Return of pork barrel seen as IMF queries budgeting

This, as reports are rife that Budget Management Secretary Florencio “Butch” Abad, chief architect of the Priority Development Assistance Fund (PDAF) and the Disbursement Acceleration Program (DAP) and his staff are again tinkering with the national budget, perfecting a bottom-up budgeting scheme, since renamed as Grassroots Participatory Budgeting Program (GPBP).

The Department of Budget and Management (DBM) is also said to be working to free some funds “for expanded and new programs and projects” to make up for the disappointing 5.2-percent growth in the first quarter of the year, but in reality, according to critics, to institutionalize a program in the 2016 budget that would pour billions into the ruling Liberal Party’s (LP) campaign war chest in next year’s presidential election.

Abad is the LP’s coalition’s chief campaign strategist.

Like the DAP, the GPBP is a brainchild of Abad, and most of its funds are under the control of the Department of Interior and Local Government (DILG), the head of which is Secretary Mar Roxas, the presumptive LP standard-bearer.

The Manila-based IMF, in a report titled, “Philippines: Fiscal Transparency Evaluation,” which it released last Wednesday, questioned the transparency of the budgeting system.

“Budget credibility is undermined by the complexity and large flexibility of the annual budget framework,” the IMF noted. “To some extent, this reflects the specific challenges the country faces, such as the frequency of natural disasters that require quick responses from the State.

Also, at times, difficult relationship between the Executive and Congress has delayed budget approval beyond the timeline envisaged by the Constitution and made the passage of supplementary budget legislation cumbersome.

As a result, the annual budget law has become an imperfect indicator of the government’s priorities for resource allocation and service delivery, as budget outturns differ noticeably from the budget law,” the report said.

“While this has not affected macroeconomic and fiscal policy outcomes over the last few years—to the contrary, the authorities’ fiscal policy stance has been prudent and resulted in highly positive public debt dynamics—this could rapidly change should the political or external environment become less favorable,” it added.

The IMF also urged Congress to push for vital reforms that would pro- vide, among other things, clearer rules in the State’s budgeting process, particularly in the use of politicized lumped slush funds.

“Planning and costing of projects haven’t been strong, especially for multiyear projects. Clearly, the planning and costing could be improved,” IMF Resident Representative for the Philippines Shanakah Jayanath Peiris said.

Unconstitutional

The issues raised by the IMF were similar to those that the High Court cited in its ruling on the DAP, where it described as unconstitutional Malacañang’s acts that created it through the juggling of funds from the budget.

The SC had ruled twice against the use of lump-sum funds in the government, whether or not in the budget, in its decisions on the challenges raised against the PDAF and DAP.

The PDAF, or legislative pork barrel, is an item in the budget, while the DAP is the rechanneling of itemized funds in the bud- get to a money pool created by the Palace supposedly as economic stimuli.

Abad has revealed plans for a two-tier budget approach that would release P581 billion “for expanded and new programs and projects”next year, in line with Administrative Order 46, which seeks to speed up the disbursement of government funds after the dismal first-quarter growth.

Abad is known to rein in spending in preparation for an election year. Economists have been criticizing this “underspending,” which was described as massive enough to dislocate growth.

But Abad in unrepentant in his strategy. “Last year’s spending deficit helped us to correctly identify the issues that agencies had with implementing projects and conducting procurement procedures,” he said. “As we refine agency spending processes and enhance their operational capacity, we can definitely look forward to faster and more efficient disbursements in 2015.”

But figures showed that, instead of improving, government under- spending had worsened in the first quarter, although Abad said the government had speeded up the use of public funds.

Abad said the fiscal space for new programs and projects comprises 20 percent of the proposed P3-trillion budget for FY 2016 and is more than double the fiscal space of P287 billion this year.
The GPBP, a pork-barrel clone to critics, was alloted P20.8 billion in this year’s budget and likely a bit more in next year’s budget, when it becomes a mainstay as an item in the yearly budget.
The GPBP works like the PDAF, except that the former goes down to the local government level.

Abad said that, in the 2016 budget call of the DBM, the implementation of the GPBP would also be scaled up in scope and in value through the greater involvement and responsibility of local government units (LGUs) in anti-poverty and basic public projects in their localities.

At the House of Representatives, administration ally Agusan del Norte Rep. Erlpe John Amante has filed Resolution 1932 to make the GPBP a permanent feature of the budget.

“There is a need to dispel notions that funding for the GPBP is a form of presidential pork that has failed to deliver its promise,” Amante said in filing the resolution.

Earlier, Rep. Mel Senen Sarmiento, LP secretary general in Western Samar, admitted the GPBP was meant to “cure” the restrictions imposed by the SC on the DAP in funding unprogrammed projects. Luis Leoncio and R. Guillermo Galacos