• The Art of Underspending

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    BY June 2010, there was talk that only a few hundreds of billion was left for the incoming administration. “In the first six months of this year (2010), government expenditure exceeded revenues. Our deficit further increased to PhP196.7 billion. Our collection targets, which lack PhP23.8 billion, were not fully met, while we went beyond our spending by PhP45.1 billion. Our budget for 2010 is PhP1.54 trillion. Of this, only PhP100 billion – or 6.5% of the total budget – can be used for the remaining six months of the current year. Roughly 1% of the total budget is left for each of the remaining month.”

    Aquino stated, “we will push for the Fiscal Responsibility Bill, which will limit spending bills only for appropriations that have identified a source of funding. We need 104.1 billion pesos to fund those laws already passed but whose implementation remains pending because of lack of funds.” Going on its last year, the unfunded mandates remain pending and the Fiscal Responsibility Bill is stuck in the labyrinth of the committee system.

    By FY2011, the budget philosophies were transparency and accountability, bias for the poor and the vulnerable, fiscal responsibility (again), public-private partnerships and zero based budgeting. By FY2012, paggugol ng matuwid at diretso sa tao. “This is how we define budgeting under the Aquino administration: efficiency, effectiveness and strategy, as opposed to waste, irrelevance and caprice. Ito ang ibig sabihin ng paggugol na matuwid.”

    FYs 2011 and 2012 were years of underspending. Either the bureaucracy is not supportive of the Aquino policies, plans, programs and activities because they are the righteous ones and those in the bureaucracy were considered to be with the other side or the key agencies are so fearful of moving because they would be labeled corrupt or be sampled as so-called big fish in the anti-corruption campaign. Daang Matuwid led to drag, if not immobility for officers and the rank and file. FY2012 saw the establishment of Participatory Budget Preparation.

    By FY2013, the Aquino Administration started with the practice of “GAA as release document.” Another fundamental transformation in budget execution was made: the shift to one-year validity of all appropriations. “This Administration continues to disaggregate lump-sum funds under the budgets of departments and agencies. We have seen how such bulk funds have become prone to abuse, causing bottlenecks as well during budget execution.” FY2013 also saw the introduction of Bottom-Up Budgeting “to amplify the voice of the grassroots in the allocation and management of public funds, as well as to promote a greater sense of understanding and ownership of the budgeting process among the public.” But from FY2012-2014, the budget was laced with pork.

    FY2014, the principles that shaped the budget were: performance informed budgeting; prioritization for inclusive development; better collaboration as the new standard in government, leveraging program budget approach; enabling the private sector as engine of economic growth, via the PPP; transparency as the core of effective public financial management, establishing the budget as release document, unified account code structure, treasury single account, all of which would culminate in 2016 with an Integrated Public Financial Management System.

    All reform buzz words and yet underspending continues to be a problem in the last five years.

    Then, the Lords of Padre Faura ruled that Aquino’s Development Acceleration Program or DAP was unconstitutional in July 2014 and pork was unconstitutional in November 2014. DAP was supposed to be the eureka formula allegedly designed in FY2011 to speed up implementation of agencies with low absorptive capacities. They were curing underspending as early as 2011. Then, again, could it be that the bureaucracy is saying something to the righteous ones?

    Come FY2015, a unique approach was again introduced via the 44 provinces under the Geographic Focus Areas; Performance Informed Budgeting with Congress introduced in 2014; Performance-Based Incentive Program that started in 2012 to “encourage better management and teamwork” among public servants; imposition of a One Year Validity of Appropriations and the redefinition of use of savings and augmentation, a direct response to the pointed ruling of the Supreme Court.

    And viola, former Sen. Ping Lacson comes loud and clear that pork had a reincarnation in the GAA2015, probably prompting the chair of the powerful Senate Finance Committee to resign, wiggling out from the mess that he knew existed but publicly denied. Could it be true that there were so-called “billion legislators” in Congress?

    And so we are back with the problem of underspending, a phenomenon only experienced in the Aquino administration. Senate Pro Tempore Ralph Recto even pointed out that “government even underspent to the tune of Php827 million a day last year, as disbursement so fell short of program by Php302.7 billion” which is translated to building “1,000 classrooms a day or build 80 kilometers of roads every 24 hours out of the amount not spent.” Another legislator pointed out that funds are there but programs of work are not. “They budget without the complete staff work from the agencies so at the end, “nagsubilang.”

    And that is quite dangerous because huge amount of taxpayers money are lumped but not spent at the end of fiscal year. Technically, it goes back to the treasury because of the one year validity of appropriations. Are we now seeing, after five years, the harsh reality of a disconnect between the budget process and the ability of agencies to spend? What happens during budget call? At the DBCC level? Since GAA is the actual release document, why the bottlenecks? Absorptive capacity of agencies? Really? After 5 years? Even with Administrative Order No. 46 signed by Aquino, transforming agencies into “full time delivery units”?

    All the buzz words in reform lexicon won’t shake if spending ceases. That impacts on service delivery and that in turn leads to caring for the bosses. Would the last ten months be a major paralysis or a total breakdown? You just have to look around you and, sorry, it ain’t called progress!

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    2 Comments

    1. The Aquino administration made it a point to underspend as the opposite of trying hard to complete all the projects it started for the mere purpose that it has the flexibility to declare it as savings instead of improving our nation with all the infrastructure they can create. They want the nation to accept a third world country type of government, so be it. Its better that we encounter this type of governance now so that in the next 6 years we can have an assurance that it will improve since we’ve seen some of the worst governance now anyway.

    2. I just wonder with all the underspending and the cancellation of previous administration’s projects, why is it that the country owes so much more than in the previous administration? Where did all the money go?