UP-NCPAG News

THE BUSINESS OF GOVERNANCE
By LEONOR MAGTOLIS BRIONES
November 10, 2008

The entire world is enthralled with Obama’s victory, including the Philippines. It is reported that in France, the search is on for a French Obama. The other day the hosts of a popular radio program asked listeners to mention who deserves to be the “Filipino Obama.” Someone immediately texted the name of a popular young senator. Just as quickly, another texter disputed the choice and suggested the name of another senator.

The thinking is that anyone who is relatively young, tall, good-looking and smooth-talking can be a Filipino Obama. An important question to ask is: who is funding wanna-be-Obamas? Obama’s funding largely came from the public. Are our Obama pretenders using public funds for their campaigns? Are they depending on big business and trapo money?
Another important question is: what is their track record? For presidentiables who are senators and congressmen, what is the output of the committees they chair? A simpler question: are they working in the Senate or out touring campuses on public funds to seduce the youth vote?

A large percentage of those who voted for Obama are young. In the Philippines, the race is on for the youth vote. Every other candidate has its youth arm. This is not really a new thing. The youth has always been recognized as a potent force for change. At the same time, cynics note that corruption starts at a very young age, say, in the Sangguniang Kabataan.

In a forum with young political leaders, a young man asked the anguished question, ”Too often, the youth have been disappointed by those who promise to lead them. They end up worse than their trapo parents, handlers and funders.” The youth then recited a long list of politicians who wooed the youth vote and turned trapo. “What is your guarantee that you will not disappoint us when it is your turn?”

An enthusiastic journalist wrote that the Obama victory was “the first global election.” He has been described as a “historic and transformational” figure. It is too soon to swoon over a self-proclaimed Filipino Obama. We need a Filipino for the Filipinos, not a grotesque Obama imitation.

The second book which Obama wrote is entitled, “The Audacity of Hope.” Let us not be seduced by those who offer “The Audacity of Hubris.”

When the 2009 budget goes to the Senate

Today, both houses of Congress resume their sessions after a month long holiday. There are concerns that the Cha Cha train will be rammed through a compliant House of Representatives. At the same time, Congressmen will also busy themselves with reconciling amendments to the 2009 budget so that it can be transmitted to the Senate.

Sen. President Manny Villar stated in a recent interview that “the Senate will be “fiercely independent” of the Executive when it scrutinizes the 2009 budget.

There are at least four issues which the Senate needs to examine. These have been exposed by Cong. TG Guingona III: the macroeconomic assumptions upon which the calculation of the Ph1.4 trillion budget is based; the Special Purpose Funds directly under the Office of the President, now popularly known as the President’s beef barrel; the accumulation of huge savings and the power of impoundment; and the Bicameral Committee whose closed door deliberations set the stage for illicit negotiations.

During the presentations of the Alternative Budget Initiative (ABI)/Social Watch in the Senate, Sen. Panfilo Lacson asked a hard-hitting question: “The Macroeconomic Assumptions have been changed at least three times because actual economic conditions did not reflect the optimistic government projections. The P1.4 trillion budget is based on these assumptions. The deficit is understated. What should be the realistic size of the budget? How large should the deficit be?” Tough questions.

Sen. Villar also announced that the ABI/Social Watch is welcome to present its alternative budget proposals. Last year, the following attended the presentations: Senators Lacson, Legarda, Pimentel, Aquino and Madrigal. The two Senators Cayetano asked for separate presentations. These senators picked out certain ABI proposals and added these to the budget amendments. Sen. Enrile included a proposal in his plenary amendments.

The 2009 budget is crucial for two reasons: first, it is considered an election year budget. Priorities can be easily distorted and manipulated for election-related goals. Second, Economists are projecting that 2009 will be more difficult than 2008. The budget can be wielded as a powerful tool for protecting the poor or enhancing political interests.,

Last year, ABI/Social Watch members were present in the Senate during the final deliberations of the most important piece of legislation to be produced by both Houses of Congress. Among the presidentiables, those who were present were Sen. Villar, Lacson and Legarda. We did not see Sen. Mar Roxas and Sen. Chiz Escudero. Hmm.

