Solon warns of conversion of unprogrammed funds
THE House of Representatives yesterday began its deliberations on Malacañang’s proposed P6.352 trillion national budget as a militant lawmaker warned of unprogrammed funds being turned into what she called “presidential super pork.”
“The proposed national budget is more than just a financial document. It reflects our priorities, commitments and vision for the future,” said Rep. Zaldy Co (PL, Ako Bicol), chairperson of the House Committee on Appropriations, during the first day of the lower chamber’s budget deliberations.
The hearing began with the presentations of the Development Budget Coordination Committee (DBCC), which is comprised of Budget Secretary Amenah Pangandaman, Finance Secretary Ralph Recto, Secretary Arsenio Balisacan of the National Economic and Development Authority (NEDA), and Governor Eli Remolona Jr. of the Bangko Sentral ng Pilipinas (BSP).
Rep. France Castro (PL, ACT), a member of the militant Makabayan bloc, warned that the P158.6 billion unprogrammed funds under the 2025 national budget may balloon again once the budget reaches the bicameral level.
Castro cited what happened in this year’s unprogrammed funds after the amount reached P731.4 billion, or an increase of P449.5 billion, from the Executive’s original proposal.
“We are seeing a dangerous trend in the 2024 national budget where unprogrammed appropriations have ballooned to P731.4 billion, an increase of P449.5 billion from the original proposal,” she said. “This massive increase gives the President unprecedented discretionary power over public funds, effectively creating a presidential super pork barrel.”
Unlike regular items in the national budget, unprogrammed appropriations are not automatically allocated and only becomes available if funding conditions are met, such as when the government is able to raise additional tax or non-tax revenues.
Unprogrammed appropriations are released after a certification from the Department of Budget and Management (DBM) and the National Treasury that there are surplus revenues.
Castro explained that unprogrammed appropriations allow the executive branch to reallocate funds from government-owned and controlled corporations (GOCCs), like PhilHealth, GSIS, and SSS, to various projects at the President’s discretion.
She warned that the mechanism “allows the administration to siphon off funds meant for critical public services and redirect them to pet projects without proper legislative oversight.”
She added that “it’s a blatant attempt to circumvent budgetary processes and concentrate fiscal power in the hands of the executive.”
The militant lawmaker called for an end to the use of unprogrammed appropriations and demanded direct funding for public health and other essential services.
“We must not allow the people’s money, especially funds intended for health insurance and social security, to be used as the President’s personal pork barrel,” Castro said, adding: “We call for the abolition of all forms of pork barrel, including this new modus operandi of unprogrammed appropriations.”
Castro also urged her colleagues “to fight corruption and demand transparency in the national budget.”
“The people’s funds should directly benefit the people, not serve as a presidential slush fund,” she said.
‘NO PORK’
Speaker Martin Romualdez said unprogrammed funds cannot be considered “pork,” pointing out that pork barrel funds are budgetary items that are changed even after the annual national budget has already been enacted.
“Well, I think if we’ll look at the definition, there is really no pork because that contemplates on the amendments or post-enactment of the budget where the allocations are being changed,” he told reporters.
The Speaker said deferred giving further comments on Castro’s statements, citing pending petitions before the Supreme Court challenging the use of unprogrammed funds.
Last August 2, a group of petitioners led by Senate Minority Leader Aquilino “Koko” Pimentel III asked the High Court to issue a temporary restraining order against Department of Finance (DOF) Circular No. 003.2024 on the transfer of unused PhilHealth funds for “unprogrammed appropriations.”
“I’d like to defer the comments that we make, that you know, suggest any influence on the outcome of the resolution,” he said. “So let’s just wait on the resolution, I think the Supreme Court will be judicious enough to handle this issue.”
‘TANGIBLE’
In his speech before the budget briefing of the DBCC, the Speaker said the national budget aims to sustain the country’s economic growth and benefit all Filipinos, calling it the “the best tool we have to ensure that all our people, especially the poor, feel the tangible benefits of our economic achievements.”
He said by prioritizing programs that uplift the most vulnerable and provide essential services, the budget “serves as a bridge, connecting our economic successes with the daily lives of our people.”
“It is a testament to our commitment to inclusivity and equity, ensuring that the progress we make as a nation is shared by all,” the leader of the 300-plus-strong House of Representatives said.
