• ‘OBAs’ cloud budget transparency efforts

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    OBA20140811DESPITE persistent efforts to consolidate all public funds to ensure better transparency in their disbursement, so-called special funds, or mostly “hidden” items such as off-budget accounts (OBAs) keep on “creeping back” into government budgeting.

    In the past, experts introduced measures such as the “one fund” concept to make all available funds useful to all by putting them together in the general fund.

    “The one fund concept was introduced during the 1950s at the height of the reorganization of the entire government system. There were too many funds then. These could not be used by the government since these are restricted,” Professor Leonor Briones, former National Treasurer, explained.

    She told The Manila Times that the concept was broached at a time when “the government was borrowing heavily.”

    “The rationale was to make all these funds available for public benefit by putting them in the general fund. Over the years, the special funds kept creeping back,” Briones said.

    In 2004, Sen. Ralph Recto filed a measure instituting the “one fund concept” by providing that any and all share or percentage of an income, collection or revenue of a government agency, corporation or activity that is earmarked by law for direct remittance to another agency shall accrue to the national treasury.

    Ten years later, nothing has been heard of Recto’s Senate Bill 1319.

    Recto observed that experience had shown, time and again, that earmarking public funds for specified purposes in the form of a special fund “has proven unreliable due to the delay if not non-release of the funds.”

    Permanent fixture
    Based on a 1999 study funded by the United States Agency for International Development (USAID), OBAs have been a permanent fixture of government budgets in the Philippines from the time the budgeting and accounting system was installed in the country.

    Early accounts of OBAs talked of separate books kept for separate purposes in many agencies, mostly to account for receipts from authorized collections retained by the collecting unit as well as war reparation payments after 1946.

    “Many attempts have been made by various administrations in power to consolidate said accounts for more effective resource allocation. However, such attempts were basically negated by subsequent legislations authorizing new OBAs,” the study said.

    In 1977, the Martial Law regime succeeded in consolidating a substantial number of independent accounts under the General Fund of the government. Some 320 accounts were closed and the fund balances transferred to the General Fund by virtue of Presidential Decree 1177.

    “For a while, the policy held up, but by the early 1980’s, OBAs reared their ugly heads again as new directives effectively reversed the avowed fund consolidation policy. In 1987, the newly-installed Aquino administration moved to clean government books and purged several accounts considered to have outlived their usefulness. Included in this account-cleaning effort was the strict implementation of the ‘one-fund concept’ in budgeting initially promulgated in 1977,” the study said.

    A similar directive was issued by the Ramos administration in 1996 to reiterate the one-fund policy and discourage attempts to create new OBAs. Furthermore, to strengthen government resolve, the Ramos administration mandated and required all agencies to provide adequate disclosures of retained OBAs in the agency financial reports.

    “Because OBAs are an integral part of public financial management, there is a need to promote the integrity of OBA financial management. Arguably, some OBAs are better managed than others although this argument will have to be sustained by independent analysis. In the absence of publicly available and understandable information on their operations, however, doubts on their proper use will linger in the perception of the general public,” the paper said.

    Despite many efforts in the past to consolidate government accounts, OBAs continue to proliferate.

    “At the end of the day, public officials are ultimately responsible for the funds entrusted to them. As such, a more transparent and responsive financial management system for OBAs needs to be instituted as soon as possible,” the report said.

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    1 Comment

    1. WE cannot question the findings of both honorable Leonor Briones and Ben Diokno. This revelation only adds to the existing facts that the King PNoy administration have been fooling the people of the Philippines since the very beginning. For sure, the author of this scam is PNoy, Abad and Drillon as key figures as well as Purisima A lot of hocus pocus of public money is still going on in this daang matuwid Pnoy administration.