THE BUSINESS OF GOVERNANCE
By LEONOR MAGTOLIS BRIONES
ABS-CBN News.com
November 03, 2008

I often get feedback from readers of my columns. Since the columns are circulated by various e-mail groups and websites, I receive responses from a wide range of readers - students and alumni, overseas Filipinos, civil society organizations, church people and people I don’t know personally.

A recent column which received many comments was my account of my trip to Europe. I recounted how chasing trams, buses and trains stirred up memories of my own penny-pinching time as a scholar in England. When I bumped into U.P. activist lawyer Marichu Lambino last week, she told me she enjoyed the light touch.

Jeck Reyes Cantos, Chief of Staff of Cong. Erin Tañada, was moved by my story about the dream of Philippine Ambassador to Germany Delia Albert for the Philippine government to purchase the building in Berlin where a half-starving, half-freezing Jose Rizal finished writing his immortal “Noli Me Tangere.” Surely, if the government can finance a Ph750 million brand new building for Congress, it can scrape up funds to acquire a meaningful historical site!

Is classical music dead?

This question was raised in the weekly magazine of a broadsheet. The writer was bewailing the lack of appreciation for classical music in Philippine contemporary culture. The taste for classical music is identified with the rich, the moneyed and the foreign community.

I don’t think so. Classical music is performed not only in theaters patronized by the “perfumed crowd.” One can thrill to classical music in two places where many Filipinos congregate: the universities and the churches. And one does not have to spend money.

Philippine universities faithfully continue the tradition of classical music. The different official singing groups of the University of the Philippines, University of Santo Tomas, Ateneo de Manila University and Silliman University offer awesome repertoire which can compete with the best in Europe

One does not have to pay thousands to watch world class performances from university choirs and cultural groups. The trick is to attend their free performances in the university campuses.
Many classical music pieces were originally composed for the church. In Protestant churches, music is an indispensable part of worship. Important church events are celebrated with choir festivals where one can listen to Beethoven, Mozart, Bach and Handel for free.

Recently, Fairview Christian Fellowship Church celebrated its anniversary with a festival featuring three choirs and two chamber music groups. Manila Concert Choir was conducted by Romulo Pizana. The crowd was awed by MCC’s rendition of great church anthems and Negro spirituals. On the other hand, Novo Conzertante conducted by Erwin Tan, stunned its listeners with difficult pieces usually sung in international choral competitions. The youngest MCC member, James Labung charmed the SRO audience as he conducted the Polytechnic University of the Philippines chorale. Mark Olivares, MCC accompanist, coordinated the event.

For as long as universities and churches exist, classical music will be here to stay!

Is there hope for legislative budget reforms?

Since August, the Filipino people have been subjected to the annual tiresome circus known as the budget process. As expected, scandals were brought to public attention and manipulations in the allocation process revealed.

Is there a need for legislative budget reforms, asked Cong. Teofisto “TG” Guingona III when he convened a Round Table Discussion last October 28 at the U.P. National College of Public Administration and Governance. The question elicited diverse answers from experts, government officials, academe and media.

TG cited recurring budget “vices”, including the gargantuan Ph 790.6 billion Special Purpose Funds which now constitute nearly 65% of the total annual budget. He quoted Cong. Edcel Lagman who labeled the SPFs (Special Purpose Funds) as the President’s “beef barrel.” He also mentioned the practice of collecting revenues in advance, abuse in spending savings, the conduct of secret negotiations in the Bicameral Conference Committee and reenacted budgets.

Yes, answered Commissioner Juanito Espino Jr. of the Commission on Audit. He detailed budget malpractices and recommended solutions. Former Secretary Ben Diokno advised that electoral and political reforms need to be conducted along with budgetary reforms. Former NEDA Director General Philip Medalla cautioned that giving more power to Congress may not work since it is not trusted by the public.

