The porky national government budget and messy budgeting process

In theory, budgeting starts with a plan that outlines where we want to be and how we arrive at it. That is why every president has his or her own Philippine Medium Term Philippine Development Plan (MTPDP). Among others, the main objective of the current MTPDP is to grow the GDP by 7 to 8 percent a year and bring down our poverty by 5 percentage points.

To achieve our objectives, the plan addresses the various problems and issues on the economy and the social sector, including the environment. Most of all, it also addresses the main bottleneck to our development – our poor infrastructure. Hence, we now hear of the Build-Build-Build Program of the present government. It designs the program to boast economic growth and employment and bring down poverty.

One of the main instruments to achieve our objectives is the national government budget. In preparing the annual budget, the government sets the GDP target for the year and other macroeconomic assumptions relating to inflation rate, exchange rate, and so forth. Because total projected national government revenues for the budget year is not sufficient to meet total projected national government expenditures, the budget also indicates how much fiscal deficit we should tolerate in relation to the projected GDP without hurting the economy with the burden of repayment.

Under the previous administration, the budget deficit averaged about 2 percent of the GDP. Because of the Build-Build-Build Program, the present administration wants to raise the deficit to around three percent or higher of the GDP.

The national budget preparation starts with the budget call. The call outlines the priorities of the national government for the budget year. Based on these priorities, the budget secretary estimates the size of the proposed budget. From this estimated budget, the budget secretary gives each agency of the national government a budget ceiling. Within the ceiling, each agency allocates a budget to each of its various programs and projects as it sees fit to meet the national government priorities within its area of responsibility.

Now comes the P75 billion insertion issue to the DPWH budget raised by no less than Majority Floor Leader Rolando Andaya Jr. of Congress. Andaya accused Budget Secretary Benjamin Diokno of making the insertions even without the knowledge of the Public Works Secretary Mark Villar to favor certain congressional representatives with pork in billions of pesos. For raising the issue, Andaya is now removed from his post.

The Department of Budget and Management (DBM) secretary denied it was an insertion. He said thus that after totaling the budget submitted by all concerned national government agencies, the total fiscal deficit was still below the targeted ratio to the GDP that would compromise our development targets. Adding P75, billion to the DPWH budget will meet the deficit target.

That is good enough. The problem with Diokno is why he gave the extra P75 billion to the DPWH only. We heard of the budgets of the Department of Health (DOH) and Department of Education (DepEd), for example, being cut to the bones. Why not give them part of the P75 billion?

The other problem with Diokno is that he was the one who prepared and gave the budget ceilings to each of the government agencies. Did he make a wrong calculations such that the total budget when prepared and submitted to his office by the different agencies did not meet the overall budget deficit ceiling?

One more problem with Diokno is why there is still pork in the budget. Did not the Supreme Court already outlaw the pork?

Now I wonder if the budget submitted by the other agencies were not actually cut by Diokno and gave it to the DPWH for certain reasons, like what Andaya pointed out, which is to give more pork to favored congressmen.