,178 190.8%
PHIVOLCS
MFO 1: Technical Advisory Services for Geologic and Geophysical Phenomena
No. of bulletins and warnings issued 1,201 As necessary 1,276 NA
MFO 2: Disaster Preparedness and Risk Reduction Services

No. of Disaster Risk Reduction (DRR) activities conducted 315 260 271 104.2%
Ave. no. of participants per disaster risk reduction activities 124 90 111 123.3%
**Source: Consolidated FY 2016 Actual MFO/PI Physical Accomplishment
In supporting industry growth, DOST championed technology transfers,

providing 4,524 firms and other entities with S&T assistance and paved the
way for the creation of 40,076 jobs. These two accomplishments exceeded its
set targets for the year at above 200 percent. In addition to these
accomplishments, a total of 7,668 technology interventions and
technical/consultative services to 32,980 firms were also provided by the
agency.
As part of the department’s efforts on Disaster Risk Reduction and

Management (DRRM), PAGASA issued 4,178 weather and flood warnings. In
parallel, PHIVOLCS issued 1,276 bulletins for geologic and geophysical
Page 55 of 66
phenomenon and conducted 271 DRR activities, with participants averaging

at 111 per activity.
Department of Social Welfare and Development (DSWD)

Department
DSWD 142.75 124.26 87.0% 131.83 108.81 82.5%
Financial Performance. To provide policy direction in the delivery of social

welfare and development services and the implementation of social protection
of the poor, vulnerable and disadvantaged sector, the DSWD was supported
with a total allotment of P131.8 billion in 2016, of which P16.0 billion was a
carry-over from the previous years. The obligation rate of 82.5 percent or
P108.8 billion is mainly accounted by the following major programs:
Conditional Cash Transfer Program - P60.5 billion; Social Pension for Indigent
Senior Citizens - P8.2 billion; Sustainable Livelihood Program- P7.4 billion;
and Supplemental Feeding Program- P3.9 billion. As of end 2016, a total of
P23.0 billion has remained unobligated. Of this amount, approximately P7.5
billion is accounted for by the overprovision for the expanded coverage until
High School for CCT beneficiaries. In terms of disbursement amounting to
P92.8 billion, the department was able to utilize 88 percent of its obligations.
Physical Performance. As of end-December 2016, DSWD granted educational

and health allowances to a total of 4,156,591 households which complied with
the requirements of the Conditional Cash Transfer Program. It was short of its
4.4 million target beneficiaries since the department deferred the registration
of approximately 270,000 additional beneficiaries targeted for CY 2016 due to
the policy to retain the current number of Pantawid Pamilya beneficiaries.
Another 233,272 households benefitted from the Modified Conditional Cash
Transfer which covers families in need of special protection 14 . The
overachievement of its 2016 target of 218,377 family beneficiaries is attributed
to the inclusion of families affected by disasters such as Zamboanga Seige and
Typhoon Yolanda and continuous registration of Field Officers in the
National Capital Region (NCR) to complete the target for Oplan Balik Bahay
Sagip Buhay (OBBSB). Moreover, the extended coverage of the CCT Program
of children up to 18 years of age to enable children to finish high school
provided for 1,377,895 beneficiaries during the year.
14
such as street families, itinerant indigenous families including those displaced by natural and man-made
disasters, and persons with disability (PWD), child laborers, children in conflict with the law, and families with
members having terminal disease and victims of human trafficking
Page 56 of 66
2015 2016
PARTICULARS
MFO 2 SOCIAL PROTECTION SERVICES
Pantawid Pamilyang Pilipino Program (Conditional Cash Transfer)