Different solutions were suggested. Some of these require amendment of the budget law while others require more effective oversight on the part of Congress. The role of civil society organizations in assuring allocations for social development and exacting accountability was emphasized.

The next round table will examine the legal implications of the proposed reforms.

Will reforms have a chance, asks TG. To quote Arwen from “The Lord of the Rings,” “there is still hope.” As long as congressmen like him continue their quest, experts contribute expertise, civil society persists in its reform advocacy, and most important, the people insist on accountability, hope remains.

Boiled Green Bananas
By LILING MAGTOLIS BRIONES
BusinessMirror
NOVEMBER 02, 2008

During the last weekend, the country celebrated two important Christian holidays: All Saints’ Day on November 1 and All Souls’ Day on November 2. Like Christmas and the Holy Week, these are mandatory occasions for families to gather together. The difference is families congregate in cemeteries instead of their homes.

Taking care of the dead is a beautiful tradition which is not only practiced by Christians but also by those from other religions, as well. I would not mind my family carrying on the practice when my turn comes!

As usual, Filipinos go all the way in honoring their dearly departed. Tombs of the rich and the poor are spruced up. In certain cemeteries, the tombs of the dead are better than the homes of the living. These are even complete with living quarters so families can carry on vigils in comfort and style.

Special food is usually prepared on the feast days of the dead. Families lug tents, picnic tables, chairs and tons of food. I have even seen families bringing portable barbecue pits and cooking utensils! For all intents and purposes, cemeteries turn into veritable picnic grounds.

We Filipinos certainly take care of the dead.

Taking care of the living

Now, we are back among the living after our annual trek to the cities of the dead. As a country, are we taking care of our living as well as we take care of our dead?

The number of Filipinos living in poverty has been steadily increasing. Official poverty statistics reveals that in 2006 poverty incidence had already risen to 26.9 percent of Filipino families. This translates to 27.6 million individuals.

Obviously the global financial meltdown will increase poverty numbers because of its impact on employment, income, overseas workers’ remittances and prices of basic commodities.

Numbers of nutrition and hunger are correspondingly rising. Is the government taking good care of the living poor?

Roundtable on protecting the living poor and the budget

Analysts have predicted that the economy will worsen in 2009. The role of the 2009 budget in protecting the living poor gains more importance. At present, the amendments submitted by the congressmen are being consolidated by the appropriations committee headed by Rep. Junie Cua. This is in anticipation of the resumption of Congress on November 9. However, defects in the law and current practices make it vulnerable to regular manipulation and abuse.

On October 28, Rep. Teofisto “TG” Guingona III convened a roundtable discussion of experts, knowledgeables and government officials to consider legislative budget forms. He presented “budget vices” which need to be corrected. These include non-transparency and accountability in the disbursement of special purpose funds, abuse in the use of savings and secrecy in the bicameral committee.

Lead discussants, former National Economic and Development Authority director-general Philip Medalla, former Budget secretary Ben Diokno and Audit Commissioner Juanito Espino Jr., tackled the issues presented by TG from varying perspectives.

Ben stated that fiscal rules are actually stricter in the Philippines than in other countries. It is not that these are wrong; these are ignored and violated. He also said that Congress has failed to perform effectively its oversight functions.

On the other hand, Philip admitted that the President is more powerful than the two other “co-equal” branches of government. A good president would, therefore, be advantageous for the country; a bad president wreaks havoc, and does! Philip also pointed out that Congress does not have credibility at present.

Jun Espino gave a detailed narrative of current abuses in the budget process by the Executive and gave concrete examples of how such abuses are committed. He also recommended precise legislative reforms.

Undersecretary Mario Villaverde of the Department of Health, Budget Director Joselito Florendo of the University of the Philippines (UP) and the financial management team of the Department of Public Works and Highways shared critiques of the budget process at the agency level.

Columnist Marvin Tort, Social Watch Convenor Rene Raya and academics joined the lively discussion which ensued. Solutions like drastically cutting the budget, multiyear budgeting and limiting the powers of the bicameral committee were considered.

