"The national budget is a document of the highest importance. It is the North Star of a countryís economic development effort."
"The national budget is a document of the highest importance. It is the North Star of a countryís economic development effort."
I feel sorry for the national budget, more formally known as the General Appropriations Act. The document that economists consider the most important economic management tool has become the most abused and disrespected of the key government documents relating to the economy.
Based on DBM (Department of Budget and Management) statements and COA (Commission on Audit) reports—as reported by the media —the abuse of the national budget falls under the headings of padding, insertion, misdirection and underutilization.
The practice of national-budget padding is as old as the hills, and the placement in the proposed GAA of inflated figures has been the practice since the first post-Independence national budget was put together by the First Congress. Budget-padding has to be resorted to if the contractors are to be able to pay commissions to members of Congress, local officials (governors, mayors and barangay captains) and, yes, DBM officers. The need to pay commissions gives rise to inflation of GAA figures; without the commission-paying environment, the GAA would reflect real, unbloated numbers.
During the run-up to the deadline for completion of the 2019 GAA the most popular verb in the national discourse was “insert.” The media stories gave the impression that the leaders of the House of Representatives, from which all money bills must originate, were on an insertion rampage. The amounts involved were mind-boggling: The P2.4 billion and P1.5 billion were reported to have been inserted in the allocations for the districts of the Speaker of the House and the Majority Leader, respectively. The Constitutionally mandated norms for the preparation of the national budget appeared to have been violated in such a gross manner.
In its reports, COA has been performing yeoman’s work in pointing out, and establishing responsibility for, the mis-implementation of the national-budget allocations for the Executive Department instrumentalities and the congressional districts. COA has reported diversions of funds from one part of a congressional district to another and from one purpose to another. This is not how budgeting of national resources—scarce resources, to be sure—is supposed to be done. Funds are appropriated for a designated use in a designated Executive department because that is supposed to be their optimal use. Diversions defeat the whole purpose of resource-use planning and makes a mockery out of the entire national budget-making process.
In some of its reports COA has drawn attention to yet another instance of disrespect for the national budget. This is the underutilization by the national government offices and the Congressional districts of their GAA allotments. COA reported recently that GAA allotments totaling P518 billion went unused in 2017. Considering that the implementation of economic-development projects cannot proceed without financing, this piece of COA reporting is not only shocking; it is exceedingly saddening. Seen against this backdrop, the push of the Secretary of Budget and Management for the cash-budget method of budgeting makes eminent good sense.
The national budget is a document of the highest importance. It is the North Star of a country’s economic development effort. Yet, as the foregoing discussion has shown, it has been the object of abuse and disrespect.
The present Philippine Development Plan (2016-2022) is targeting, and its immediate predecessor targeted, annual GDP (gross domestic product) growth of 7-8 percent. So long as this country’s national budget is put together and implemented the way it currently is, the target is well-nigh unattainable.