Core
Business World 22 July 2014

 

Call a spade a spade. The Disbursement Acceleration Program (DAP) is neither a budget reform measure nor a fiscal stimulus. The DAP was crafted to allow the President to mobilize “contrived” savings and to use these for programs, projects and activities that are not authorized by Congress. It was designed in utmost secrecy that only a handful of people knew about it until it was exposed as the source of funding for additional pork for senators who convicted former Chief Justice Renato Corona.

By sequestering funds authorized by Congress for specific programs, projects and activities, the President has usurped the congressional power of the purse. The usurpation was done with increasing viciousness. DAP 2011 was approved on October 2011, DAP 2012 in the middle of the year (June 25, 2012), and DAP 2013 shortly after the first quarter of the year (May 20, 2013).

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While it’s true that the Aquino administration was under a lot of pressure to speed up budget implementation (a problem of its own making), it is not justified to cut corners, and ignore the constitutional provisions on the use of savings and the disbursement of funds for programs, projects and activities with no congressional authorization.

The P30 billion additional equity contribution to the Bangko Sentral ng Pilipinas (BSP) was designed to accelerate government spending. But is the disbursements authorized in any of the general appropriations acts in 2011 and 2012? And it would be a stretch to argue that the P30 billion helped perked up the slowing economy. How many new jobs were created as a result of the P30-billion new equity for BSP? Nil if not zero.

How can the DAP be a fiscal stimulus when there was no additional spending? The programmed spending for 2011 was P1.711 trillion; actual spending was P1.557 trillion.

Teachers and policemen were not hired and retirees not paid their pension on time in order to create artificial savings. The savings were then used as equity contribution to BSP. How can the spending substitution be seen as stimulating the economy?

Here’s another example: authorized spending for airports and the modernization of 25 regional hospitals were abandoned, so that payments to landowners can be accelerated. The substitution did not increase spending, hence it was not fiscally stimulating.

Some of the DAP’s disbursements were meant for the importation of machineries and equipment for abroad. Here are some examples: the upgrading of the physical plant and medical equipment of the Philippine Children’s Medical Center (P280 million) the Bio-Regenerative Technology Program and Pediatric Pulmonary Program of the Lung Center of the Philippines (P105 million), the upgrading of aging physical plant and medical equipment of the Philippine Heart Center (P357 million), and the purchase of MRT cars (P4.5 billion). These activities would perk up the economies of other countries from which the equipment would be imported, but not the Philippines’.

Worse, to date, the P4.5 billion allocated for the importation of additional MRT cars has yet to be disbursed. And I thought the DAP was meant to accelerate spending.

The harsh reality is that the DAP is politics-driven. It was designed to ensure that the Liberal Party would win in the 2016 presidential election.

The list of DAP releases in the accompanying table is not exhaustive, but it suggests how Budget Secretary Butch Abad has ensured that a large chunk of the DAP would support the electability of the administration candidates in the next national elections.

The P6.5-billion LGU support fund (Item 3 in the table) was meant to offset the P13.6-billion cut in the Internal Revenue Allotment (IRA) resulting from the drop in tax collection during the height of the global recession. But that is the challenge for fiscal management. The drop in revenues affected the national government as well as the local governments. Both have to adjust, and both have to learn to operate under a hard budget constraint.

And why should the P6.5-billion LGU support fund be discretionary, at the whims and caprices of the Interior and Budget secretaries, when the fund to be replaced, the IRA, is formula-based? If the idea is to offset the reduction in IRA, then the fund should be distributed based on the IRA formula, and not discretionary.

The Interior Secretary played god in dispensing the P6.5-billion LGU support fund. But that’s not all. The P6.5 billion is just one of at least 15 other lump-sum funds totaling P47.7 billion, which is totally under the control of Budget Secretary Butch Abad and Interior secretary Mar Roxas.

Other DAP funds were placed under the control of Mr. Abad’s other allies: Social WelfareSecretary Dinky Soliman and Peace Process Coordinator Ging Deles.

The inconvenient truth is that the estimated P150-billion DAP was designed as a tool for perpetuating the Liberal Party in power. Without the timely Supreme Court ruling, the DAP could have continued and grown uncontrollably in size. Without it, there would have been no limit to the Liberal Party’s total domination of the political scene.