MANILA, Feb. 5 (Xinhua) -- Eliminating highly discretionary lump sum items and unprogrammed funds from its annual budget can help the Philippine government in narrowing its huge deficit, analysts said.
Some of these budget items are unfunded, and may require the government to resort to more borrowing. This is something that the government can't afford as it's grappling with a wide deficit.
The deficit is estimated to have reached 300 billion pesos (6.5 billion U.S. dollars), or about 3.5 percent of the GDP in 2009. Thin revenues can't keep with the accelerated government spending, as the global meltdown spurred the need for a stimulus package.
"I believe unprogrammed funds and Special Purpose Funds should be abolished from the national budget," Leonor Magtolis-Briones, lead convenor of advocacy group Social Watch Philippines, said in an interview.
Social Watch is one of the organizers of civil society-led Alternative Budget Initiative Consortium. The consortium advocates for a more transparent and participatory budget system in the Philippines.
Not only do these budget items contribute to the fiscal deficit, but they have no clear and identifiable purpose and highly discretionary, and are thus prone to abuse and mismanagement, Briones said.
Briones, who once served as National Treasurer, noted that more than 50 percent of the 1.45 trillion pesos (31.4 billion U.S. dollars) budget for 2009 was allotted for special purpose funds, lump sums and unprogrammed funds.
"Unprogrammed funds are stand-by funds. It is better to abolish it than it to be misused or abused," says Emilia Boncodin, professor of public administration at the University of the Philippines and former Philippine Budget Secretary.
Boncodin said in a recent forum that in 2008, 29 billion pesos (62.8 million U.S. dollars) worth of unprogrammed funds were released. There's no set amount for unprogrammed funds. Boncodin said that each year, the government allots a ceiling for unprogrammed funds, depending on the budget.
The existence of unprogrammed funds and other highly discretionary budget items pose a serious challenge for economic managers.
In its analysis of the 2010-budget, the Alternative Budget Initiative Consortium said the Philippine government, given its tight fiscal space, has to balance its need to increase spending to sustain recovery without falling into a fiscal crisis.
One of the means to achieve that aim is to curtail the waste of government funds.
"Budget items without clear, identifiable and useful purpose should be eliminated to reduce inefficiency, redundancy, and highly discretionary lump-sum funds which are prone to abuse and mismanagement," the consortium said.
"Greater scrutiny of Special Purpose Funds should be done as it constitutes 57 percent of the proposed budget with particular emphasis on lump-sum," they added.
This is why Briones said that it's important for stakeholders to monitor the national budget.
The national budget is mainly controlled by the executive branch, with the President proposing, approving, implementing and monitoring the budget. However, it is the Congress which has to power to ratify the proposed budget. Lawmakers also have an oversight function, and Briones said that legislators should strengthen this function to prevent misuse of government funds.