TG announced that the next roundtable will be hosted by the UP College of Law. It will focus on the legal aspects of the proposed reforms.

In the past, hundreds of thousands of lives were sacrificed to build tombs for the dead, like the pyramids and the Taj Mahal. Vast wealth and treasures were expended. At this time of great suffering for the Filipino people, public resources should be utilized for the living poor.

THE BUSINESS OF GOVERNANCE
By LEONOR MAGTOLIS BRIONES
ABS-CBNNews.com
October 29, 2008

The Philippines prides itself in being up to date in most aspects of governance. Both government and private sectors boast that current financial management systems, processes, rules and regulations are harmonized with international practice. Billions are spent for the latest toys in computerized gadgets, information systems and capacity building for financial management analysts, planners and budget officers, accountants and auditors.

The donor community has spent hundreds of millions of dollars and euros in assisting national and local governments in improving financial management practices. They have invested heavily in organizational development and capacity building. Hundreds of public officials go abroad each year to study various aspects of financial management.

The Commission on Audit claims that it has updated accounting and auditing rules and regulations to standards compatible with global benchmarks. The Department of Budget and Managements boasts that budget implementation is closely monitored and actual performance of agencies measured.

So how come we had the PNP fiasco in Russia involving the Comptroller? And he was heading a PNP delegation to, of all meetings, an Interpol conference!

The more facts are uncovered by enterprising media and the senators, the more we realize that government financial practices are stuck in the Stone Age when money and treasures had to be transported physically.

Financial management in PNP and DILG

The Senate hearings have exposed the vulnerability of the financial management system in the PNP and its mother department, the DILG. It is obvious that the amount of cash carried by the PNP delegation far exceeds maximum allowable levels. Who approved the allowances which break existing rules? Fingers point to the PNP Head and the DILG Secretary.

Back to the Stone Age: Cash and Carry

In spite of claims to modernization and globalization, it appears that the government is still in the Stone Age. We laugh at peasants who hide money under their beds or in holes in their posts. We are amused with stories about money being carried about in chests during wars in ancient times. And here we have the highest financial management official in the PNP lugging over a hundred thousand euros in the year 2008!

International banking was already practiced in the ancient Roman Empire. It flourished further during the Crusades when the Knights Templar set up banks all over the known civilized world. Pilgrims would deposit cash in their home countries and travel only with statements of deposits and minimal cash. They would withdraw money as needed in Jerusalem or in the nearest branch wherever they happened to be. That was during the time of Richard the Lion Hearted!

The DILG Secretary lamely explained that so much cash had to be carried because the delegation was going to a strange country and had to be ready for contingencies such as health emergencies. Hasn’t he heard of health insurance and credit cards?

Challenges to agency heads, the DBM and COA

The Audit Code clearly states that fiscal responsibility rests with the head of office. The internal control systems of PNP and DILG are dangerously weak and subject to manipulation. It is the responsibility of heads of agencies to overhaul their internal control systems and to correct the appalling ignorance of their financial management officials.

Obviously sound financial management is not practiced in many agencies. PNP may only be the tip of the iceberg. It is the responsibility of DBM which monitors budget releases and the Commission on Audit which reviews internal control systems to conduct a government wide review of financial practices in overseas travel. They might be in for a shock!

Round Table Discussion on Legislative Budget Reforms

On Tuesday, October 28 Cong. Teofisto “TG” Guingona will convene a round table discussion on legislative budget reforms. Twenty experts and practitioners will exchange views on problems and issues which TG will present for their reactions and inputs. The objective is to identify urgent problems in budgeting which need legislative reform.

The array of participants include present and former DBM officials, COA executives, experts from the academe, and practitioners from agencies with the largest budgets. The Round Table will be held at the U.P. National College of Public Administration and Governance.

TG is one of the most studious congressmen in the House of Representatives. In the course of reviewing the national budget, participating in the debates and conducting hearings, he has uncovered myriad problems in budget practices which can be traced to the budget law.

He is one of the leading champions of the Alternative Budget Initiative convened by Social Watch Philippines.

