The national budget’s ‘black box’

The national budget’s ‘black box’ | Daily Tribune

As far as the Senate is concerned, it will not allow any unprogrammed appropriations (UA) in the billions of pesos in the proposed national budget for 2026, declared Senate President Vicente Sotto III.

“We will review reports that there is actually P200 billion in UA in the budget approved by the House of Representatives,” Sotto said in a radio interview over the weekend, contrary to House Speaker Faustino Dy III’s assertion that only P80 billion in UA could be found in the House version of the budget.

To recall, the House of Representatives last week passed on third and final reading its version of the proposed P6.79-trillion national budget for 2026, which, while granting funds for education equal to 4.1 percent of GDP — breaching the 4-percent international benchmark for the first time — was roundly criticized by the opposition for retaining some P214 billion in UA.

A motion by Akbayan Rep. Chel Diokno to completely remove the UA was rejected by a majority of the congressmen, with House appropriations committee chair Rep. Mikaela Suansing asserting that about P35 billion worth of infrastructure projects had already been slashed and that the remaining amount was necessary to fulfill foreign-assisted project obligations outside the main budget.

“We need to fund them; otherwise, we would be reneging on our international commitments,” she argued.

The argument is acceptable to Sotto, who said his chamber will limit unprogrammed portions of the House-approved budget to foreign-assisted projects. But beyond that, he emphasized, “If what I heard from the Speaker was correct — P80 billion or the rumored P255 billion — we won’t let it become UAs just like that. For what purpose? UAs in bulk? Lump sums? Unacceptable.”

To be sure, UAs, which in essence allow the government to fund additional programs and projects with extra cash beyond what was originally appropriated, have always been present in the national budget. The latter are programmed or planned funds for the country’s needs, while UAs are a separate account to be funded if the country earns more than expected.

Between 2011 and 2022, the UA had been moderate, reflecting its role as a contingent fund instead of a parallel budget. But from 2022 onward, the UA has expanded to hundreds of billions of pesos.

Also, from 2022, the gap between the National Expenditure Program — the Executive’s proposed national budget — and the General Appropriations Act (the legally enacted law authorizing government spending) has swelled enormously, with congressional insertions in the UA reaching as high as over P1 trillion. This compelled President Marcos Jr. to veto nearly P170 billion worth of items in the UA in the 2025 national budget.

The UA, bloated with insertions and justified as fiscal flexibility, has become the new normal — an aberration decried by former Bangko Sentral ng Pilipinas Deputy Governor for the Monetary and Economics Sector, Diwa C. Guinigundo.

Guinigundo, who also served as an alternate International Monetary Fund executive director from 2001 to 2003, blasted the House for having “learned nothing, despite being told, taught and fully involved in the unraveling of the flood control scandal that has shocked the nation.”

He said the House’s remorseless pushing of its version of the 2026 budget perpetuates the same scheme that enabled plunder through anomalous flood control projects.

“The House’s greatest sin,” said the former BSP official, “is institutionalizing the abuse of UAs — murky reserve funds that have been turned into a parallel budget.”

These UAs are supposed to be standby funds released only if there are excess revenues or foreign grants secured after the enactment of the GAA, providing flexibility for unforeseen priorities without the need for supplemental appropriations — “an understandable fiscal instrument,” he said.

But in practice, lawmakers have made the UA into what it really is — “the black box” of the national budget, with projects funded under the UA not specified in the GAA, making them nearly impervious to scrutiny by civil society and difficult for oversight bodies to track.

This opacity has paved the way for ghost projects, substandard public works and politically driven spending. Unless the Senate gives the House version of the 2026 budget a thorough review, the same sordid situation will prevail. Every peso misallocated in the UA will be a peso denied to a student, a destitute patient, or a small entrepreneur; every ghost project funded will mean a public school unbuilt, a bridge unmaintained, and communities left underwater.