No. of familiy beneficiaries-Regular CCT 4,139,728 4,402,253 4,154,417 94%
No. of familiy beneficiaries-Modified CCT 238,034 218,377 233,272 107%
No. of children beneficiaries - CCT Extended Coverage until High - 1,153,020 1,377,895 120%
School
Supplementary Feeding Program
1,804,735 2,231,361 1,998,489 90%
No. of Day Care children provided with supplementary feeding
Recovery and Reintegration Program for Trafficked Persons
No. of trafficked persons assisted 2,268 1,800 1,713 95%
Social Pension for Indigent Senior Citizens
No. of indigent senior citizens ages 60 years old and above, with 877,198 1,368,941 1,314,816 96%
social pension
Sustainable Livelihood Program
380,068 170,470 225,119 132%
No. of families to be served thru Micro-enterprise Development
No. of families facilitated for employment 127,539 208,352 218,040 105%
The Department, through its Supplementary Feeding Program (SFP),

provided additional hot meals to 1,998,489 day care children enrolled in LGU-
run day care centers and supervised neighborhood play, short of achieving its
2,231,361 target as 309 Local Government Units (LGUs) have not implemented
the 6th cycle of SFP due to unliquidated funds from the previous cycle and
delayed submission of required documents for downloading of funds for the
6th cycle.
For the same period, the monthly social pension of P500 was given to
1,314,816 indigent senior citizens aged 65 and above.
Meanwhile, the Sustainable Livelihood Program exceeded its target of 170,470

families by 32 percent by serving 225,119 CCT beneficiary-families through its
Micro Enterprise Development component. Another 218,040 non-CCT but
identified poor families in the National Household Targeting System for
Poverty Reduction (NHTS-PR) were facilitated for employment.
Page 57 of 66
Department of Transportation (DOTr)

Department
DOTr 79.59 46.13 58.0% 92.16 61.80 67.1%
Financial Performance. As of December 31, 2016, the Department of

Transportation (DOTr) received a total allotment of P 92.2 billion. Out of the
total allotment, 67.1 percent equivalent to P 61.8 billion were obligated,
significantly higher than last year’s 58.0 percent obligation rate. Furthermore,
the DOTr disbursed an amount of P 49.0 Billion in 2016 more than twice the
P22.2 billion disbursed in 2015.
The reasons for continuing low fund utilization rates, both obligation and
disbursement, were mainly attributed to the election ban as well as the
slowing down of activities during the transition period due to the late
approval of the appointments of the new set of Department Undersecretaries,
which caused delays in project implementation. Also, the perennial problem
of procurement – such as failure of bidding, and filing by losing bidders of
Motions for Reconsideration – caused delays in the awarding of contracts,
court injunctions and temporary restraining orders on major projects. Other
reasons were problems related to Metro Rail Transit Line 3 (MRT 3)
operations, delay in the procurement of various locally-funded projects,
deferred payments to contractors, and delayed transfer of funds to attached
corporations, pending finalization of the covering Memoranda of Agreement
(MOA).
Physical Performance. Under the Motor Vehicle Registration and Driver's

Licensing Regulatory Services, the Land Transportation Office (LTO) was able
to register 8,973,364 motor vehicles, and issue 5,672,746 driver’s licenses and
permits ahead of the target of registering 8,331,490 motor vehicles and
5,247,060 driver’s licenses and permits, representing accomplishment rates of
107.7 percent and 108.1 percent, respectively. Likewise, the department
reached its target of completing the registration of new motor vehicle plates
and stickers within seven days and renewal of registration of motor vehicle
plates and stickers within two hours. In the case of renewal registration, the
unavailability of MV plates due to Commission on Audit (COA) disallowance
that resulted to the non-delivery of plates by the supplier. Finally, the LTO
was only able to take action on 568,531 apprehensions out of the target
586,010 apprehensions for which a Temporary Operator’s Permit (TOP) was
issued and complaints acted upon, representing a 97.0 percent
accomplishment rate. The LTO did not meet the target because it cannot force
Page 58 of 66
erring motorists to pay fines and penalties immediately even with imposed
time frame.
Accomplishment* (GAA) Accomplishment** Rate ***
MOTOR VEHICLE REGISTRATION AND DRIVER'S

