February 19, 2025 l Business Mirror
A national budget of 6 trillion makes the government equivalent to the biggest “corporation” and employer in the Philippines. In fact, this spending represents 20-percent of the gross domestic product (GDP), making it a low-lying fruit enticing the salivating lips of crooks aching to get a chance to have their hands on it.
But why does this Third World country need to have a gigantic budget knowing that it has been in grave fiscal deficit through the years- in the region of P1.5 trillion to P1.7 trillion through 2021-2024? One wonders how it has fallen into a gargantuan debt -currently at P16 trillion.
Former Finance Secretary Jesus P. Estanislao quotes that the fiscal gap from January to November 2024 was P1.8 trillion, representing a telling 20 percent of the 2024 budget. Prudent international standards demand a 60-percent debt-to-GDP ratio, and the country had eclipsed that at 60.7 percent in 2024 (in one quarter hitting even 63 percent). Why are we taking such inordinate risks; for whom?
From the 1990s to about 2015, the country’s debt-to-GDP ratio was averaging 55.5 percent. President Benigno Aquino Jr. brought the national debt from P10 trillion to P5.9 trillion at the end of his term in 2016. The Duterte administration ended its regime with a P13.42 trillion debt, which President Ferdinand Marcos Jr. raised to the current level of P 16.090 trillion. That national debt servicing of P2 trillion is already a third of the national budget, remember that. And for what?
The Philippines still languishes among Asean economies, eclipsed by war-ravaged Vietnam, and its per capita GDP is at the same pitiful comparative level.
Economists often point to the pervasive corruption, which Mayors for Good Governance Founder Baguio City Mayor Benjamin “Benjie” B. Magalong says has escalated from the old 10 percent to a shocking 40-percent to 50-percent corruption level as the main culprit. This comes mainly from the graft and abuse inflicted upon the national budget.
Who is in charge?
WHO is to blame for the country’s relative economic anemia amidst a graft-laden budget? The President, through his National Expenditure Program (NEP), says this is my budget—derived not from thin air, mind you. But a product from the consolidation of the line agencies’ recommendations consistent with the government’s Long-Term Development Plan and inputs from the regional Development Councils under the “bottoms up” budgeting (initiated by the Aquino government).
Though the NEP does not always fully equate to the GAA—by and large, through the years, the President’s NEP budget has been respected. However, according to former Budget Secretary Florencio “Butch” B. Abad, the bicameral committee (Bicam) under the Marcos administration had slashed the NEP by a total of P1.0156 trillion (three-year budget) including about a P500-billion cut for 2025.
Why does the President allow such wholesale decimation and only veto a minuscule P25 billion and then, merely shrug his shoulder and call the 2025 GAA “sub-optimal”? If the President has “lost control of the budget” then who is in charge? Or is the president complicit in the ways of the Speaker?
Like the early 2024 “referendum or people’s initiative” attempt revved up by the Speaker’s men with nary a whimper from the palace?
Morality play
FORMER Finance Secretaries Estanislao and Ramon R. Del Rosario Jr., former Senate President Franklin M. Drilon, and a host of economists and finance people assailed the budget as “the most corrupt” in years. It underfunded the basic budget needs of the people (like health and education) and gave way to deals that favored politicians and their graft-laden pet projects and ayuda system in aid of reelection.
It is not hard to pin the villains and victims in this morality play.
The Bicam approved the report with 12 item blanks worth P241 billion but inserted the same in the GAB (General Appropriations Bill), which the president signed into the official GAA. Drilon proposed that such insertions be made implementable only after the elections. But how?
There are about P500 billion cuts in the NEP but diverted to other extraneous projects many of them dubious in intention and self-serving in origins.
The biggest casualty in the cuts is the counterpart funding for important foreign-assisted projects (41 percent of the cut total), 7.8 percent (PhilHealth), and the computerization program in education.
Despite the country’s unfortunate situation of being the pathway of most typhoons and earthquakes, the calamity fund cut was 2.1 percent of the P500 billion total. Meantime, while the whole world knows the insults the country regularly bears in the conduct of the West Philippine Sea, they cut the AFP Modernization Fund representing 2.0 percent of the total. Why?
One can almost predict where these cuts were rechanneled to: historically known corrupted deals in the DPWH (33.6 percent) and flood control projects (the most difficult to audit projects) at 47.1 percent. Both would translate into a whopping 90.7 percent of the P500 billion. Who would be most interested in benefiting from these multi-billion transitions?
Reportedly, the successful and ably monitored PPP (conditional fund transfer) of the DSWD has been de facto replaced by new allocations of P27 billion (Ayuda-Tupad) and P26 billion (AICS dole outs)- given by public officials in aid of reelection or election. Even the successful “Malasakit” (free medicine and consultation) program has reportedly been frozen. And the endorsements to its usage are left in the hands of local officials instead of directly administered by the Department of Health. A new set of emperors in their fiefdoms?
A study had earlier shown that roughly 80 percent of the entire Philippine officialdom is controlled by political dynasties: paying tribute to whoever sits in the palace to gain their share of the booty.
In a recent forum, former Finex President Renato “Rene” C. Valencia quoted from a worldwide best-seller book “Why Nations Fail” that the extent of poverty in a nation is directly proportional to the relative control of political dynasties of the levers of power.
Another independent Ateneo study showed that the “fatter” (more family members involved) the dynasties are, the poorer the communities become. A haunting food for thought.
If this was a morality play, the disturbing question has to be asked. Why national budgets are mangled as they have been.
Is the nation set up to be a people who are poor, less educated, and sickly such that they become easy prey to offers of mendicancy to perpetuate a certain set of officials in power—well, till hell freezes over? Think about it.
***The views expressed herein are his own and do not necessarily reflect the opinion of his office as well as FINEX. For comments, email dejarescobingo@yahoo.com. Photo is from Pinterest.