[In This Economy] How Marcos Jr. bastardized the national budget
On November 14, I had the privilege of attending and reacting to the 23rd Jaime V. Ongpin Annual Memorial Lecture at the Ateneo Professional Schools in Rockwell Center, Makati.
This year’s keynote speaker is none other than Zy-za Nadine Suzara, a budget expert and a good friend of mine. She used to work at the Department of Budget and Management during the term of the late former president Noynoy Aquino, and under former budget secretary Florencio “Butch” Abad.
Zy-za was invited to discuss the recent controversies surrounding PhilHealth (Philippine Health Insurance Corp.), specifically the transfer of nearly P90 billion of its “surplus” funds at the behest of the Department of Finance or DOF (and as allowed in the 2024 General Appropriations Act or national budget).
As I wrote in a previous column, the DOF in April 2024 ordered PhilHealth to remit P89.9 billion to the national treasury. In the succeeding months, PhilHealth did remit P60 billion (P20 billion in May, P10 billion in August, and P30 billion in October).
Recently, in end-October, the Supreme Court issued a temporary restraining order that blocks the transfer of the last tranche of P29.9 billion, scheduled in November.
Zy-za pointed out that this “cash sweep” of PhilHealth, to begin with, is violative of two laws — the Sin Tax Law and the Universal Health Care Act — which earmark part of government revenues to PhilHealth’s subsidies (remember that PhilHealth subsidizes part of Filipinos’ hospitalization fees and other health-related expenses).
But the stronger point Zy-za was making is that the PhilHealth cash sweep is but the tip of a massive iceberg, a “glimpse into larger problems.”
Wrong priorities
We have to ask: why is the Marcos Jr. government desperate to get the “surpluses” out of government corporations? (I discovered that in May, at the same time that PhilHealth remitted P20 billion, another government corporation, the Philippine Deposit Insurance Corp. or PDIC remitted an even larger amount of P30 billion.)
The reason is that they need money to fund important projects which they relegated to the national budget’s so-called “unprogrammed appropriations” (budget items that can’t be spent on unless the government has extra funds).
In yet another column, I provided a breakdown of these unprogrammed appropriations, showing an extreme jump in 2023 and 2024 — the first two budgets of the Marcos Jr. administration.
What do unprogrammed appropriations include? In 2023, a large part of it was “support to foreign-assisted projects,” or big-ticket infrastructure projects partly funded through foreign loans. These comprise projects like the Metro Manila Subway, MRT Line 4 (EDSA-Ortigas to Taytay, Rizal), the Cebu Bus Rapid Transit, PNR South Long Haul, and the Davao Public Transport Modernization Project.
Then in 2024, apart from foreign-funded projects, a large part of unprogrammed appropriations included “support for infrastructure projects and social programs.”
In short, the Marcos administration de-prioritized many flagship infrastructure projects partly funded by foreign loans. Without excess funds (such as those from PhilHealth or other government corporations), these projects will be stalled. Worse, the government pays a commitment fee for foreign-funded projects even if they’re deprioritized in the budget. What that means is that we’re still shelling out money for projects that will be stalled.
If you think that’s stupid and counterproductive — well, it is.
While President Ferdinand Marcos Jr. likes to boast about his “Build Better More” (BBM) infrastructure program, in reality, many of those projects will come to a halt because they’ve been relegated to the national budget’s unprogrammed appropriations.
Other things that were put in the unprogrammed appropriations were “special purpose funds,” like the Armed Forces of the Philippines Modernization Program, the Universal Access to Quality Tertiary Education Act (which mandates free tuition in state and local universities), the expansion of cold storage facilities (crucial for agriculture), social pensions for indigent senior citizens, and the National Data Privacy Program.
These, too, will be unfunded sans excess funds from government corporations.
Pork fiesta
What, then, did Congress (headed by Speaker Martin Romualdez, the President’s cousin) prioritize in the national budget? Pork. Horrendous amounts of it.
It’s so bad that in the past three budgets (2022, 2023, and 2024), Zy-za estimates that nearly 20% or a fifth of the national budget (specifically the programmed appropriations or those with “guaranteed cash cover”) was allocated for legislators’ pork.
I feel like a statement like that should be dominating headlines — but it somehow doesn’t.
Recall that in 2013 the Supreme Court banned pork barrel allocations, which used to be a fixed amount per lawmaker. But in doing so, they created a loophole that is now shamelessly exploited by lawmakers: pork can still exist so long as it is pre-identified and baked into the budget of national government agencies, such as the Department of Public Works and Highways (DPWH) and the Department of Transportation (DOTr).
Zy-za’s data showed that in the past three budgets, a full fifth of the DPWH’s budget went to flood control projects, while almost half (44%) went to “local roads, bridges, and multi-purpose halls.” Meanwhile, an increasing portion of the Department of Agriculture’s budget went to farm-to-market roads.
Lawmakers are also bloating the budget for financial assistance programs, broadly called “ayuda” or help.
Naturally, the prioritization of local infrastructure projects, as well as ayuda (“hard” and “soft” projects, respectively), might be linked to incumbent lawmakers’ bids for the 2025 elections.
By banning the fixed pork allocations in 2013, and allowing them to be baked into agencies’ budgets, the rules of the games essentially changed: now, congressional leaders (notably the Speaker of the House) can have tight control over which lawmakers’ pork projects are funded, and where these pork funds are lodged.
Every lawmaker wishing to get a piece of the pie will therefore need to be close to the Speaker, curry favors, or do the Speakers’ bidding. Otherwise, they will just get scraps.
I pointed out in a later chat with Zy-za and Prof. Cielo Magno of UPSE that this seems to be an unintended consequence of the pork ban in 2013. In a way, then, things are worse now. Pork didn’t go away; it just morphed into something else that’s more hidden now (what with closed-door meetings of the bicameral conference committee) and is more prone to patronage than ever before.
Data also show that apart from ballooning pork, the maintenance and operating expenses of the House of Representatives itself have also blown up since 2022, at least via-à-vis the budget proposed in the National Expenditure Program. Note that this particular budget is managed by the House Committee on Accounts, now chaired by Representative Yedda Romualdez, the Speakers’ wife…
Let’s moderate their greed
To summarize, Zy-za said that there’s a noticeable “erosion of fiscal discipline” under the Marcos Jr. administration, and “the budget has become a political instrument rather than a tool for development.”
Who’s to blame? One can point to, say, Speaker Romualdez, or Budget Secretary Amenah Pangandaman, who should be the first to raise a howl with the bastardization of the budget, but didn’t. Ultimately, though, command responsibility rests with President Marcos Jr., who approved the bastardized budget at the end of the day.
That’s why we ought to be wary that Marcos, on October 29, wrote the Senate to hasten the approval of the 2025 budget (after the House railroaded it as early as September 25). Less talk and debates, more opportunities for insertions and corruption. I invite all Filipinos to help scrutinize the budget more than ever before. We need to safeguard the public coffers and — to borrow a phrase from the NBN-ZTE scandal nearly 17 years ago — moderate politicians’ greed. – Rappler.com
JC Punongbayan, PhD is an assistant professor at the UP School of Economics and the author of False Nostalgia: The Marcos “Golden Age” Myths and How to Debunk Them. In 2024, he received The Outstanding Young Men (TOYM) Award for economics. Follow him on Instagram (@jcpunongbayan) and Usapang Econ Podcast.