LICENSING REGULATORY SERVICES
Vehicle Registration
No. of motor vehicles registered 8,463,001 8,331,490 8,973,364 107.7%
% of new registrations completed with MV plates 90% 90% 90% 100.0%
and stickers within seven days
% of renewals of registration completed with MV 90% 90% 90% 100.0%
plates and stickers within two hours
Driver Licensing
No. of driver's licenses and permits issued 5,442,005 5,247,060 5,672,746 108.1%
Enforcement
No. of apprehensions for which a Temporary 586,010 568,531 97.0%
Operator's Permit (TOP) is issued and complaints
acted upon
REGULATION OF PUBLIC TRANSPORT SERVICES

Franchising
% of new CPC acted upon over the compliant 92% 93% 51% 54.8%
applications received
40,778 36,390 89.2%
No. of petitions for extension of validity acted upon
No. of dropping/substitution acted upon 10,772 8,124 75.4%
% of dropping/substitution acted upon over the no. 91% 91% 74% 81.3%
of dropping/substitution filed
No. of other petitions acted upon 751,604 522,115 69.5%
% of sale and transfer acted upon over the no. of 93% 92% 72% 78.3%
petitions for sale and transfer received
RAIL TRANSPORT PASSENGER SERVICES

No. of passenger kilometers travelled (per day) 3,075,760 4,335,324 3,422,027 78.9%
Average travel speed (kph) 35.25 33 26.4 80.0%
No. of passenger unloading incidents (annual) 417 300 587 -95.7%
Notes:
* Consistent with the actual accomplishment of DOTr in 2015 as reflected in MARC-1
** Consistent with the actual accomplishment of DOTr in 2016 as reflected in BAR-1
*** The actual accomplishment rate of DOTr was computed as the percentage of actual accomplishment of DOTr as reflected in BAR-1
over its committed target in the GAA.
Meanwhile, under the Regulation of Public Transport Services, the Land

Transportation Franchising and Regulatory Board (LTFRB) was able to
achieve most of its performance targets. However, it is noteworthy that
LTFRB underperformed on some of its commitments.
First, the LTFRB issued 51 percent of the new Certificate of Public

Convenience (CPC) applications behind the targeted 93 percent of CPC issued
over received compliant applications. Thus, it record an accomplishment rate
of 54.8 percent in this indicator. The decline in the processing of new CPC was
attributed to the suspension of acceptance of all Transport Network Vehicle
Services (TNVS) nationwide pending review of existing policies and other
relevant processing issues on the issuance of franchise to this mode of service.
Page 59 of 66
Second, the LTFRB acted upon 522,115 other petitions below its target 751,604
other petitions equivalent to a 69.5 percent accomplishment rate. The decrease
in the number of filed and adjudicated applications of other petitions was due
to the prohibition of interchange of units, as well as the temporary and
extended suspension in the conduct of the testing and resealing of taximeters
nationwide.
Third, the LTFRB accomplished 72 percent of sale and transfer over the
number of petitions for sale and transfer received behind its target 92 percent
in 2016s, recording an accomplishment rate of 78.3 percent, lower than the 93
percent accomplishment in 2015. The non-accomplishment of the target was
due to the prohibition of acceptance of application for sale and transfer or any
form of conveyances of CPC. This goes back to issues of abuses and the hi-
jacking of the franchising process by trafficking in franchises and CPCs at
huge profit. This has been a lucrative business, which mocks the very purpose
of application for franchises and CPCs. In terms of the decrease in the number
of filed and adjudicated cases, this could be attributed to the more stringent
policies of the LTFRB Board.
Finally, under the Rail Transport Passenger Services, the MRT-3 did not fully
meet its committed targets in the 2016 GAA. In terms of passenger kilometer,
the MRT-3 was only able to travel 3,422,027 passenger kilometers out of the
target 4,335,324 passenger kilometers recording an accomplishment of 78.9
percent, which was however, still an improvement over its 2015
accomplishment. The below-target performance was attributed to the
insufficient number of trains in good running condition during operating
hours for the first semester of 2016. It is noteworthy that the number of
passenger kilometers travelled per day slightly improved during the second
semester because of gradual increase in the number of trains.
Correspondingly, the MRT-3 only achieved an average travel speed of 26.4
kph out of the target 33 kph or 78.8 percent accomplishment. The non-
accomplishment of the target was due to the train speed restriction on the
mainline during revenue hours for passenger safety, considering the signaling
problem and rail breakage. Lastly, there were also 587 cases of passenger
unloading incidents, which was behind the target 300 cases; thus, recording
an underperformance of 95.7 percent. The increase in passenger unloading
incidents was attributed to the increase in number of train defects coupled
with lack of spare parts during the first semester and due to system failures,
e.g., signaling, Automatic Train Protection (ATP) Failure, and broken rail
problems.
Page 60 of 66
Infrastructure Program
Obligations
For 2016, the infrastructure obligation budget totaled to P744.2 billion. Out of
the said budget, 87.4 percent obligation was recorded equivalent to P650.1
billion, 12.9 percent higher over the 2015 actual obligation of P 575.7 billion.
The obligation budget for infrastructure covers National Government (NG)
infrastructure, infrastructure subsidy and equity to GOCCs, and
infrastructure transfers to LGUs.
Disbursements
The estimated cash requirements of the infrastructure outlays for 2016

