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Health care, Bangsamoro laws among 2020 fiscal risks

THE interagency Development Budget Coordination Committee (DBCC) has flagged a number of measures and recently signed laws as the sources of fiscal risks for next year.

In its “Fiscal Risks Statement 2020” released over the weekend, the DBCC warned that “[e]nrolled bills and pending legislative measures, among others, pose immediate issues with potentially far-reaching budgetary implications.”

Those “with diminishing effects [on] the budget,” it said, are the Unified Military and Uniformed Services Personnel Separation, Retirement and Pension measure; Republic Act 11223, or “The Universal Health Care [UHC] Law;” RA 11054, or “The Bangsamoro Organic Law [BOL];” and the proposed lowering of the optional retirement age of civil servants to 56.

The government is seeking a P4.1-trillion national budget for next year, an 11.8-percent increase from the P3.7 trillion allotted for 2019.

According to the DBCC, the pension measure seeks to provide all military and uniformed personnel with adequate remuneration and benefits by revamping the current retirement benefits and pension scheme.

“As was previously mentioned, it is worth noting that the current…scheme may result [in] ballooning pensions, and [the] passage of a bill reforming [the] scheme may not necessarily defuse the problem,” said the panel, made up of the Office of the President, the Budget and Finance departments, the National Economic and Development Authority, and the Bangko Sentral ng Pilipinas.

On the other hand, it pointed out that fiscal risks from the UHC Law “are expected to emanate from revenue headwinds (i.e., unmet incremental revenue targets) and various uncertain events, such as natural calamities, outbreaks/epidemics and/or man-made conflicts.”

The UHC program, which aims for a holistic approach in providing health care services to Filipinos, will be funded from total incremental sin tax collections, as provided in RA 10351 or “The Sin Tax Reform Law;” portions of the national government’s share from the income of the Philippine Amusement and Gaming Corp.; portions of the Charity Fund, which will be derived from documentary stamp tax payments and mandatory contributions of the Philippine Charity Sweepstakes Office; premium contributions of National Health Insurance Program members, annual appropriations of the Department of Health; and national government subsidies to the Philippine Health Insurance Corp.

The DBCC also said the budgetary impact of the Bangsamoro law “would be equivalent to the incremental cost of the block grant, i.e., the difference between the block grant as required by the law and the appropriations that would have been given to [the] ARMM [Autonomous Region in Muslim Mindanao] in the absence of the BOL.”

Under the law, the Bangsamoro Autonomous Region in Muslim Mindanao (BARMM) government will be given a 5-percent annual block grant from the national government, which will be automatically appropriated in the national budget.

The 2019 budget includes a P30-billion allocation for the Bangsamoro region.

On lowering the optional retirement age of civil servants, the interagency body said this would have a negative impact on the actuarial life of the social insurance fund of the Government Service Insurance System (GSIS).

Results of an actuarial study showed that this move would result in expenses exceeding income becoming a reality earlier by a decade, and in the agency’s fund life being reduced by 12 years.

“The GSIS has reservations on the adoption of the proposed lowering of the optional retirement age, as it would adversely affect the number of contributors supporting the pensioners, bringing it down further, and without the support of additional funding, would be detrimental to the solvency of the fund,” the DBCC said.

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