TG has realized that it is not enough to expose questionable practices year after year. Executive Order 292 which includes a chapter on the national budget must be amended.

THE BUSINESS OF GOVERNANCE
By LEONOR MAGTOLIS BRIONES
ABS-CBNNews.com
October 13, 2008

Last Saturday at 3.30 a.m. the House of Representatives finally approved the proposed P1.4 trillion budget of for 2009. The representatives staggered home after four weeks of hearings and two weeks of intense plenary debates.

This is only the first phase in the budget legislative process. A period of amendments will follow before the House version is submitted to the Senate which will subject the budget to another round of hearings and plenary debates. The Senate version will be reconciled with the House version in the Bicameral Committee. By tradition , the Bicameral Committee sessions are kept from the public.

In the meantime, both houses of Congress or on a month-long vacation. They won’t resume sessions till November 10.

Social Watch Philippines wishes to thank the members of the Minority for advocating our alternative budget, and the Majority for acquiescing to important allocations.

While waiting for the congressmen and senators to return from their break, let us trace Jose Rizal’s footsteps in Germany.

Where Jose P. Rizal lived while in Germany

“In this house lived and worked in 1887 Jose Rizal, hero of the fight for liberation of the Philippine people. Here, he finished his work “Noli Me Tangere.”

The above is an English translation of a weather-beaten plaque with a raised portrait, posted on the door of a building located at 71 Jaegerstrasse/Glinkastrasse 28, 10117 Berlin. According to Ambassador Delia Domingo-Albert, “this building has great historical value to the Philippines. Dr. Jose P. Rizal stayed in this building while in Berlin from November 1886 to May 1887 where he published his novel entitled “Noli Me Tangere.” As every school child knows, this book inspired the Filipinos struggling for freedom and independence from Spain.

Filipinos who have the good fortune to visit Berlin should take time to visit this building. For sure it will not be in the usual guidebooks which are intended for the typical tourists. The best time to go would be towards winter . As they shiver from the frigid climate of Berlin, Filipinos can recreate in their mind the difficulties that Rizal underwent in finishing the novel and getting it printed.

Andreas Conrad, writing for the German newspaper “Weltspiegel” in April 2, 1989, writes of the horrific financial and physical difficulties Rizal went through. “The manuscript finished in February 1887, had almost been thrown into the fire. Rizal”s financial situation drastically aggravated. During a long period of time, he did not see any chance to publish his novel. His family could send him money only sporadically—it was in Berlin where he spent his most miserable time.”

Andreas Conrad continues, “His physical state, however, gradually worsened, since he could afford only one meal per day and the worn out clothes could not stand the glacial wind of the severe winter.” Finally, he was able to publish the novel from funds lent by a friend.

When it reached the Philippines, the novel was considered “heretical, unholy and offensive to the religious system. At the same it was anti-patriotic, destructive to the public order and offensive to the Spanish government and its political functions….”

The rest is history. We all know what happened to Rizal when he returned to his home country.

Meanwhile, the sturdy building has survived revolutions, World Wars I and II, the Cold War and the reunification of Germany.

Delia’s dream

Ambassador Delia Domingo-Albert has a dream. It is for the Philippine government to purchase the five-story building where Rizal once lived and convert it into a Chancery for the Philippine government. The Philippines is the only ASEAN embassy without a chancery and residence in Germany.

I had the opportunity to visit the building. It is centrally located in the heart of Berlin (Mitte area) and is accessible to the Foreign Ministry and other government ministries, the Bundesrat and the Bundestag as well as the major diplomatic missions and commercial establishments. It will be most accessible to Filipino nationals.

According to Delia, the proposed Chancery building will put under one roof all its Philippine Government representation including trade, tourism and cultural offices. The matter is no pipe dream for her. She is already proposing that it serve as the Philippine Center in Europe. It could be named, “Rizal House.”