amounted to P613.3 billion15 equivalent to 4.2 percent of GDP. This pertains to
payments for infrastructure programs or projects which were: 1) completed or
delivered in the previous years but remain unpaid in the current year; and 2)
contracted out and completed or delivered in the current year. This is
composed of the P484.8 billion requirements of line agencies for various
infrastructure projects; P103.1 billion transfers to LGUs for local development;
and the P25.4 billion infrastructure component of the subsidy and equity to
government corporations.
Table 14. Infrastructure Program for the period indicated

In billions
Full Year
Particulars 2015 2016 Deviation Increase/(Decrease)
Actual Program Actual Amt % Amt %
Infrastructure Program 405.9 613.3 590.5 (22.8) (3.7) 184.6 45.5
National Government 299.8 484.8 448.5 (36.3) (7.5) 148.7 49.6
Infrastructure Transfers to GOCCs 25.3 25.4 37.8 12.4 48.8 12.5 49.5
Infrastructure Transfers to LGUs 80.8 103.1 104.2 1.1 1.1 23.4 28.9
For 2016, actual disbursements for infrastructure outlays have reached P590.5
billion, up by P184.6 billion or 45.5 percent year-on-year. This was driven
largely by the P448.5 billion payments of the National Government Agencies
for transport and road infrastructure projects (DOTr and DPWH), school
buildings of the (DepEd), health facilities and equipment (DOH) and defense
assets and equipment (DND-AFP). Some P104.2 billion, meanwhile, was
released to LGUs representing the 20.0 percent of the Internal Revenue
Allotment, as well as additional financial assistance under the Local
Government Support Fund intended for local infrastructure projects such as
road repair and rehabilitation. On the other hand, infrastructure transfers to
15
Consistent with the revised disbursement program for 2016. See discussions about the fiscal program on page
11 for the explanation of the revision. The infrastructure spending is part of the total NG disbursements
discussed on page 22. Infrastructure transfers to GOCCs refers to the portion of the regular subsidy and equity
intended for or attributed to infrastructure programs or projects.
Page 61 of 66
GOCCs reached P37.8 billion mainly to cover the housing projects of the
NHA and irrigation projects of the NIA.
Infrastructure spending, however, fell short of the P613.3 billion program by

P22.8 billion or 3.7 percent. This primarily due to the P36.3 billion
underspending in line agencies as a result of procurement difficulties for their
respective capital outlay projects (see discussion on Program vs. Actual
Performance on page 23). The shortfall was offset by the faster fund absorption
in GOCCs, mainly from payment claims for completed housing programs and
irrigation projects of the NHA and NIA, respectively.
V. Fiscal Outlook
Medium-Term Fiscal Program
The government will embark on an expansionary fiscal strategy anchored on

