Re-enacted budget is bad fiscal policy


    THE turn of events in the bicameral deliberations on the P3.77-trillion 2018 national budget is worrisome, with congressional leaders raising the specter of a re-enacted budget by January if a dispute over the budget of the Department of Public Works and Highways (DPWH) is not resolved.

    The dispute centers on the P50-billion cut in the DPWH budget in the Senate version of the General Appropriations bill, or GAB.

    Sen. Panfilo Lacson says the amount represents civil works projects for which right-of-way (ROW) problems have yet to be ironed out. Lacson argues that, by law, “unless ROW issues/problems are resolved, no civil works shall commence.”

    “In fact, the law is restated under Special Provision No. 10 in the 2017 GAA (General Appropriations Act) and repeated under Special Provision No. 12 in the 2018 General Appropriations bill now undergoing bicameral conference,” he explains.

    “Save for P11.38 billion where they (House lawmakers) submitted a list of ROW claimants, they failed to justify the rest of the P62.1 billion, leaving P50.7 billion from the P62.68 billion. This is in addition to another P18.389 billion that they failed to dis-aggregate up to this date,” he adds.

    House Speaker Pantaleon Alvarez, instead of coming up with a cogent reply, stuck to his guns and warned that if the Senate did not agree to the House version, the government would have to use the 2017 budget in 2018.

    Davao City Rep. Karlo Nograles could only complain over why the Senate wanted so many changes at the last minute, after dragging its feet on the budget bill.

    Sen. Ralph Recto is right; it would be bad for the country to go back to the era of re-enacted budgets, which are prone to corruption.

    At first glance, a re-enacted budget seems to be a safeguard, as provided for by the 1987 Constitution: “If, by the end of any fiscal year, the Congress shall have failed to pass the general appropriations bill for the ensuing fiscal year, the general appropriations law for the preceding fiscal year shall be deemed re-enacted and shall remain in force and effect until the general appropriations bill is passed by the Congress.”

    This mechanism means that there will be no government shutdowns in the Philippines, unlike in the United States, when there is a congressional budget deadlock.

    But it is bad fiscal policy. A re-enacted budget could mean outlays remain for programs or projects that have been finished, and theoretically could be diverted to other items.

    Worse, new programs and projects in need of urgent funding under the new budget, notably infrastructure programs, will have no funding. This will undoubtedly have an impact on economic growth.

    To its credit, the previous Aquino administration did away with such bad practices and made it a point to pass budgets on time (although it had difficulty disbursing money and had to resort to the illegal Disbursement Acceleration Program to avoid underspending).

    The Philippines cannot risk veering away from its rising growth trajectory because of delays in priority infrastructure projects and other critical expenditures.

    The House and the Senate should come to their senses and resolve their differences. Fifty-billion pesos is too small an amount to hostage a budget as big as P3.77 trillion.


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