Recent Supreme Court oral arguments on unprogrammed appropriations have sharpened scrutiny over how the Philippine budget is manipulated, exposing concerns that standby funds are being used to bypass fiscal discipline, expand executive discretion and fuel pork barrel politics.

Recent Supreme Court oral arguments on unprogrammed appropriations have sharpened scrutiny over how the Philippine budget is manipulated, exposing concerns that standby funds are being used to bypass fiscal discipline, expand executive discretion and fuel pork barrel politics. | Daily Tribune

Cash is fungible, the defense goes, like money in a bank rather than a safety deposit box. Caguioa, however, demonstrated through common sense that this practice produces perverse outcomes.

Consider the justice’s Iran war scenario where projected revenues for a key programmed project fell short in the final quarter due to external shocks.

Meanwhile, an excess collection in another line item, say, a jump in Bureau of Customs license fee collections, already triggered unprogrammed spending.

The excess cash, which could have cushioned the programmed priorities, is instead directed elsewhere. The government must then borrow to fill the shortfall that widens the deficit.

The Solicitor General conceded Caguioa’s logic that giving the UA priority would increase borrowing, thereby adversely affecting the deficit.

Yet she defended the mechanism to augment the bloated UA as being compliant with the General Appropriations Act which Executive Secretary Ralph Recto had designed by inserting a provision empowering the Department of Finance to sweep up funds from state firms to trigger UA funding.

It is a deliberate accounting sleight-of-hand. Justice Caguioa returned to the 2015 Araullo v. Aquino ruling on the notorious Disbursement Acceleration Program, which the Supreme Court rejected.

The Court insisted on aggregate revenue targets, or on total collections exceeding projections, before UA funds can be released.

Interpreting triggers individually creates “artificial surpluses,” distorts priorities and undermines the deficit targets.

The UA, originally envisioned for genuine contingencies such as foreign-assisted projects or disasters, became a parallel budget in which the Executive gained flexibility without the inconvenience of having to seek supplemental appropriations that would be subject to congressional debate.

The funds flow to the UA and are allocated for essential projects, with room set aside for legislators’ pet projects.

Additional borrowing is needed to sustain such juggling of items in the budget, resulting in higher interest costs, larger deficits and a stealthy expansion of executive discretion, all while maintaining the fiction of a deficit neutrality.

The budget must be grounded on honest projections, discipline and respect for the separation of powers, not gamesmanship.

The hunt for Zaldy Co and the impeachment of Vice President Sara Duterte are part of the script to divert the public from the unabated corruption.