Not a clean job (1)

The least-discussed consequence of the Department of Finance (DoF) sweep of excess funds from the national budget was the P117 billion taken from the Philippine Deposit Insurance Corp. (PDIC) which was bigger than the P60 billion siphoned off from the Philippine Health Insurance Corp. (PhilHealth) that has been slapped with a Supreme Court injunction.

Worries about the suctioning of funds on the ability of the PhilHealth to deliver on its mandate were repeated in the PDIC.

The PDIC is the guardian of deposits in local banks with a P500,000 guaranteed coverage when a bank becomes distressed. It requires around P215 billion in deposit insurance funds to adequately maintain 5.5 percent of total bank deposits to ensure coverage for all depositors.

Bank depositors are now worried that the amount the DoF, through a circular, transferred to the national treasury may affect the capability of PDIC to provide cover to depositors of a failed bank.

“If P117 billion was taken away, that is 55 percent of the fund. Do they think this will not affect depositors’ confidence?” asked one banker.

Zy-za Nadine Suzara, a former Budget undersecretary during the term of the late President Noynoy Aquino, said the practice of the government of diverting funds should be a cause for public concern since it “compromises agencies’ ability” to deliver mandated services.

She blamed the ballooning unprogrammed funds in the yearly budget for the desperation of the government in scouring for idle funds.

The Executive branch requested only P281.91 billion in unprogrammed funds in the proposed 2024 national expenditure program (NEP).

But in the 2024 General Appropriations Act (GAA), or the final version of the national budget that President Ferdinand Marcos Jr. signed in December 2023, unprogrammed funds ballooned to P731.45 billion.

Unprogrammed funds used to have three sources which are excess revenue collections, new tax or non-tax sources, and loans for foreign-assisted projects.

A provision under the 2024 GAA included the fund balance of government-owned or controlled corporations (GOCCs) as another resource with consideration of their disbursement in previous years.

“Those funds were appropriated for a reason. The solution to poor spending is not to keep taking out the funds but to improve the capacity of institutions to efficiently deliver their respective mandates,” Suzara said.

She added that tapping into the GOCCs’ funds was very similar to what legislators initially wanted to do in the original version of the Maharlika Investment Fund, which received seed funding from the Land Bank of the Philippines and the Development Bank of the Philippines.

“This is in fact worse than the earlier version of Maharlika because it gives blanket authority to the national government to do a cash sweep of just about any GOCC that’s unable to disburse funds,” she explained.

“At least in the MIF, the GOCCs were identified in the bill,” she added.

Suzara said if GOCCs continue to underspend, then it is very likely that they will remit more funds to the Treasury to finance the long list of items under unprogrammed appropriations in the 2024 budget.

“Ironically, budget items in the unprogrammed appropriations appear to be more of a priority as the election nears when in reality, the unprogrammed appropriations are supposed to be a standby fund for things that aren’t funded in the programmed appropriations,” she added.

“If this is left unchallenged, then we can expect this to continue as the national budget grows annually,” she pointed out.

Economic managers proposed a P6.352-trillion national budget for 2025, a 10-percent increase from 2024.

Another former economic manager, Cielo D. Magno, a professor at the University of the Philippines School of Economics, said that what members of the bicameral conference committee did for the 2024 national budget was “unconstitutional” because it was in effect “trying to amend laws and charters of GOCCs by inserting a provision in the GAA to finance the unappropriated portion of the budget.”

“Congress expanded the budget significantly through the unappropriated portion and tried to find the money to finance it by taking the GOCCs’ reserved fund,” she said in an e-mail.

“This happened during the bicameral meeting, not during the actual deliberation/consultation on the proposed 2024 budget,” she underscored.

The DoF said PhilHealth and PDIC’s respective boards “approved” the return of excess and unused funds.

(To be continued)