On unprogrammed appropriations and Secretary Ralph Recto
July 30, 2024 | 12:02 am
My Cup Of Liberty
By Bienvenido S. Oplas, Jr.
The use of the idle funds of some government-owned and -controlled corporations (GOCCs) like PhilHealth to fund the Unprogrammed Appropriations of the budget law, the General Appropriations Act (GAA), has become a big issue recently.
See for instance, see these “Yellow Pad” columns in BusinessWorld: “Maharlika 2: This time, PhilHealth members are the victims” (July 1), “The P89.9 billion taken from PhilHealth are member contributions, not government subsidies” (July 22), “Lame arguments to justify the transfer of PhilHealth funds” (July 29).
From the “Demand and Supply” column in the Philippine Star: “Unhealthy mess” (July 17) and “Shameless, Sec Ralph!” (July 24). And from “Gotcha” column also in the Philippine Star: “Now they’re stealing our PhilHealth contributions” (July 17), “Don’t tempt a tax boycott, you PhilHealth thieves” (July 19).
The immediate trigger for all this was a press statement from July 15, “Statement of the Department of Finance Mobilizing Unused GOCC Funds for Public Programs.” The Department of Finance (DoF) argued that “Unlocking these excess fund balances is a more prudent fiscal option than borrowing more or imposing taxes. The move does not affect the viability of participating corporations. It does not impair their delivery of services.” It cited the Philippine Health Insurance Corp. (PhilHealth) as having “a P500 billion benefit chest, which can fund multiple-year claims.”
I reviewed the country’s overall fiscal condition, both actual and projected. I believe the DoF is correct and the detractors are wrong, on using the idle funds of GOCCs like PhilHealth.
The programmed appropriations, our expenditures, are so many that current and future revenues will not be able to catch up resulting in a huge budget deficit, which in turn results in huge financing and borrowings to plug the deficit, and consequently huge interest payments that add more pressure on expenditures.
For instance, in the first half of 2024 our interest payment was already P377 billion, likely to reach P750 billion full year 2024 vs. projected interest payments of P670 billion under the Budget of Expenditures and Sources of Financing (BESF) 2024 submitted by the Budget department to Congress in August 2023.
The latest update by the Development Budget Coordination Committee shows that budget deficit for 2024 and 2025 would be at the 2023 level of P1.5 trillion, much higher than BESF projections (see Table 1).
If people can be vehement in opposing certain revenue measures to plug the deficit, they should have been equally vehement in opposing certain expenditures in the programmed appropriations that are contributors to uncontrolled deficit that leads to uncontrolled borrowings, that lead to rising Unprogrammed Appropriations. But this is not happening.
It is precisely because programmed appropriations are already bloated with lots of spending unsupported by projected revenues that Unprogrammed Appropriations were invented and are rising. From the original Malacañang proposal of P282 billion for Unprogrammed Appropriations, it went up to P731 billion after the bicameral conference committee meetings in December 2023 that became the GAA 2024.
The article “Shameless, Sec Ralph!” was particularly strongly worded, including its accusation of “the Great Health Fund Robbery by the BBM administration.” It further argued that “Congress literally robbed the Filipinos of scarce health funds so pork barrel wish lists can be funded.”
I checked the Unprogrammed Appropriations in GAA 2024, also GAA 2023. Here are two things I discovered.
One, out of the P731 billion in Unprogrammed Appropriations for 2024, the potential Congress pork barrel fund would be P225 billion on “Strengthening assistance for government infrastructure and social programs.” The rest, or P506 billion, is earmarked for foreign-assisted projects (FAPs), the Philippines’ counterpart funds, social programs for health and education, etc.
Two, the Unprogrammed Appropriations in 2024 of P731 billion was even lower than that in 2023 of P807 billion (see Table 2).
Among the FAPs are the Metro Manila Subway Project, the North-South Commuter Railway System, the PNR South Long-Haul Project, the Support to Parcelization of Lands for Individual Titling (SPLIT) Project, the MRT Line 4 Project, and the Cebu Bus Rapid Transit Project, etc.
So these important infrastructure projects can no longer be accommodated in the programmed appropriations otherwise the programmed deficit will hover near P2 trillion this year alone. These were moved to Unprogrammed Appropriations and the DoF has correctly identified the use of idle funds of GOCCs, including PhilHealth and Philippine Deposit Insurance Corp. (PDIC), both of which can contribute P200 billion to fund some, but not all, of the P731 billion in Unprogrammed Appropriations.
On July 30, Finance Secretary Ralph G. Recto spoke at the Senate and among the myths and fake news by the detractors that he debunked were the following:
One, that the idle GOCC funds are to be used for the Maharlika Investment Fund. The Maharlika Fund has zero relation on this, it is purely about funding some of the Unprogrammed Appropriations.
Two, that they should refund the P90 billion of PhilHealth reserves now. He clarified that so far only P20 billion, not P90 billion, has been remitted to the National Treasury.
Three, that PhilHealth will go bankrupt and members’ contributions will be tapped. PhilHealth has a P500 billion benefit chest fund. I know that a substantial portion of this does not come from members’ contributions but from alcohol and tobacco tax collections.
Four, that PhilHealth benefits to members will be reduced. The PhilHealth officials themselves assured that not a single centavo will be reduced from programmed benefits.
Five, that the DoF scheme is arbitrary and has no legal basis. Mr. Recto said the legal basis behind this is GAA 2024 or RA 11975, and there is no automatic implementation using the idle funds, it has to go through strict review by the Office of Government Corporate Counsel (OGCC).
Mr. Recto is a credible gentleman, an honorable and highly learned official who knows the numbers better than the detractors. He and the DoF are unjustly vilified for the mistakes of many agencies, departments, and subsidy-seeking dependents and lobbyists who cannot control their itch for more funding and subsidies yearly. The DoF is forced by these agencies and lobbyists to look for funds to satisfy the itch for endless spending.
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