Proposed 2022 budget faces scrutiny

By Kyle Aristophere T. Atienza, Reporter
and Russell Louis C. Ku

THE PROPOSED P5.024-trillion national budget for 2022 is expected to face tough scrutiny from lawmakers, in the aftermath of recent state audit reports showing deficiencies in the use of public funds by some government agencies, analysts said. 

President Rodrigo R. Duterte is scheduled to submit the record budget plan to Congress today (Aug. 23).

The House of Representatives is targeting to approve the proposed National Expenditure Program (NEP) on second reading by Sept. 30, just before lawmakers suspend session for the filing of certificates of candidacy for the upcoming national elections.

ACT-CIS Party-list Rep. Eric G. Yap, chair of the House Appropriations Committee, told BusinessWorld in a phone interview on Saturday that the budget hearings will start on Thursday (Aug. 26) with the Development Budget Coordination Committee (DBCC) briefing.

“If we go as planned in the Senate, we could hold a bicameral conference by early December. Then the approved [2022] General Appropriations Act would be sent to the President for his signature before the end of the year,” he said in a mix of English and Filipino.

The proposed 2022 national budget is 11.5% higher than this year’s P4.51-trillion spending plan, with the biggest chunk of the budget going to the social services sector.

“With the public attention on fiscal responsibility generated by the Commission on Audit (CoA), I believe lawmakers will make an effort to show that they are really scrutinizing every item in the proposed budget,” said Michael Henry Ll. Yusingco, a senior research fellow at the Ateneo De Manila University Policy Center.

With less than a year before the 2022 polls, lawmakers, especially those who are allied with the administration, may also avoid being accused of condoning bureaucratic inefficiencies and possible corruption, Mr. Yusingco said in a Facebook Messenger chat.

“They will purposely put on a show to the voters that they too are concerned about fiscal responsibility,” he said.

The proposed P242-billion budget of the Department of Health (DoH) “will likely be scrutinized more closely by lawmakers especially with respect to their spending performance,” said Zy-za Nadine Suzara, executive director of Institute for Leadership, Empowerment, and Democracy (I-Lead).

“That is because aside from fund mismanagement flagged by CoA, DoH has also not been able to spend a huge amount of funds which could have been used to buttress the government’s pandemic response,” she said in a Facebook Messenger chat.

In an audit report, CoA said there were deficiencies in the Health department’s pandemic response funds amounting to P67.3 billion.

The deficiencies contributed to challenges and missed opportunities by the DoH amid a national health emergency, the state auditors said. The findings “cast doubts on the regularity of related transactions,” they added.

Aside from the DoH, the Department of Education (DepEd), Department of Interior and Local Government (DILG), Department of Labor and Employment (DoLE), Department of Transportation (DoTr), Department of Agriculture (DA), Department of Budget and Management (DBM), and Department of Social Welfare and Development (DSWD) were also flagged by state auditors for irregularities and deficiencies in their handling of public funds.

Ms. Suzara said lawmakers will also keep a close eye on the proposed allocations for social services and economic recovery amid the pandemic.

“Senators will also likely look for economic aid and fiscal stimulus in the budget proposals of the DSWD, DoLE, DepEd, DoTr, DTI and, practically, all the major government departments,” she said.

The budget for cash aid, distance learning, service contracting program for public utility vehicle (PUV) drivers, support for micro, small and medium enterprises, “should ideally still be funded especially because as Moody’s pointed out, the pandemic left deep scars in our economy,” Ms. Suzara said.

“In last year’s budget deliberations, lawmakers in both houses of Congress have criticized the lack of funding for these things,” she said. “They will likely look for these allocations once again as the new variants of the coronavirus continue to develop and lockdowns will likely be imposed again and again.”

Moody’s Investors Service last month said the Philippines may face “deep scarring” or long-lasting economic losses due to the prolonged pandemic, amid uncertainty around the reopening of the economy and the continued rise in coronavirus cases.

The proposed allocations for the administration’s flagship infrastructure projects will also be scrutinized given that these have enabled patronage politics, Ms. Suzara said.

The economic services sector will get P1.474 trillion under next year’s budget. This includes the flagship infrastructure projects under the “Build, Build, Build” program.

“Duterte’s economic managers have repeatedly asserted that Infrastructure development will be the main driver for recovery, but in the 2021 budget and even previous years, the ‘Build, Build, Build’ has always included patronage-driven local infrastructure projects in the DPWH budget,” Ms. Suzara said, noting these questions are always raised every year.

Ms. Suzara said lawmakers will also question the readiness of the Commission on Elections to conduct the May 2022 national elections with COVID-19 still in the picture.

“Due to severe mobility restrictions and physical distancing requirements in the middle of the pandemic, there’s a possibility that polls might not be finished in one day. If that is the case, additional resources will have to be allocated to run the election system,” she said.

Lawmakers would also ensure that there’s “no duplication of functions and budgets between the National Government and local government units (LGUs)” in line with the implementation of the Mandanas ruling that increased the LGUs’ share from national taxes.

“While the funding levels downloaded to LGUs cannot be questioned, lawmakers will very likely ask questions about the functions and therefore budgets of National Government agencies which need to be devolved,” Ms. Suzara said.

Another major concern is the capacity of LGUs to use the bigger national tax allotment (NTA) next year, as Ms. Suzara noted that not all “LGUs have the capacity to plan, budget and program investments for their localities.”

Meanwhile, Ms. Suzara said the government’s anti-communist task force may also face a budget cut after lawmakers raised concerns that allocations for counter-insurgency programs could be used as “election giveaways.”

The task force currently implements a barangay development program, which rewards villages that have cleared their territories of Maoist rebels by funding farm-to-market roads, school buildings, reconstruction of public facilities, among others.

“Why is the Duterte administration going to subsidize local projects when the Mandanas ruling will already be implemented next year?” Ms. Suzara asked.

“Localities will already receive more funds by virtue of the Mandanas ruling and yet the National Government will pour in even more despite serious capacity problems among LGUs,” she said. “Why should these be prioritized too when project implementation will very likely be forestalled by the upcoming election ban?”

Still, the 2022 national budget’s approval appears to be safe from delays “as this will also impact the respective 2022 plans of lawmakers,” Mr. Yusingco of Ateneo Policy Center said.

“We should expect the budget deliberations to be robust, as this would definitely appeal to the public,” he said. “But given the election next year, we should also expect the budget to be passed as scheduled.”

HYBRID DELIBERATIONS
For the House of Representatives, Mr. Yap said that the ongoing modified enhanced community quarantine (MECQ) in Metro Manila will not affect budget deliberations as hearings will be held under a hybrid setup.

“Those who are in the province who cannot attend [physically] can join via Zoom and then the agencies who can come [to the hearings] will be physically present,” he said in a mix of English and Filipino.

The House is also set to resume plenary sessions on Monday. Plenary sessions will be held from 2 to 5 p.m. during MECQ with only House leaders and a limited number of secretariat personnel physically present inside the session hall, while other members will attend through videoconferencing.

“We are ready to carry out our constitutional duty of carefully scrutinizing the NEP and eventually pass a national budget that is truly reflective and responsive to the needs of Filipinos as COVID-19 continues to wreak havoc on people’s lives and the economy,” House Speaker Lord Allan Jay Q. Velasco said in a statement.