‘Billions in public funds hidden’

by JOEL M. SY EGCO
SENIOR REPORTER
http://www.manilatimes.net/billions-public-funds-hidden/118050/


NOT all government expenditures are covered by the annual General Appropriations Act (GAA) because there are hundreds of “hidden” accounts in the government’s budget, which, according to former National Treasurer Leonor Briones, could be as high as 10 percent of the national budget.

A study funded by the United States Agency for International Development (USAID) said these off-budget accounts (OBAs) are equivalent to at least five percent to as high as 10 percent of the yearly budget.

If Briones’ estimate is applied to the proposed 2015 budget of P2.2 trillion, 10 percent would be equivalent to P220 billion, the use of which could escape public scrutiny.

According to the USAID study, off-budget accounts, which are nowhere to be found in the General Appropriations Act (GAA), include those spent under the Presidential Social Fund of the Office of the President (OP) and National Agri-Business Corp. (Nabcor), one of the agencies tagged in the pork barrel scam.

Besides the OP and Nabcor, there are other “major” OBAs whose appropriations do not pass the scrutiny of Congress but are audited by the Commission on Audit (COA).

So far, only the USAID-funded Philippines National Budget Monitoring Project in 2009 touched on the sensitive OBA issue. The project was undertaken in cooperation with the Management Systems International (MSI) for the International Center for Innovation, Transformation and Excellence in Governance (INCITEGov).

In a separate study on the Public Expenditure and Financial Accountability (PEFA) of the Philippine public financial management system, the World Bank (WB) determined that OBAs represent less than five percent of the national budget and therefore “not a major accountability concern.”

“Nonetheless, these accounts are highly vulnerable to improper, if not illegal, acts on account of the generally non-transparent nature of their operations. To safeguard the integrity of the funds, there is a need to advocate for more transparency, efficiency and effectiveness in the operations of OBAs,” the report said.

But Briones strongly disagreed with the WB figures, stressing that the estimates given by the study were very low.

“I vehemently disagree with the observation attributed to the World Bank that the estimated amount of OBAs are only less than five percent of the national program of expenditures, and therefore not worthy of their attention. If we use the appropriations act as base, which is generally only one-half or even less of the total expenditure program, then you get ten percent,” Briones told The Manila Times.

“The problem with just focusing on numbers without looking at the political and social consequences is that we are misled. Look at the pork barrel originally intended for 2014. It was ‘only P25.4 billion’ which was much less than the World Bank’s famous five percent, or probably less than one percent but look at how this ‘un-major accountability concern’ has destroyed our public finance system, our administrative culture and our societal values for decades and decades,” she pointed out.

The “best way” to fully account for all the OBAs, Briones said, is to “examine the budget documents in close detail.”

“For example, the remittances of Pagcor [Philippine Amusement and Gaming Corp.] to the Office of the President are in the volume on budget of expenditures and sources of financing,” Briones added.

According to her, identifying all OBAs would be a tedious task.

Pagcor and the Philippine Charity Sweepstakes Office (PCSO) are the principal sources of OBA for the President’s Social Fund (PSF) which, based on the USAID study, was among the four main OBA generators, the three others being Nabcor, the Municipal Development Fund and the Manila Economic and Cultural Office (MECO).

Scrutiny
Former Budget Secretary and University of the Philippines professor Benjamin Diokno believes that there should be a more thorough scrutiny of off-budget funds that are spent without much public attention.

Diokno said OBAs also include the controversial Judiciary Development Fund (JDF) and Road Users Fund or Motor Vehicles Users Charge (MVUC).

“All public funds should be subject to audit, be it the JDF, the entire budget including PDAF [priority development assistance fund] and DAP [Disbursement Acceleration Program], and even off-budget funds like Pagcor, Malampaya, PCSO, Road Users Fund and others,” he told The Times.

“These other funds are subject to audit and they are many times bigger than the JDF,” he noted.

Briones agreed with the former Budget chief.

Diokno “is correct. These funds are audited, even the JDF as the Supreme Court emphasizes. Those who watch the budget only see what is in the [GAA]. It is also partly due to media, which report only the agency budgets,” she said.

The former national treasurer also noted that the “expensive study” by the USAID failed to look into the role of OBA as a “source of pork.”

“Take the MVUC. Congressmen who sit in the committee which determines the allocation of MVUC expenditures get at least P10 million in additional pork,” Briones pointed out. “It has a multiplier effect on the proliferation of pork.”

The Road Tax, under Republic Act 8794 that was promulgated in 2000, is purportedly the government’s third largest source of tax revenue, after the Bureau of Internal Revenue and the Bureau of Customs.

The Road Tax fund, which reaches nearly P10 billion annually, comes from annual registration fees paid by vehicle owners to the Land Transportation Office, which remits the fund to the Bureau of Treasury.

Like a real OBA, the Road Users fund is not mixed with other funds. Instead, it is deposited under four different Special Accounts — the Special Support Fund, with 80 percent share; Special Local Road Fund, with five percent share; Special Road Safety Fund, 7.5 percent share; and Special Vehicle Pollution Control Fund, 7.5 percent share.

From 2001 to present, the Road Fund already amounted to around P100 billion.

The fund is reported annually in the President’s Budget of Expenditures and Sources of Financing (BESF) under “Earmarked Revenue.” Since it is automatically appropriated, it does not need the year-by-year appropriation from Congress.

When Sen. Miriam Defensor-Santiago raised a howl against the “anomalous” use of the Road Fund, she said, ”With or without the GAA, the total revenue collected by the LTO is remitted and deposited to the four accounts, according to the percentages prescribed by law, and are then spent by the Road Board.”

To be continued