INTEREST PAYMENTS FOR DEBT SERVICE OVERSTATED IN 2011 BUDGET
 

MANILA, SEPTEMBER 8, 2010 (STAR) By Christina Mendez - Interest payments for debt service in the budget program for next year may have been overstated by as much as P7.7 billion, according to Senate ways and means committee chairman Ralph Recto.

With the budget department’s shielding of debt servicing from congressional review, the excess interest payment cannot be rechanneled to social services.

Recto said the government has set aside P357 billion of the P1.645-trillion national budget for interest payments alone. Of the amount, P120.8 billion has been earmarked for interest payment for foreign obligations.

He said the P120.8 billion is premised on a P47:$1 exchange rate, which is “a high assumption, in the light of emerging consensus among banks that the peso could strengthen to at least P43 to a dollar next year.”

Recto said Standard Chartered Bank has forecast the peso to reach P43 against the US dollar by the end of 2011 while HSBC and Goldman Sachs are more bullish, predicting the peso to surge to P42.50 and P42, respectively.

Recto said using the P45 to a dollar reference rate would reduce interest payment allocation from P120.8 billion to P115.7 billion or a difference of P5 billion, while a P44:$1 benchmark would further whittle interest payment to P113.2 billions, which would free up P7.7 billion for “productive expenditures.”

Recto said the savings may be used for improving public hospitals “or can be added to the P15 billion seed fund for Public-Private Partnership in infrastructure.”

He said the funds should be used for vital projects “especially infrastructure whose 2011 level of P147 billion is P17.5 billion lower than this year’s P164 billion program.”

In a statement, Recto surmised that interest payments for next year have been “deliberately bloated to create a buffer in the event tax collection falls.”

‘Cloak of infallibility’

He said automatic appropriations are beyond Congress scrutiny because they “are presumed to be 100-percent correct and thus cannot be changed.

“Automatic appropriations are now clothed with the cloak of infallibility. The new dictum it seems is that automatic appropriations are automatically correct that they are beyond scrutiny and possible correction by Congress,” Recto said.

The Aquino administration has submitted P933.5-billion worth of expenditures for 2011 as against the ceiling of P1.64 trillion.

The Palace has argued that it does not need congressional authorization to spend the balance of P711 billion in automatic appropriations items.

Aside from debt service, other expenditures deemed automatically appropriated are the Internal Revenue Allotment of P287 billion, and retirement and life insurance premiums (RLIP) of government employees (P22.4 billion).

Recto said he could not accept “a presumption of correctness of the P22.4 billion in the proposed RLIP considering that there is no reliable database on the names and number of government employees.”

Recto said the decision not to submit debt service for congressional approval was spurred by worries that lawmakers would reduce the amount and convert the “savings” into pork, Recto said.

“If the worry of the executive branch is that interest payments will be carved up into small pork slabs, then my suggestion is that not a single centavo of funds transferred from interest payments will end up in legislators’ allocations,” he said.

Recto said the executive should have “the sole monopoly in doing the realignment.”

Recto said the changes can be effected by a simple message of the President to Congress “stating that the amount for next year’s interest payment as indicated in the proposed budget has been reduced by, say, P7 billion, and this, in turn, has been added to the sector of his choice.”

GMA overshot 2009 travel budget by P696 million By Michael Punongbayan (The Philippine Star) Updated September 08, 2010 12:00 AM Comments (80) View comments

MANILA, Philippines - Former President Gloria Macapagal-Arroyo and those who accompanied her on local and foreign trips overshot her travel budget for 2009 by over P696 million, a Commission on Audit (COA) report bared yesterday.

The Office of the President spent almost P1 billion, or 284 percent more than what was appropriated under Republic Act 9524.

Of the amount, P848.1 million was used for foreign travels including trips to Vancouver in Canada and Washington and New York in the US on July 29, 2009 to Aug. 5, 2009, which alone incurred expenses totaling P69.6 million.

The COA report said travel was among the “highly financed” programs of the Office of the President in 2009 considering that the budget for this under the General Appropriations Act (GAA) was only P244.6 million.

The COA report said that the Office of the President’s actual disbursements for Arroyo and her party’s traveling expenses reached P940,643,778.23, including unliquidated cash advances.

The report showed that the excess amount used for the local and foreign trips was sourced from augmentation from the General and Administration and Support Services Program of Malacañang and from the contingent fund which is, after all, allowed under the 2009 GAA.

State auditors said Arroyo and her party’s travel expenses last year used up to 29 percent of the total funds received from the Department of Budget and Management (DBM) in the amount of P3,230,801,921.74.

Entourage galore

The COA report said those who accompanied the President on a foreign visit usually reached 60 people on average, which leads to the observation that “trimming the members of the delegation may greatly reduce the total travel expenses.”

State auditors said members of the party accompanying a President on foreign visits may be classified into non-paying and paying members and that the latter were required to refund or return to the Office of the President their personal traveling expenses.

“We noted, however, that most of the paying members do not reimburse the OP funds spent for their travel. The total collections received from the refunds/payments of the paying members of the delegation were not reflected as a deduction to the Traveling Expenses account,” COA said.

“Verification revealed that OP does not set up a receivable account upon sending bills to paying members, thus collection could not be properly monitored. Notwithstanding the authorized augmentation for travel expenses, some of the urgent and mandatory expenditures have been imperiled,” the audit report reads.

Costly travel

Under the category of “Unsettled suspensions and disallowances on foreign Presidential visits/travels,” the COA report revealed how Malacañang actually spent P848.1 million for Arroyo’s foreign travels.

Records show that the biggest chunk amounting to P422,105,968.55 was used for “Charter Lease,” which includes lease of aircraft for the various foreign visits of the President.

The cost of the charter lease included the cost of fuel, oil and other maintenance of the aircraft, landing fees, hangar fees, dispatch cost and other ground handling cost of the aircraft, salaries, flight pay and per diem for the crew and selected ground personnel during the flight and during the stay on the ground at intermediate stations.

The COA report said P75,873,910.14 was spent for hotel expenses; P70,709,692.30 for gratuities; P63,774,644.99 for transportation; P56,436,105.14 for airfare; and P28,993,409.98 for the per diem of the members of the delegation.

The rest of the amount was used for other expenses like meals (P14,406,459.66); supplies (P2,437,629.65); rental (P6,676,607.65); honorarium (P38,776.00); communication (P1,099,720.57); translator’s fees (P1,293,928.28); representation (P7,165,054.44); and miscellaneous (P902,641.34).

Justification

The COA recommended in the same report that the Executive Secretary minimize the use of contingent fund for travel purposes, although such is allowed as one of its purposes.

State auditors said the official who approves travel orders should adopt measures on the selection of members in the delegation to the President’s foreign travels with the mission that will be proportionate to the different activities of the government.

It also called on the chief of the finance office to set up a billing system to handle the billings on the paying members of the delegation.

Lastly, the COA report advised the chief accountant to adjust the traveling expenses account for the payment of the paying members of the delegation.

In its comments, the Office of the President said the traveling expenses for 2009 were indeed sourced from the regular MOOE (Maintenance and Other Operating Expenses) of the Office of the President and from the contingent fund.

Malacañang explained that augmentation is authorized under the General Provision of the GAA which states that “agencies may augment any item of expenditures within MOOE, except confidential and intelligence funds, from savings in other items of MOOE without prior approval of the DBM.”

“Rest assured that all members of the delegation during foreign presidential travels were all covered with approved travel authorities. The participation of all members of the delegation was essential to the visit and had official involvement in the activities of the places visited,” the Office of the President said.


Chief News Editor: Sol Jose Vanzi

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