Contrived Savings Escape Audit
Businessmirror, 05 Dec. 2008
Written by Jun Vallecera / Reporter

SOME legislators, mostly in the opposition, are appalled by the “subversion of the country’s budgetary process” that they say allows others outside of the Legislature—Malacañang, for example—to impound unspent agency money and rechannel these “to special purpose funds and other schemes that only encourage corruption.”

One of them, Rep. Teofisto Guingona III, wants to recast the budget process to a more transparent and accountable manner that makes it harder or even impossible to perpetrate scams such as the P728-million fertilizer-fund scam widely seen as used instead for the administration’s 2004 election drive.

Guingona seeks to prohibit Malacañang from impounding unspent budgetary allocations in his House Bill 5580. He said in his bill that the Palace is realigning them for special public projects that often exceed the costs allowed by the General Appropriations Act. 

The Alternative Budget Initiative (ABI), a consortium of 60 nongovernment organizations globally recognized as one of the best advocates for “best practices in budget,” strongly supported Guingona’s proposed bill on impoundment control which seeks to control the exercise of impoundment—where the President refuses to spend or delay the release of funds appropriated by Congress.

It added that a true boost to the economy means empowering the people by increasing allocations for social development, and not realigning “savings” for “vague and unreasonable budget items.” 
Guingona gave two examples of impounding and unprogrammed funds. He recalled that in 2003 when the Department of Agriculture was appropriated a budget of only P2.2 billion, Malacañang had access to a much larger fund worth P2.56 billion that allowed it to underwrite several cereal, livestock and high-value cash-crop programs under the so-called Guinintuang Masaganang Ani, or GMA program.

“Agriculture Secretary Arthur Yap actually spent only P2.15 billion of his allotment and the GMA program spent only P1.59 billion of its alloted P2.56 billion fund. Thus, the Malacañang-controlled GMA program effectively saved P970 million worth of funds in 2003 that did not pass legislative scrutiny and was spent the following year in the now-infamous manner that made former agriculture undersecretary Jocelyn ‘Joc-joc’ Bolante a household name in the country,” Guingona explained.
“That much money was given a special allotment and release order [Saro] when first requested 24 hours earlier, or on February 2, 2004,” added Guingona.

In budget year 2004 when Secretary Yap was able to spend his entire allotment of P2.04 billion, the GMA program budgeted P2.86 billion but actually spent only P2.40 billion. “As a result, another P1.102 billion was given a Saro in 2004 and had not even been audited since then on the ground that special purpose funds do not get reviews by the Commission on Audit. This much money was requested for release on February 9 that year and disbursed two days later,” he added.
Guingona said these and many more transactions illustrate the evil of declaring unspent government funds as savings. He added that while it is the duty of government institutions to make efficient use of its resources, it is a “breach of duty when these are not released for the people’s benefit and then later on declared as savings....Duty pertains to the efficient use of funds, not the refusal to spend the same.” 

The ABI was in tune, saying, “The perfect fiscal stimuli are increased allocations for environment, agriculture, health and education which target the poorest segments of society. This will help create more jobs, increase competitiveness of Filipinos and promote sustainable environment and food security.”

Former national treasurer Leonor Magtolis Briones, lead convenor of Social Watch Philippines that organized the ABI, said, “Budget reforms are needed to erase the culture of corruption where majority of public funds are controlled by only one person through the special purpose funds.” 
The ABI is particularly fearful of the agriculture budget. According to Hazel Tanchuling of Rice Watch and Action Network, funding for government’s agriculture programs comes mainly from the Agriculture and Fisheries Modernization Budget.

She said the Afma budget is one of those under the Special Purpose Fund. “Most of the budget for operations for agriculture are lodged under Afma which amounts to P41 billion. This means putting the funds for operations for agriculture under the Special Purpose Funds which are very moveable and subject to the abuse of only one person.”

“Many congressmen and senators have come to the realization that it is high time to restore the balance of power in the budget process. It is high time that the power of the purse be restored to the legislature as they are the representatives of the people,” said Briones.








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