NG bucks Congress move to clip its fiscal flexibility

Faced with a bloated budget deficit which had reached P122.152 billion as of end September, the National Government is opposing moves in Congress to clip its flexibility in managing its fiscal position.

The inter-agency Development Budget and Coordinating Council (DBCC) which met last week to discuss the implications of the proposed "Budget Impoundment Control Act" which calls for the legislation of a provision in the General Appropriations Act (GAA) that will strip the Executive branch, especially the President, of its authority to decide on how to manage its fiscal position.

Under the existing GAA, there is a provision that calls for the automatic transfer of the internal revenue allocation (IRA) to the local government units (LGUs). The National Government on the other hand, can decide to impound or withhold expenditure items from LGUs once the target deficit is breached.

The proposed bill in effect, prohibits the National Government from impounding appropriations under the current budget.

Budget Secretary Emilia Boncodin said such move will adversely affect government’s strategies to handle its deficit problems. She expressed concern that the deficit could further deteriorate if government is not allowed to control this year’s P703.218-billion expenditure program.

"We understand that this is a check and balance thing. Congress does not want the Executive branch to abuse its authority, but at the same time, it still needs to have the discretion or the prerogative to act on matters pertaining to the budget," Boncodin said.

She maintained that government has the authority to impound part of the budget especially if the allowable deficit has been exceeded and determined as "unmanageable."

Boncodin said the issue will have to be clarified with Congress even as she acknowledged the move is meant to instill discipline on the Executive branch.

"For two years, we have doubled our budget deficit and made us look bad in the eyes of the international lending community. We understand that, but government should not be constrained unnecessarily," Boncodin said.

Solons led by Ilocos Rep. Imee Marcos are pushing for the Budget Impoundment Control Act mandating restraints on expenditure items as opposed to inserting the same each time the budget is deliberated upon in Congress.

Finance officials said some expenditure items were withheld three years ago at the height of the Asian financial crisis as government spent more than its budget to keep the economy going.

The issue was reactivated in the wake of the yawning budgetary shortfalls incurred under the Estrada administration, with the deficit ballooning to P134.2 billion in 2000 and P68.4 billion in 1999.