raising both the revenue effort and the deficit ceiling to finance the country’s
development priorities. This fiscal policy will provide a positive stimulus to
economic growth in support of the Philippine Development Plan’s growth
target of 7.0 percent to 8.0 by 2022 towards our goal of becoming an upper
middle income country.
The revenue-to-GDP ratio of 15.2 percent in 2016 is relatively low compared

to the country’s peers and development needs. This underscores the need for
both tax policy and administrative reforms to expand the revenue base and
intensify collection efficiency. The proposed tax reform measures will allow
total revenues to increase by an average of 11.0 to 12.0 percent annually and
reach P4,504.0 billion or 17.8 percent of GDP by 2022.
The FY 2017 National Budget and the Medium-term Budget Framework were
crafted with an overall deficit target of 3.0 percent of GDP, up from the 2.0
percent of GDP target of the previous administration. The government will
continue to favor domestic borrowings with an 80:20 financing mix to
minimize the country’s exposure to foreign exchange fluctuations and for
better debt management. This approach is sound and sustainable as economic
growth is projected to outpace the rise in debt accumulation. The debt-to GDP
ratio is therefore expected to decline from 42.2 percent in 2016 to 37.7 percent
in 2022.
The administration’s goal of decreasing the poverty rate from 21.6 percent in
2015 to 14.0 percent by 2022, lifting about 6.0 million Filipinos out of poverty,
requires an increased share of infrastructure and social services in the
Page 62 of 66
government’s expenditure program. Of the P3,350.0 billion obligation budget

for FY 2017, P858.1 billion, equivalent to 5.4 percent of GDP, is allocated for
infrastructure development. This is projected to reach 7.3 percent of GDP by
2022 as the authorities plan to spend more than P8.0 trillion for public
infrastructure over the medium term.
The government is also committed to long-term human capital development,

providing the country’s young population with the necessary tools – quality
education, appropriate healthcare, and effective social safety nets – to be an
agile, competent and productive workforce. In line with this, the social
services sector will continue to expand both as a percentage of GDP (from 8.5
percent in 2017 to 9.2 percent in 2022) and as a share of the total budget (from
40.3 percent in 2017 to 41.2 percent in 2022).
Outlook for 2017
Government spending remains to be one of the primary drivers of growth and

hence plays a pivotal role in uplifting the lives of more than 104 million
Filipinos. In 2016, government consumption grew by 8.4 percent, contributing
to 10.5 percent of the country’s GDP. Public infrastructure on the other hand
increased by 28.0 percent and equivalent to 24.0 percent of the total gross
value in construction.16
This growth momentum will be sustained in 2017 with the National

Government intending to spend P2,909.0 billion, equivalent to 18.2 percent of
GDP and 14.1 percent higher than the P2,549.3 billion actual disbursements in
2016. This spending commitment covers the requirements of major social
sector programs such as the K-12 program, universal health care, and social
pension and protection which is a significant contributor to the Government
Final Consumption Expenditure. It also considers the huge investments to public
infrastructures with some P549.4 billion cash program to support the
requirements of infrastructure and other capital expenditures this year. In all,
this will contribute to the achievement of the 6.5 to 7.5 GDP growth target for
the year, consistent with the macroeconomic assumptions and fiscal targets
adopted by the DBCC.
The growth of disbursements for the first few months this 2017, however, has
been moderate, partly due to base effect considering the high disbursements
recorded for the same period in 2016 taking into account the impact of one-off
16
The annual growth of the sector or industry, and its percentage distribution to total sector/industry and GDP
are measured at constant 2000 prices.
Page 63 of 66
and election-related expenditures. The growth is expected to pick up in the

