The Department of Budget and Management (DBM) released last week the core documents of the proposed 2027 national budget, including the National Expenditure Program (NEP) and the Budget of Expenditures and Sources of Financing (BESF).

The BESF is a voluminous publication — the print copy runs nearly two inches thick — because it presents three years of data for national and local agencies alike: actual figures for the previous year, programmed levels for the current year, and proposed amounts for the next year. Its coverage extends across numerous agencies, government corporations, state universities, PPP projects, and more.

The first table of the BESF sets out the budget's macroeconomic parameters — the assumptions and projections on which projected revenues and proposed expenditures are built. That makes the early tables especially important, because they frame the rest of the budget even before lawmakers begin debating agency allocations and project line items.

Columnist Bienvenido S. Oplas, Jr. draws a parallel with private business: entrepreneurs decide whether to expand, by how much, or not at all, based on the projected macroeconomic environment plus the foreseen industry situation. Business expansion means more job creation and more taxes for the government.

For the government, bad or unrealistic growth projections carry a fiscal risk. Planners may assume high revenues from high growth and prepare and submit correspondingly high expenditures to Congress. If growth comes in much lower than projected, revenues will be lower and the budget deficit will be higher than projected, because expenditures and appropriations are already fixed and legislated.

A review of actual numbers from 2023 through the first half of 2026 shows GDP growth slowing from 5.5% to 2.5%, inflation fluctuating, unemployment marginally rising to 5%, and the peso depreciating to what the author calls the “senior citizen” level of P60+. The Dubai oil price has increased, while the 364-day Treasury bill rate has mildly decreased (Table 1).

This week, the House of Representatives' economic think tank, the Congressional Policy and Budget Research Department (CPBRD), published a series of papers, one of which is “Philippine Economy Macroeconomic Perspectives: Inputs to the Analysis of the President's Budget for FY 2027,” Budget Briefer No. 1, 2026. The CPBRD's old name was the Congressional Planning and Budget Office (CPBO), where Oplas worked from 1991 to 1999.

The paper summarizes GDP growth and inflation projections for 2026 and 2027 from four multilaterals — the ADB, World Bank, IMF, and AMRO — along with the CPBRD's own projections. Oplas added to the table the projections and assumptions of the Development Budget Coordination Committee (DBCC), composed of the DBM, DoF, DEPDev, and the Office of the President via the Office of the Executive Secretary.

The columnist also asked the chief economists of several banks — BPI's Jun Neri, China Banking Corp.'s Domini Velasquez, and Sun Life's Patrick Ella — for their GDP and inflation projections.

The DBCC posted the highest and most optimistic projections: growth of 3.5–4.5% in 2026, for a median of 4%, and 5–6% in 2027, for a median of 5.5%. The CPBRD has the least optimistic projection, at 1.9–3.2% for a median of 2.6% in 2026. Asked about the think tank's 2027 predictions, CPBRD Director-General Jun Miral said they see high volatility after Q4 2026 and decided to withhold releasing their projection for next year.

Oplas also noted surprise at BPI's low growth projections for both years. Neri said the bank has both upside and downside scenarios, though the columnist did not ask for these. Chinabank's Velasquez and Sun Life's Ella hold what the author considers a more balanced view, and he goes along with their projections (Table 2).

On the fiscal situation, the budget deficit has averaged P1.5 trillion per year over the last three years and is projected to rise to around P1.7 trillion per year from 2026 to 2029.

The more notable item, the columnist writes, is the consistent steep rise of interest payments — from P628 billion in 2023, doubling to P1.237 trillion in 2028 in just five years. The projected interest payment of P996 billion this year implies an average of P2.7 billion per day (Table 3).

Oplas argues there should be a drastic spending cut somewhere — a deliberate and explicit program to reduce the deficit below P1.5 trillion per year — plus the privatization of some government assets and corporations, such as the big hydropower plants in Mindanao.

In his view, there is no way the P19.1-trillion outstanding public debt can be repaid, or even significantly reduced, by taxation alone, and there should be large-scale privatization. He writes that he wishes to see the current land of NAIA — some 636 hectares — privatized someday to generate at least P6 trillion 15 years from now.

In the coming weeks, Oplas says he will analyze the budgets of big agencies and projects, assessing whether they succeed in improving the productivity of the country's people and businesses.

Bienvenido S. Oplas, Jr. is the president of Bienvenido S. Oplas, Jr. Research Consultancy Services and Minimal Government Thinkers, and an international fellow of the Tholos Foundation. He can be reached at minimalgovernment@gmail.com.