Managing unprogrammed appropriations

Every year, Congress deliberates on the national government (NG) budget and passes it into law to authorize the use of public funds for specific purposes. This is called an appropriation. There are two types of appropriations in the NG budget—the programmed and unprogrammed.

Items listed in the programmed appropriations have definite sources of funding and can be implemented readily. Conversely, unprogrammed appropriations (UA) do not have definite funding sources. They are on standby and are released only when the NG collects excess revenues against targets, revenues from new taxes or sale of government assets, or approved loans for foreign-assisted projects.

Similar to a family budget, the programmed appropriations would be the equivalent of basic needs such as food, clothing, shelter, education, medicines, water, and electricity. The UAs would be nonbasic items such as extra appliances, cars, and foreign travel.

In the 2024 General Appropriations Act, Congress decided to increase the UAs from P281.9 billion, as originally submitted by the executive branch, to P731.4 billion, an increase of 159 percent or P449.5 billion.

Congress then authorized the finance secretary to collect unused/idle fund balances of government-owned and -controlled corporations (GOCCs) including the P89.9 billion of the Philippine Health Insurance Corp. and the P108.9 billion of the Philippine Deposit Insurance Corp. to fund UAs. Priority will be given to those that were previously programmed, such as government counterpart funds for foreign-assisted loans, payment for right-of-way and infrastructure projects, among others.

Ballooning unprogrammed appropriations. While the existence of idle/unused funds in some government agencies and GOCCs is an issue that needs to be addressed, a more concerning issue is the ballooning amount of UAs in the past two years.

In 2023 and 2024, UAs reached P807.2 billion and P731.4 billion, or 15 percent and 13 percent, respectively, of the NG budget. This is more than double the 5-percent average from 2010-2022.

In the case of this year’s budget, other key priority items that were added under the UAs include a portion of funds to upgrade health facilities and train health professionals, pay government personnel benefits, and construct national housing for the poor. This means delayed implementation of vital programs since there is no definite funding source.

We agree that a reasonable amount of UAs is necessary to cover expenses arising from unforeseen events since the NG budget is prepared one year ahead of time. However, moving crucial social and infrastructure projects from programmed to unprogrammed is not only questionable but also undermines the government’s commitment to inclusive development and fiscal prudence.

Recommendations. Accordingly, we would like to share a few recommendations to help prevent this issue from happening in the future.

The President should convene the Legislative-Executive Development Advisory Council (Ledac) as a platform to allow the executive and legislative branches to agree on the priority programs that should strictly remain programmed and budget items that will be placed under unprogrammed. This could be done for the proposed 2025 NG budget before the deliberation in the bicameral conference committee. The Ledac can be convened for succeeding years before the NG budget is formally sent to Congress.

Enhance transparency and accountability in the budget process, particularly in monitoring congressional insertions or amendments in the budget. In this regard, opening the bicameral conference committee to the public through livestreaming and publication of minutes will significantly enhance the transparency and accountability of the budgeting process.

Stricter monitoring of spending through the joint congressional oversight committee on public expenditures. This committee, in coordination with the Department of Budget and Management, should be more proactive in monitoring the utilization of public funds by government agencies and GOCCs. With billions of pesos of idle funds from GOCCs currently being remitted to the national treasury, the public has the right to know whether these funds are being spent judiciously.

Assist government agencies and GOCCs that have weak absorptive capacity. The Development Budget Coordination Committee should regularly monitor spending behavior across government, particularly those that are historically weak in utilizing its budget, to prevent the existence of idle funds. Allotted public funds must always be spent to translate into tangible programs and projects that improve the welfare of Filipinos.

Conclusion. Given all this, it is necessary to unburden the finance secretary from scrutinizing financial statements of each GOCC in search of idle funds just to finance the rising UAs. It would be more efficient and practical for the finance secretary to focus on his primary role of increasing collection efficiency from existing taxes, recommending necessary new tax measures, and ensuring that we are within prudent international standards in managing our fiscal deficit and debt. After all, sound fiscal management is vital in attaining sustained economic growth and progress.

Gary B. Teves served as finance secretary under the Arroyo administration.