succeeding months beginning the summer season towards the end of the year
as the bulk of the spending requirements of line agencies (i.e., 54 percent of
the total disbursement program) are lodged in the second semester.
Moreover, the pre-implementation and pre-procurement activities for the
programs and projects of line agencies are usually being completed at the
start of the year.
Revenues meanwhile are targeted to reach P2,426.9 billion, 10.5 percent more
than the actual collections in 2016 given the more robust domestic economy
and improved trade outlook this year. Collections of the BIR and BOC will
amount to 1,782.8 billion and P459.6 billion, respectively, representing 92.4
percent of the total revenue program for 2017. In order to attain these targets
and sustain collection growth, the BIR and BOC will continue to implement
revenue-enhancing measures such as Run After Tax Evaders, Oplan Kandado,
simplification of tax forms, tax mapping, anti-smuggling campaigns, and
technology modernization.
Reform Measures
Improved Budget Execution. To help the agencies obligate their budget faster,
the DBM has comprehensively released P1,643.9 billion or 83.5 percent of the
total P1,968.8 billion agency-specific budget in January 3, 2017 – the first
working day of the year 17 . This is part of the Department’s GAA-As-An-
Allotment Order policy and is supported by the comprehensive release of cash
requirements for the first semester to ensure efficient and timely
implementation of government programs and projects.
Better procurement planning. Spending agencies are also enjoined to conduct

early procurement activities from planning up to the conduct of actual
procurement processes and procedures, short of award, even before the
approval of the GAA or receipt of obligational authorities issued by the
DBM. 18 Furthermore, to fast-track the bidding process and encourage pre-
procurement activities and better procurement planning, the government
issued late last year the revised Implementing Rules and Regulations (IRR) of
the Procurement Law or R.A. No. 9184. Training and capacity building of
BAC personnel also started in late 2016 and currently still ongoing for some
17
Annex A of National Budget Circular No. 567 dated January 3, 2017 entitled Guidelines on the Release of Funds for FY
2017. Available at http://www.dbm.gov.ph/?page_id=18372
18
Section 4.5, GPPB Circular 09-2015 dated August 18, 2015 entitled Guidelines Reiterating the Procedures to
be Adopted in Undertaking Procurement Activities Prior to the Approval of the GAA or Receipt of Obligation
Authorities Issued by DBM.
Page 64 of 66
line agencies, GOCCs and LGUs to support the implementation of the revised
IRR. This should facilitate the procurement activities of agencies this year,
help them avoid procurement problems and the delays in program/project
implementation to hopefully improve their budget utilization.
Increased allocative and operational efficiency. The government is

institutionalizing the implementation of the Medium-Term Expenditure
Framework through the development of manual that will assist the line
agencies in rolling out a medium-term budget consistent with the
development plan. This will strengthen the link of planning and budgeting of
line agencies by quantifying the cost of implementing their strategic plans
consistent with the Philippine Development Plan (PDP) within the available
resource envelope.
The government will also implement a Rightsizing Program which aims to

attain effective and efficient delivery of public services by streamlining the
operations in government agencies. The measures under the program include
1) elimination of functions, programs and projects which are already
redundant or no longer needed; and 2) abolition of agencies with overlapping
or redundant operations and functions that result in confusing regulatory
rules, duplicating requirements, red tape and inefficient delivery of public
goods and services. The savings generated from these measures will be used
to fund expenditure priorities. As of June 30, 2017, four (4) senate bills and
four (4) house bills addressing government rightsizing have already been filed
at the Senate and the House of Representatives. To date, Senate Bill. No. 1395
is currently under second reading in the Senate while House Bill No. 5707 was
approved on the third and final reading in the House of Representatives. The
public hearings are currently ongoing in both chambers of the Congress.
Stronger PFM practices and standards. The government is pushing for the
enactment of the Budget Reform Bill which will address the gaps in the
country's PFM system and clarify the limits of the Executive's budgetary
powers. The bill provides for the: 1) shift from obligation-based to cash-based
budgeting and from a two-year appropriation shelf-life to one-year validity to
force implementation-ready projects and better strategic and operational
planning in spending agencies; 2) establishment of the Office of the
Comptroller General (OCG) for improved compliance to reporting and
accounting standards; 3) development and implementation of an Integrated
Financial Management and Information System for better monitoring and
reporting of financial transactions; and 4) strengthening of the Congressional
power of the purse to ensure proper check and balance.
Page 65 of 66
Fiscal Expansion. In order to increase the resources to meet the country’s

