MANILA -- The Philippines will be confronted by a "huge problem" if the government will continue shouldering the pension of military and uniformed personnel (MUP), Finance Secretary Benjamin Diokno warned anew Wednesday.

• 'Big drain to national budget': DOF chief calls for overhaul of military pension system

“If you let this to continue, I think the next administration will be faced with a huge problem. In fact, the current situation now is that the amount that we give to the military pension is much higher to the current budget of the military,” Diokno told the Senate Finance Committee.

Diokno pictured such a scenario in the event that Congress fails to pass into law the proposed MUP Pension Reform Act.

“Kung patuloy po nating ii-ignore ang military pension system, baka po yung ating investment grade ngayon sa mga rating agency, baka po yan maging junk... It will be more difficult for us to finance our budget, borrow money,” Diokno said.

• DND eyes 'phased' mandatory contribution under new military pension system

As of May this year, the government’s liability on the MUP pension is already at P9 trillion, which is a big part of the country’s gross domestic product (GDP) of P20 trillion, according to Diokno.

Diokno said it is time to come up with a law that will correct the current MUP pension system or the whole country will suffer.

“The pension system for the military is not a real pension system in the following sense. There are no contributors. A pension system is where the beneficiaries of the pension system contribute to the system, and there’s a government counterpart. But in this particular sense, there is no contribution on the part of the beneficiaries,” Diokno pointed out.

Military pension is annually funded through the General Appropriations Act.

• House ad hoc panel OKs MUP pension reform bill

Some steps being taken by government to effectively manage its resources is introducing new tax measures, effective tax collection, and limiting the budget deficit to 5.1 percent of the economy with target to bring it down to 3 percent.

• Marcos admin allocates P150-B for military, uniformed personnel pension in 2024

DEFENSE CAPABILITY

Sen. Bato Dela Rosa meantime urged the Marcos administration to further increase the Department of National Defense (DND) budget, which is pegged at P282.757 billion for 2024.

Budget Secretary Amenah Pangandaman stated that the DND now has budget increase from its current allocation of P210 billion.

Senate President Juan Miguel Zubiri meantime urged the economic managers to amend the provision of the Government Procurement Policy Board (GPPB) and allow the Armed Forces of the Philippines to buy second-hand but state-of-the art defense equipment, given its limited budget.

Pangandaman said the Department of Budget and Management will formally submit to the President the proposed amendment to the Government Procurement Act.

“On Tuesday next week, during our Cabinet meeting. And after the approval of the President, we’ll provide a copy of the bill to the Senate and the House for their filing,” Pangandaman said.