He noted that on top of the spending priority list is education with an allocation of P977.6 billion, followed by public works with P900 billion, health with P297.6 billion, interior and local government with P278.4 billion, defense with P256.1 billion, social welfare with P230.1 billion, agriculture with P211.3 billion, transportation with P180.9 billion, judiciary with P63.6 billion, and justice with P40.6 billion.
Co, for his part, said the 2025 budget could help more Filipinos hurdle the poverty threshold, especially after the government’s action that brought down rice tariff to 15 percent starting July 16 this year from 35 percent.
“It (the budget) outlines government’s plan to stimulate economic growth, enhance social services, improve infrastructure and ensure sustainable development. In these challenging times, a well-crafted budget is essential for addressing our country’s pressing issues from economic recovery to social equity and food security,” said Co.
He asked his colleagues in the House to carefully analyze the numbers presented by the government’s economic managers to ensure a “realistic budget” that could be supported by revenues.
“As we embark on this crucial task, let us approach it with a sense of responsibility and urgency. Our goal is to approve a budget that not only meets the immediate needs of our constituents but also lays the foundation for long-term growth and prosperity consistent with our vision in Ambition 2040,” said Co, referring to the vision for a more prosperous Philippines.
Ambisyon Natin 2040 envisions a Philippines as a middle-income country, with income levels at least three-fold in 2040 compared to its level in 2015.
ON-TRACK
Finance Secretary Ralph Recto assured the House that the government is on-track to achieve its targets under the refined Medium-Term Fiscal Program that gradually reduces deficit and debt, creates more jobs, increases incomes, and reduces poverty.
“[W]hen I took on the Finance Secretary hat, my first priority was to recalibrate our growth and fiscal targets to ensure that they are achievable and adaptable to external shocks. Our refined Medium-Term Fiscal Program reduces our deficit and debt gradually in a realistic manner, while creating more jobs, increasing our people’s incomes, and decreasing poverty in the process,” he said.
Recto, a former Batangas lawmaker, said the spending program “took into account ongoing external trends that heavily influence the global economy at present while still recovering from the pandemic, such as geopolitical tensions.”
To fund the budget of P5.77 trillion in 2024, he said the Department of Finance (DOF) scouted for more resources without inflicting new taxes on the people at present or bequeathing debts to be paid by future generations.
He said this is why the DOF hiked the GOCCs’ dividend rates to 75 percent from 50 percent in 2024 as among the major sources of non-tax revenues.
He also said that the Bureau of Internal Revenue (BIR) and the Bureau of Customs (BOC) also posted higher collection performances through digitalization, strict enforcement, and plugging of tax leakages, especially from e-commerce.
Recto said total revenue collection from January to June 2024 grew by 15.6 percent, amounting to P2.15 trillion, of which tax collections increased by 10 percent to P1.84 trillion, while non-tax grew by 63.3 percent to P14.2 billion.
He said the performance has placed the Philippines second in Asia in terms of revenue effort with a revenue-to-GDP ratio of 15.3 percent for the first quarter of 2024.
He reported that expenditures also grew by 14.6 percent in the same period, reaching P2.76 trillion. In the first quarter of 2024, expenditure-to-GDP stood at 19.7 percent.
Recto said the fiscal deficit has remained “very manageable” at P613.9 billion, which, he said, is “way below the mid-year target.” As a percentage of GDP, the deficit stood at 4.5 percent in the first quarter of the year, he noted.
He said that over the medium term, the government expects revenues to grow by an average of 10.3 percent annually and revenues as a percentage of GDP will also increase from 16.1 percent in 2024 to 17.0 percent in 2028.
The finance chief said tax collections are expected to rise by 11.8 percent annually, “driven by projected double-digit collection growths of the BIR and BOC.”
“This will outpace the roughly 8.7 percent average increase of nominal GDP every year from 2024 to 2028,” he said. “This means that we are asking the BIR and BOC to work harder and boost efficiency at a faster pace,” Recto said.
By 2028, he said the tax effort will rise to 16.3 percent from 14.4 percent in 2024.
Recto also shared that the projections took into account the additional revenues from the refined revenue reforms of the DOF, which were recalibrated to ensure that they do not place undue burdens on the taxpayers.