The reader might ask, “Why contemplate buying a building during the global crisis”? It is during times of great crises that we cling to icons and symbols which remind us of who we are. For Filipinos in Germany and stray tourists, can anything be more comforting than to be in a building once occupied by a great Filipino who suffered untold hardships to give us the novel which sparked our struggle for freedom?

THE BUSINESS OF GOVERNANCE
By LEONOR MAGTOLIS BRIONES
ABS-CBNNews.com
October 6, 2008

“How will the US financial meltdown affect the Philippines? What are the implications of the crisis on the 2009 national budget? How will it impact on the Filipinos”? These were the questions which Congressman Rolio Golez and his colleagues raised when the Alternative Budget Initiative convened by Social Watch Philippines, presented its alternative budget for education, health, agriculture and the environment to the Appropriations Committee of the House of Representatives.

These very same issues were likewise raised by Minority Floor Leader Ronaldo Zamora when ABI/Social Watch made a similar presentation later in the afternoon. How relevant are the macroeconomic assumptions in the 2009 budget in the light of the rapid global escalation of the crisis?

As early as May, ABI/Social Watch already engaged the first version of the macroeconomic assumptions. These did not take into account the double tsunami of rising rice and fuel costs, as well as increase in poverty and hunger. The submission of the 2009 budget on August 30 was followed by the collapse of the US financial markets, rendering the second version of the macroeconomic assumptions downright ridiculous and absurd.

Uncertainties about the $700 billion rescue package from the US government further rendered the third version of the assumptions submitted last week by the economic team of the government even more tenuous.

It is important to bear in mind the combined impacts of external crisis and bad governance, including graft and corruption.

I mentioned the fact that while concern was immediately expressed about the banks and the stock market, risks and dangers threaten the entire Philippine economy as well as the social system. The government has stoutly maintained that they are ready to come to the rescue of the private financial system.

The slowdown in the US economy will surely impact on trade and tourism. This is unfortunate since trade is the best source of foreign exchange for the economy, and not debt.

The Philippine economy is kept afloat by remittances from overseas workers. Filipino Americans have assimilated the credit culture of the American system. They are in debt for houses, cars, appliances and even for their trips home. They have made bad investments This is also true for European Filipinos. Remittances as well as balikbayan expenditures might be reduced.

Who needs government protection?

The ones who need the most protection are those who have the least capacity to protect themselves, namely the lower middle class and the poor.

The slowdown in trade and tourism will surely impact on employment and incomes. The continued increase in prices of consumer goods will surely affect expenditures for food, health and education.

Worse, the fabric of society will be threatened as criminality rises. The poor will prey on their fellow poor. They are the ones who will be held up; their purses and cell phones will be stolen; their homes will be burglarized. They will even be killed for a few pesos. The rich might be safe in their enclaves and fortresses but not the lower middle class and the poor who are surrounded by the poorest.

How can the budget be served as an instrument for protecting the poor?

Since the government claims that the financial sector is fairly safe, public financial resources should be utilized to strengthen the real economy and its productive forces. Focus should be on the sectors which produce what we need to survive: food and basic necessities.

ABI/Social Watch recommended that expenditures in education, health, agriculture and environment should be increased by at least P34 billion. An additional P18.697 billion was recommended for education—for the creation of new teaching positions, teachers’ training, scholarship and fellowship grants, benefits for teachers under the Magna Carta, and development of alternative learning systems. For higher education, P536.72 million was recommended for capital outlay and tuition subsidy.

It was also proposed that the health budget be augmented by P 3.352 billion. Among others, this will cover implementation of doctors to the barrios programs to induce physicians to go to the provinces, and provisions for pools of resident physicians. ABI/Social Watch also proposed intensified rabies control programs and mercury-free thermometers for hospitals.

As for agriculture, it was proposed that additional allocations of P9.680 billion be made for organic fertilizers; strengthening of irrigation and infrastructure, dryers and post harvest facilities, and agricultural education .

Additional allocations were proposed for environment at P2.586 billion for community based forestry programs, operations against toxic substances and waste management, pollution control and other projects.

Where will the money be coming from?

