DEBT, not revenues, financed the country’s operations in 2012, the Commission on Audit (COA) reported recently.
In its latest report on the Bureau of Treasury, state auditors underscored that debt primarily moved the country’s operations and not income-generating activities, resulting in accumulated deficit spending.
The COA report said that by yearend 2012, the government slumped to a negative P3.15 trillion in equity. Specifically, as of December 31, 2012, state assets were at P2.46 trillion, but liabilities were higher at P5.61 trillion.
“The National Government’s operations were financed by debt and not by revenues which resulted to accumulated deficit spending,” the audit report said. In fact, the absence of available revenue and collection pushed the national government to borrow loans and bonds to fund the 2012 appropriations.
“New borrowings were resorted to fund the General Appropriations Act of 2012 which was not supported by funds actually available,” the report said.
President Benigno Aquino 3rd signed a P1.8-trillion budget in 2012.
The COA report said that “new borrowings” in 2012 posted at P955 billion of which 56 percent was used to fund the budget deficit of the country.
Auditors showed that that the biggest borrowing came from regular domestic bonds at P430.5 billion, followed by retail treasury bonds (P368 billion), global bonds (P96.8 billion), and official development assistance loans (P59.8 billion).
The state slashed the P955.1 billion “new borrowings” with P416.9 billion for payment, leaving a P538.2 billion difference. This amount was used to fund the budget deficit of the national government, the report read.
In their analysis, auditors commented that the increase in the national government’s liabilities showed that “expenditures exceeded the revenues.”
“The government resorted to borrowings from foreign sources or domestic capital market in view of the non-availability of cash and absence of corresponding revenue collection to be raised,” the report noted.
Auditors stated that the Constitution “was not adhered to,” specifically Section 25 (4) of Article 6, which stipulates that government appropriation “shall be supported by funds actually available as certified by the National Treasurer.”
During the exit conference with state auditors, Treasury officers said that they had to borrow from domestic and external sources for funding.
“Even in years that the national government realized budget surpluses, the government still had to borrow to bridge the financing gap,” the report read.
As to the assurance of a balanced budget, the Treasury said that “it is not the function of the Bureau” although that will be referred to the Development Budget Coordination Committee.
Treasury officials said that it is the Departments of Budget and Management and of the Finance department, which propose annual fiscal targets.