Last week I wrote about the scandalous and imprudent transfer of two government-owned and controlled corporations (GOCCs) of their surplus funds to the Treasury.
The ultimate culprit here is not the Department of Finance, which is sweeping GOCCs for their surpluses, but Congress and President Ferdinand Marcos Jr. who enacted the 2024 budget law, otherwise known as the General Appropriations Act or GAA.
You see, the 2024 budget law always contains “unprogrammed appropriations”—standby funds for special projects that can only be authorized if the government has extra money.
Before, that extra money could not come from GOCCs’ surpluses. But in the 2024 law, they included GOCCs’ surpluses as a source of funding for unprogrammed funds.
In the proposed budget (National Expenditure Program or NEP) submitted by Marcos to Congress middle of last year, they asked for “just” P281.9 billion of unprogrammed funds. But after going through the budget process, that amount ballooned to a staggering P731.4 billion.
This was done thanks to the shenanigans of the closed-door meetings of the bicameral conference committee—a handful of lawmakers who convene and finalize the budget bill.
Trend over the years
What’s the big deal with unprogrammed funds?
This past week, budget analyst Zy-za Suzara and I looked at the history of unprogrammed funds from 2010 to 2024. We came up with Figure 1 below:
Figure 1.
Note that in 11 of the past 14 years, there has been virtually no difference between unprogrammed funds as found in the proposed budget and the final budget law. Notable exceptions include the 2010 budget: the Gloria Macapagal-Arroyo administration proposed P68.9 billion in unprogrammed funds for 2010, but Congress approved P118.9 billion—an extra P50 billion.
In 2012, the reverse happened: the Benigno Aquino III administration proposed P161.7 billion in unprogrammed funds, but Congress approved P8.87 billion less.
All other years have zero difference.
Things started to get weird in the 2022 budget. For that year, the Duterte administration proposed just P151 billion in unprogrammed funds, but Congress added P100 billion—and got away with it.
Then in 2023, the first budget of the Marcos Jr. administration, unprogrammed funds in the NEP almost quadrupled the proposed amount. Congress padded P219 billion more. So the final unprogrammed funds in the 2023 budget law was a whopping P807.16 billion. That’s close to a trillion pesos!
Then for this year, the executive proposed just P281.9 billion in unprogrammed funds, and Congress added almost P450 billion more—for a total of P731.45 billion.
In sum, congressional additions to the unprogrammed funds have grown steadily since 2022 (the blue line in Figure 1). So much so that the total unprogrammed funds in the first two years of Marcos Jr. were already 93% of the total unprogrammed funds of the Aquino III and Duterte administrations combined.
Where might unprogrammed funds go?
Suppose the government can sweep funds from GOCCs and other sources like new or excess revenue collections, as well as approved loans for foreign-assisted projects. On what things can they spend unprogrammed funds?
The budget law typically includes an enumeration of these things. And it used to be a short list. In the 2016 budget law, for example, there were only eight such “purposes,” including the Armed Forces of the Philippines Modernization Program and payments for living World War II veterans.
The biggest jump was from 2021 (24 purposes) to 2022 (50 purposes). The number of purposes peaked at 61 in 2023, then slid down again to 51 in 2024.
Figure 2 shows the detailed breakdown. What jumps out at you is the increase in 2023, thanks to “support to foreign-assisted projects” (P344.14 billion). Such projects include big-ticket infrastructure projects, like the LRT-1 Cavite Extension Project and the Metro Manila Subway Project Phase I.
These programs aren’t usually included in the unprogrammed funds. They’re included in, say, the budget of the Department of Public Works and Highways (DPWH). But it seems that lawmakers learned to remove such projects from agencies’ budgets, possibly to give way to their respective pork projects. (Remember that the Supreme Court ruled in 2013 that pork is unconstitutional, unless they are embedded in the national budget already.)
So pork projects were lodged in agencies’ budgets at the expense of foreign-funded big-ticket infrastructure projects—which have been relegated to unprogrammed funds. According to Zy-za Suzara, this might explain the big jump in the DPWH’s budget in 2024, compared to proposal in the NEP.
But apart from that, Figure 2 shows that there was a huge jump in 2024 of “support for infrastructure projects and social programs” (P50 billion). There were also new items: one was “priority infra program for roads, bridges, multi-purpose buildings/facilities, flood control, water systems” (P145.47 billion), and another was “priority social programs for health, social welfare and development, higher education, and technical vocational education” (P52.17 billion).
In 2024, there’s also a massive increase in “support for infrastructure projects and social programs” (P225.38 billion, which was more than 4.5 times the previous year’s budget). The allotment for “priority social programs” also increased to P59.02 billion.
Figure 2.
All these types of extra assistance—aid, medical assistance, scholarships, local public works—can be used by incumbent politicians to bolster their electoral bids in their respective districts.
You see now the usefulness and convenience of tapping GOCCs like PhilHealth using the new “special provision” in the 2024 budget. Lawmakers can use such surpluses for their own political goals, ahead of the election spending ban.
The emerging picture is not pretty. We may be looking at a massive flooding of public funds in the run-up to the 2025 elections to bolster incumbents’ local bids in 2025. And this is enabled by the national budget shenanigans that lawmakers (and President Marcos himself) passed right under our noses. – Rappler.com
JC Punongbayan, PhD is an assistant professor at the UP School of Economics and the author of False Nostalgia: The Marcos “Golden Age” Myths and How to Debunk Them. In 2024, he received The Outstanding Young Men (TOYM) Award for economics. JC’s views are independent of his affiliations. Follow him on Twitter/X (@jcpunongbayan) and Usapang Econ Podcast.