ABI/Social Watch identified more than P82 billion in proposed allocations which are vague, don’t contain special provisions and are highly vulnerable to manipulation.

The budget for 2009 should be a budget for the real economy and for the people who produce this country’s output by the sweat of their brow.

BUSINESS MIRROR
October 6, 2008

During the past month, the House of Representatives and the Senate were engrossed in discussing the 2009 budget of the President.

In the course of reviewing the budget, bitter debates on major issues like the debt-service burden erupted. The most dramatic and contentious was the accusation of double allocations leveled by Sen. Panfilo Lacson against Sen. Manuel Villar.

There were also debates on the macroeconomic assumptions in both houses, but these did not gain public attention until the $700-billion rescue package crafted by the US Department of Treasury was initially rejected by the American Congress. Filipino congressmen and senators rushed back to the 2009 budget and wondered loudly if the macroeconomic assumptions should be revisited.

So what are the macroeconomic assumptions all about? And what are the implications of the US financial meltdown on the national budget?

The role of macroeconomic assumptions in the national budget

The calculation of the national budget is not supposed to be snatched out of thin air. These are based on assumptions on macroeconomic indicators and forecasts about the economy. The most important among these indicators are the gross national product (GNP) real growth (percent), the gross domestic product (GDP) real growth (percent), inflation rate (percent), the 91-day T-bill rate (percent) and the foreign-exchange rate (percent).

To a large degree, therefore, the size of the budget and the broad priorities are determined by the macroeconomic assumptions. It is, therefore, important to ask whether these constitute a fairly accurate forecast or serve more as optimistic political declarations.

In other words, are these assumptions nothing more than overconfident presumptions?

The macroeconomic assumptions for 2009: Versions 1 to 3

So far, three versions of the macroeconomic assumptions have been submitted to Congress: version 1 upon the issuance of the budget call in May to government agencies; version 2, as reflected in the Budget of Expenditures and Sources of Financing (BESF) submitted to Congress; and version 3 during the latest interpellation of the presidential economic team by the House.

To my knowledge, this is the first time in national budgeting that macroeconomic assumptions, which were already submitted, had to be revised publicly. This is because the gaps between the assumptions and reality were so wide they make the economic team look ridiculous.

Take a look at the assumptions on growth. The 2009 budget call assumes a GDP real growth of 6.5 percent to 7.3 percent, while the BESF assumes it will be 6.1 percent to 7.1 percent. The latest version now assumes it will be 4.1 to 5.1 percent. This is clearly a drastic downward trend.

The same is true for assumptions for inflation, exchange rate and balance of trade. The inflation rate for 2009 was originally estimated at 2.5 percent to 4.5 percent. It appears absurd when the current rate is already more than 12 percent. As the impacts of the global financial crisis deepen, the Philippine economy further slows down.

What about the deficit? The original deficit target for 2009 was zero. This was later revised to P40 billion. Now it is projected at P60 billion! If the deficit goes up, the level of borrowings will, of course, go up. The BESF calculates that P437 billion has to be borrowed to net the amount of P40 billion. This is because interest and amortization for due loans have to be deducted first. How much will be borrowed to cover a P75-billion deficit?

Waiting for the US rescue package

The parade of different macroeconomic assumptions will continue. The economic team promised to make another revision once the US rescue package is approved.

Some words of advice, though. It does not necessarily mean that just because the $700-billion package has finally been approved by both houses, the money will automatically be ready for distribution to the distressed institutions. The US Treasury will have to borrow and raise that monstrous amount first. It will most likely be released in tranches.

Once again, the calculation of the size of the budget and priorities in allocation is determined by the macroeconomic assumptions. It cannot be taken lightly by the legislators. Assumptions which are off-track can have disastrous consequences for the Philippines.

As the House and the Senate wrestle with the 2009 budget, it is to be hoped that our leaders will be guided by national interest when they examine the literally overweight five-volume national budget. The proposal of the Alternative Budget Initiative that P34 billion in additional expenditures for education, health, agriculture and the environment must be considered.

