Budget Secretary Emilia Boncodin told reporters over the weekend that there is a need to centralize the monitoring of drawdown from various loans and aids with the Bureau of Treasury (BTr) which should be given the mandate to require government agencies to submit regular reports.
At present, Boncodin said government agencies are not required to report when they have been debited by foreign donors except as part of their regular liquidation report.
According to Boncodin, the procedure should be automatic to enable the National Treasury to immediately reconcile the actual drawdown with the government’s cash position.
"Our problem with constructive cash, for example, was due precisely to the absence of this monitoring mechanism," Boncodin pointed out. "If the National Treasury was put on top of this from the beginning, we wouldn’t have this problem now."
The Arroyo administration has been forced instead to create a task force to investigate the unpredictable surges in the so-called "constructive cash" items in the budget that have been causing unexpected increases in expenditures especially at a time when the government is struggling to contain its deficit.
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 respective agency.
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 however, 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 equipment or the material and supplies from the suppliers which have been earlier paid in cash by the foreign donor, Boncodin said they do not always report the receipt of such item.
"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 twice at 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.
Boncodin said the proposal to expand the debt monitoring powers of the BTr is contained in an aggressive debt cap bill now pending in Congress which would put a cap on the total debt incurred by the National Government and government-controlled and owned corporations excluding government financial institutions (GFIs).
"It’s a necessary measure, otherwise, we will not be compelled to implement fiscal discipline and prudent debt management," Boncodin said. "If the debt cap becomes a law, it would force the government under any administration to be prudent." – Des Ferriols