WB: Impose 5% UA cap

While acknowledging that it is an essential part of the annual national budget, the World Bank said strict guidelines must govern the use of unprogrammed appropriations (UA), which had been identified as the conduit for the pork barrel of the executive and legislative branches.

The multilateral international agency has recommended capping UAs at around five percent of the national budget, as the government finalizes the proposed 2027 national budget amid a heightened scrutiny on public spending.

Budget watchdogs said the UA peaked in the 2023 budget at P807.2 billion, about 15 percent of the government spending plan.

This ballooned after Congress raised the 2023 UA by 37.23 percent, from the P588.162 billion the executive originally requested, to P807.162 billion.

The 2024 budget kept it high. Congress increased the UA from the P281.9 billion in the executive’s submission to P731.4 billion, a 159-percent jump. That was about 13 percent of the budget.

Public finance experts found that regular items in the yearly budget were relegated to the UA to create fiscal space for legislators’ pet projects.

After the modus operandi involving the UA was exposed, the amount fell to P363.2 billion in 2025, P150.9 billion in 2026, and a proposed P111.984 billion for 2027.

At a Monday press conference, Jaffar Al Rikabi, a senior economist at the World Bank, said the recommendation was based on international standards and should include clear criteria for when UAs could be used and disbursed.

“Our suggestion is to cap it at around five percent, and international experience says that you identify the criteria for the UA spending,” he told reporters.

“For example, you need it because of some unexpected costs related to, say, an ODA (official development assistance) project. So the idea is [to have] both a cap and a clear criteria on the use of UAs,” he said.

UAs, intended as standby funds for unforeseen circumstances, came under intense scrutiny after last year’s “Floodgate” scandal amid allegations by some lawmakers that the broad and vague rules governing their use made them vulnerable to corruption.

Following the controversy, it was found that more than P1.9 trillion had been allocated to flood control from 2011 to 2025, with more than P1 trillion allocated from 2023 to 2025 alone.

House Appropriations chairperson Rep. Mikaela Suansing has said that P141 billion was allocated for flood control projects under UAs in those years.

In the 2025 budget, the executive proposal put UAs at P158.7 billion, but Congress raised the amount to P531.67 billion in the bicameral committee version, an increase of P373 billion or 235 percent.

President Ferdinand Marcos Jr. subsequently vetoed P168.24 billion in UAs, leaving P363.24 billion in the enacted 2025 budget.

The Department of Budget and Management, then headed by Secretary Amenah Pangandaman, defended UAs at the time, describing them as “standby appropriations” that existed outside the national budget.

Pangandaman later resigned after being tagged in the floodgate scandal.

Transparency as ingredient

On Monday, Zafer Mustafaoğlu, World Bank Division Director for the Philippines, Malaysia and Brunei, likewise called for greater clarity and transparency in the use of UAs.

“On the unprogrammed funds, of course, it’s really important to have transparency around it, meaning its usage, for what purposes,” he said.

“In any country, you will need some unprogrammed funds for unexpected changes in your program. You know, there’s always an opportunity to change course,” he added.

Budget monitors said ending the corruption involving the UA would have required the cooperation of the National Treasurer and the Department of Finance (DoF), then headed by Ralph Recto, since the funds could be released only after the required funding conditions were certified.

A special provision of the UA in the 2024 GAA mandated the DoF to issue implementing guidelines to sweep up excess funds from government-owned and controlled corporations (GOCCs) to generate funds to cover the UA, since essential projects were stuffed into it.

The DoF then issued Circular 003-2024 in March 2024. It directed GOCCs, including the Philippine Health Insurance Corp. (PhilHealth), to remit their excess funds to the Treasury. The DoF said it consulted the Governance Commission for GOCCs, the Office of the Government Corporate Counsel, and the Commission on Audit.

The Supreme Court later ordered the government to return P60 billion in PhilHealth funds that were swept into the National Treasury, voiding the 2024 budget provision and the DoF circular that authorized the transfer.

In a decision announced on 5 December 2025, the Court en banc, through Associate Justice Amy Lazaro-Javier, declared that the scheme was used with grave abuse of discretion.

Shrunk after exposure

For the 2026 national budget, lawmakers reduced UAs to about 2.22 percent of the total budget.

The current version of the 2027 budget puts UAs at around 1.56 percent.

The House defended the mechanism as necessary standby funds, particularly for foreign-assisted projects, similar to the use case cited by the World Bank officials.

Former NEDA director general Solita Monsod, however, described UAs as the “new pork” and called for the mechanism to be scrapped entirely.

“The unprogrammed appropriations, at least in this administration, have been used as a pork barrel, or as a way to finance the favorite projects of legislators,” she told DAILY TRIBUNE in August.

“I do not think there is a place for unprogrammed appropriations because they are being used as a pork barrel,” she added.

The proposed 2027 National Expenditure Program is P7.2 trillion, which the DBM submitted to Congress in August. It includes P111.984 billion in UAs, or about 1.6 percent of the total expenditure program.

The Senate Finance Committee is holding departmental budget deliberations, with hearings scheduled to continue through October and into November.