growing development needs, the government is actively pushing for the
passage of the Tax Reform for Inclusion and Acceleration (TRAIN) bill. The
Package 1 of the TRAIN covers the following measures: 1) adjustment of the
personal income tax brackets to correct for “income bracket creeping”; 2)
expanding the VAT base by limiting exemptions to raw food and other
necessities; 3) increasing excise tax rates on all petroleum products; and 4)
restructuring and increasing excise tax on automobiles. The House-approved
version or HB No. 5636 is projected to provide the government with an
average of 1.1 percent of GDP in additional revenues each year starting in
2018 up to 2022:
2018 2019 2020 2021 2022

Additional Revenues P133.8 B P233.6 B P272.9 B P253.0B P269.9B
% of GDP 0.8% 1.2% 1.3% 1.1% 1.1%
The proceeds will be earmarked to priority sectoral expenditures such as

basic education, health care, social protection and public infrastructures.
Page 66 of 66

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2016 YEAR-END REPORT

Republic of the Philippines

Year-End Report on the 2016 National Budget

September 25, 2017

The country’s macroeconomic fundamentals remained strong, characterized

It is worth noting however that the sustained expansion and persistent

Overall, in terms of the delivery of public services directed towards achieving

marginalized and poorest communities; improved the current state of public

 Overview of the policy and principles embedded in the 2016 Budget;

II. 2016 National Government Budget

The implementation of the FY 2016 Budget was expectedly challenging. Given

III. Macroeconomic and Fiscal Performance

III.1 Macroeconomic Environment

The Real Sector

The Philippine economy strengthened further and registered the second

Domestic demand was visibly strong (11.0%), boosted by household

investment (+23.7%). Notable expansions were recorded in durable

Household consumption was mainly supported by high consumer

Table 1. Actual Performance versus Macroeconomic Assumptions, 2016

Consumer-based manufactures such as food and beverage drove the growth

Table 2. Recent Philippine Macroeconomic Performance

Particulars 2011 2012 2013 2014 2015 2016

The pattern of economic growth in 2016 basically reflects a continuation of the

economic growth have broadened. In fact, in 2016, the contribution of

Monetary and External Trade Sectors

The Philippines’ macroeconomic fundamentals remain sound, characterized

The Bangko Sentral ng Pilipinas (BSP) maintained appropriately calibrated

Table 3. Actual Performance versus Macroeconomic Assumptions

The Philippine peso weakened against the US dollar, recording an average

Moreover, expectations of a steeper trajectory of foreign interest rates,

Amid the generally weak demand in advanced economies and major

Table 4. Employment, actual versus target, 2014-2016

However, an equally serious concern is underemployment, where in 2015 and

considerable segment of laborers and unskilled workers, which make up one-

The Philippines significantly advanced in terms of bringing down its poverty

Table 5. Poverty, Subsistence Incidence, and Poverty Treshold, 2006-2015

The broad-based decrease in poverty incidence eased disparities across

To further accelerate poverty reduction, it is important for the government to

III.2 Fiscal Performance

performance; and c) the expected temporary delays and slowdown in

The revised fiscal program consisted of P2,256.7 billion revenue collection

Table 6. 2016 Fiscal Program, Original vs. Revised

Revenues 2,696.8 2,256.7 15.50 (440.0) 16.3

III.2.1 Revenue Performance

Table 7. NG Fiscal Position

Total remittances from the government’s privatization program also

BIR Collection in 2016

refunds were made on Taxes on Company/Corporate Enterprise (P103.0

BIR attributed the increase in collections to the agency’s strict enforcement of

Table 8. BIR Collections

Taxes on Income and Profits 846.20 945.62 924.59 9.3% -2.2%

Taxes on Income and Profits

The positive year-on-year performance of income taxes was driven by several

1. Strengthening of tax administration for individual income tax as

BOC Collections in 2016

The improvement in valuation boosted duty collections by 3.8 percent,

Table 9. BOC Collections

III.2.2 Borrowing Performance

National Government Financing