Government body to probe expenditure surges

The Arroyo administration has created a task force to investigate surges under a so-called "constructive cash" item in the budget that has caused an unexpected increase in expenditures at a time when the government is struggling to contain its deficit.

Budget Secretary Emilia Boncodin said yesterday that the Department of Budget and Management, Bureau of Treasury and the Commission on Audit have formed a team that would look into this item in the budget which has been causing problems in the expenditure program.

According to Boncodin, the constructive cash item in the budget is expected to exceed the programmed amount by at least P3 billion during the first quarter of the year, representing the only unprogrammed item in the budget.

Constructive cash represents the amount that government draws down from foreign loans or aids in the form of equipment, materials and supply. The foreign donor pays the supplier directly so that the foreign assistance is delivered in kind to the agency involved.

Although no cash actually leaves the national coffers, the expenditure is reflected as a cash drawdown from active foreign loans or aid, Boncodin explained.

Items listed as constructive cash have been unpredictable. "My problem with constructive cash is that I can not anticipate it because the information gets to me too late," Boncodin said.

When government agencies receive the goods from suppliers which have been earlier paid in cash by the foreign donor, Boncodin said they do not always report the receipt of such items.

"They have no incentive to report and the agencies often take so long to do the paperwork," Boncodin said. "So when they do come in and when we have to reconcile our reckoning, suddenly we have billions worth of constructive cash that sometimes represent equipment that were delivered two years ago or a year ago."

In 2002, Boncodin said constructive cash items were programmed to reach only P12 billion but the actual full-year figure was P24 billion. "We could not figure out when the items came in and when they were recorded. They end up being lumped together and suddenly we have overshot our target by 100 percent," she said.