Force agencies to obligate, disburse funds within the year

Barely eliciting public reaction is the recent approval by Senate and the House of Representatives of the bill extending the validity of the 2021 budget up to the end of 2022 (“Senate extends validity of 2021 budget until December next year,” Inquirer.net, 12/13/21).

As argued by its sponsors, this is necessary so as not to deprive the public of the goods and services funded in the budget, because implementing agencies will be unable to use up their respective appropriations by the end of the year due to pandemic-induced disruptions.

These reasons are pathetic and recycled excuses to mask the perennial underspending that has defined the Duterte administration’s fiscal performance. The so-called low absorptive capacity of government agencies is only partially due to the pandemic and is really the result of their inherently weak implementation capacities. And it does not help that there is no central direction and push from the President, who is more preoccupied with attacking his critics and preserving his loyalist base than effectively governing the country and rousing the entire government machinery to do its job. It also does not help that majority of our legislators are driven to the core by short-term political and selfish considerations and feel duty-bound to cover up Mr. Duterte’s failings.

The cash budgeting system was implemented in 2019 to instill greater fiscal discipline and accelerate government spending by limiting the validity of the national budget to one year, with some exceptions. With only a one-year time frame, agencies should be forced to obligate and disburse funds in a timely and efficient manner. But this objective has failed miserably, and now Congress has had to extend the validity of the 2021 budget to the following year.

It is very easy to initiate cosmetic reforms for political mileage without making sure the foundational elements for the success of a systems change exist. One such basic requirement is the managerial competence of those implementing public programs in the highest and middle-level echelons of the bureaucracy. But beyond such competence is the ability of managers to put primary importance on the strategic impact of their agencies’ spending on the overall welfare of their particular stakeholders, more than on the amount of money spent.

The national budget is in the trillions of pesos, but poverty and underdevelopment are as pervasive as ever. And then there is the biggest spoiler of effective governance—unabated and even syndicated corruption. Now, think of the level of competence and integrity in some of the key departments under Mr. Duterte, and one can guess why the cash budgeting system, while seemingly good on paper, cannot possibly deliver the desired development outcomes for the people.

Donato Soliven, paraquepa@yahoo.com