Unspent budget

Technocrats refer to it as the lack of absorptive capacity or a government agency’s inability to use its budget and thus provide services needed by our people. According to the Congressional Policy and Budget Research Department (CPBRD), a total of P1 trillion went unspent from the 2023 national budget. A table presented by the CPBRD showed that from 2016 to 2023, only 70.5 percent was spent, or an aggregate of close to P1 trillion in available funds each year was not utilized for the actual provision of public goods and services.

And this has been going on for a long while. A discussion paper prepared by the Philippine Institute for Development Studies in 2001 noted that “reports in the late ‘90s underscored the significant slowdown in the utilization of available funds by implementing agencies of the Philippine Government. This has been confirmed by government reports and also by the donor agencies, which have been alarmed and, thus, have placed a more cautious stance in programming their funds to agencies they provide support to.

“The depressed level of public sector investment in the country introduces serious constraints on the economic growth potentials of the country. It is imperative, therefore, that appropriations and allotments for public works agencies are fully utilized.”

There are perennial excuses for this inability to spend an agency’s budget. One excuse is problems with right-of-way acquisition, another is a difficult bidding process and contractor selection. A further issue is the prevailing government processes for accessing budgets. For example, Civil Aviation Authority of the Philippines has an approved budget for new air conditioning chillers for the Iloilo International Airport. It took six months to “download” the funds from the Treasury, and only after that could an order be made from Japan. The new chillers are now working after over a year of delay.

Last year, Sen. Sonny Angara, as finance committee chairman, identified the national government agencies with the lowest budget utilization rates. He got a commitment from them to take concrete steps in improving their spending efficiency following the directive of the Department of Budget and Management (DBM).

Senator Angara reported that the Department of Information and Communications Technology (DICT) will be implementing administrative interventions to improve its absorptive capacity and procurement process. The Department of Migrant Workers (DMW) committed to strengthening its Migrant Workers Office, enhancing the full-cycle reintegration program for OFWs and facilitating the immediate hiring of newly created positions for OFW hospitals.

The Department of Social Welfare and Development (DSWD) also committed to improving the implementation of its major social protection programs by fast-tracking the validation process for the Pantawid Pamilyang Pilipino Program (4Ps) and the social preparation process for the Supplementary Feeding Program (SFP), among others.

Ayun naman pala. A trillion pesos, more or less, in unused funds exists because some government agencies have low utilization rates. Yet, why was the PhilHealth fund taken?

Secretary Ralph and Rep. Joey Salceda are right in saying that using idle funds is better than having more government debts or imposing new taxes and/or higher tax rates. But in the case of PhilHealth, the proper thing to do is not to take funds already in the agency’s coffers but to increase benefits for members and/or reduce contributions.

I can’t believe Secretary Ralph Recto doesn’t see the need for this government to seriously fund our universal health needs, beyond just token or lip service. The usual excuse for why we are getting close to nothing from PhilHealth is a lack of funds. Tapos, bubulaga na lang na maraming excess or unused funds. From a recent personal experience with a major surgery, my contributions to PhilHealth since it started operations were of no help…no value.

The explanation for why PhilHealth cannot cover medical imaging and laboratory fees necessary for the regular health checks of senior citizens is the absence of enough funds. Those who try to get anything from PhilHealth realize the system is a joke in light of the meagre amounts being given. Paiyakan pa, as many hospitals complain about their growing receivables from PhilHealth. Mayroon naman palang funds…pero kinuha na ni Secretary Ralph.

The P90 billion that the Department of Finance (DOF) took from PhilHealth may not have come from membership contributions. But PhilHealth also covers non-members, and that is why the government contributes something to the fund to cover the needs of indigents. Now that the DOF has taken back that contribution, there will be less money available because the contribution of paying members must now be used to cover the needs of indigents.

I agree with Secretary Ralph that using idle funds of government agencies makes sense as an efficiency argument. But PhilHealth and, to some extent, the Philippine Deposit Insurance Corp. have the nature of provident funds belonging to private members who contribute to them to cover eventualities like getting sick or a bank run. The government is only the fund manager.

It doesn’t matter that the cash sweep does not affect the viability of these corporations. The point is, the money the DOF took from PhilHealth does not belong to the government anymore. If the DOF did a sweep of funds held by the Department of Public Works and Highways, Department of Information and Technology, Department of Social Welfare and Development, or even such GOCCs like PNOC, there would be no problem because those are really government funds, not funds that the government holds in trust for the eventual private users. In the same way, the DOF cannot do a cash sweep of Government Service Insurance System and Social Security System funds because those are funds held in trust.

If it is true, as Secretary Ralph claims, that PhilHealth still has P500 billion to fund claims of members, then it is clear the management of PhilHealth is totally inept for failing to come up with such programs that will benefit us, its members. BBM must appoint a more competent PhilHealth manager.

But Secretary Ralph is right about idle funds. Low absorptive capacity shows a failure on the part of the agency’s leadership to perform the purpose for which the agency was created. Idle funds mean idle managers. BBM should do a management sweep as well.

Boo Chanco’s email address is [email protected]. Follow him on X @boochanco.