At the same time, they have identified more than P82 billion in executive proposals which are vague, highly discretionary and vulnerable to manipulation and duplication.

The time has come for the budget to be used as a tool for the protection of those who are unable to protect themselves.

Download the CLCD Report in JPEG format by clicking the thumbnail image below:

House Deputy Minority Floor Leader Teofisto “TG” Guingona was studiously going over the National Expenditure Program for 2009 when he noticed an innocent-looking item in the 823-page volume entitled “Overall Savings.” It was located in pages 730 to 738 of the document. There were eight pages of “savings” in 2007, plus continuing appropriations from Republic Act 9401, or the General Appropriations Act for 2007.

As TG read further, he realized that duly appropriated funds were transferred from agencies and placed in “overall savings.” These “savings” were then transferred to other agencies. The amounts involved were mind-boggling. Total available appropriations in the account reached P106.108 billion. These were described as “unused appropriations” and “unreleased appropriations.”

In addition to the above “budgetary adjustments,” the same “overall savings” also include continuing appropriations for capital outlays of P6.744 billion and unreleased appropriation for maintenance and other operating expenses of P20.925 billion, or a total of P27.669 billion.

Programs and projects which can be funded with “overall savings” of P133.777 billion can go a very long way, especially in 2009, which is very close to the 2010 elections.

TG is now asking a number of questions. First, under what circumstances can the Executive transfer duly appropriated funds from agencies and classify these as savings?

There are any number of reasons why appropriated funds are not released. It can be that the documentary requirements of the Department of Budget and Management are not complied with. It can also be stated that funds were not available or collected by the revenue-raising agencies. This is not a sufficient reason, of course, since the government can resort to borrowing if the expenditure item is important enough.

Appropriated funds can be withheld for political reasons. This is particularly true for pork barrel and other perks. When he was chief of staff of the Office of the President, Michael Defensor said on television, “Why should we release their pork barrel when they [the opposition] are criticizing the President?”

Additional allocations which are placed by congressmen for social and economic development can suffer the same fate.

It is not, therefore, surprising that the Executive was able to “save” P133.777 billion by the mere expedience of withholding release of certain funds.

Second, what is the effect on the legislative “power of the purse” when so-called savings are generated by nonrelease of appropriations and used for other purposes? The obvious answer is that the original intent of the Legislature is thwarted and replaced by the preferences of the Executive.

Third, what is the remedy for this farce? Congress goes through the motions of appropriating the budget only to have the Executive transferring various allocations by withholding release, and labeling these as “savings.”

The answer is two-pronged. Actual implementation of the General Appropriations Act has to be monitored. This is not done at present. The legislature believes that its task is finished once the budget is signed into law. The action is actually in the implementation.

Another remedy is to pass a law limiting discretion of the Executive in making transfers from one account to another in the guise of savings. At present the “overall savings” claimed from the preceding year’s budget is 10 percent. This is considered exceedingly high.

The more TG reads the voluminous budget documents, the more questions come to his mind. He has championed the cause of participatory budgeting, or citizens’ participation in the budget process since 2006, and has worked with the Alternative Budget Initiative convened by Social Watch Philippines.

Reclaiming the power of the purse

The Constitution has invested the legislature with the power of the purse. During the budget hearings, congressmen and senators ask nerve-racking questions and skewer the Executive agencies with their sharp tongues and insults.

However, the rite of appropriation is only one part of the budget process. Budget preparation is completely in the hands of the Executive. During the appropriation phase, legislators believe they wield absolute power. Actually, they can’t increase the total size of the budget; they can only decrease it. If the Senate and Congress can’t agree on the budget, the previous year’s budget will be reenacted. Finally, if the President does not like the budget crafted by the legislators, she can always utilize her veto power.

After the appropriation process, implementation begins. This is totally in the hands of the Executive. The final phase is the accountability phase, when the audit body comes in.

Many in the legislature realize that it is time to reclaim the power of the purse. It is important to monitor the actual implementation of the budget and exact accountability from the Executive for budget implementation.