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Financing the Bangsamoro

This column is written as a response to the misinformation being spread about the so-called P75-billion “pork barrel” for the Bangsamoro. This is based on a study commissioned last year by the Mindanao program of Oxfam in the Philippines and prepared by a team from the Ateneo School of Government. I led that team composed of legal and finance experts, all of us sharing the conviction that a vibrant and genuinely autonomous and empowered Bangsamoro is key to a peaceful Mindanao. Such a Bangsamoro must also be well financed and have fiscal autonomy for it to succeed.

The Comprehensive Agreement on the Bangsamoro (CAB) introduced a number of innovative provisions to enhance self-governance of the Bangsamoro, including the provision that the Central Government shall provide a block grant to the Bangsamoro (the Bangsamoro Block Grant or BBG). The BBG is an amount that the Central Government will provide annually for the operation of the Bangsamoro Government. The formula for arriving at the amount, and the system of automatic appropriation is provided in the Bangsamoro Basic Law, consistent with the terms of the CAB. Under this formula, as summarized in a Rappler story by Angela Casauay, the Bangsamoro autonomous regional government will receive a “block grant” of 4% of the 60% share of the national government in the total internal revenue allotment (IRA), i.e. 2.4% of the total revenue collection. This amount is separate amount from the internal revenue allotment (IRA) for local government units (LGUs).

According to Casauay’s report, the total support for the Bangsamoro on its first year would be around P35 billion, with the BBG amounting to about P27 billion complemented by 7 billion special development fund and a P1 billion transition fund. The P75 billion that has been mentioned includes the IRA for local governments within the Bangsamoro is not accurate. Overall, I actually think the Bangsamoro is getting less than what it needs to operate but the amount provided does give it a fighting chance especially because it is accompanied by the fiscal autonomy I discuss below.

It must be noted that the BBG takes the form of an appropriation from Congress; therefore it is subject to the guidelines for appropriations under Section 25, Article VI of the Constitution. Authority for automatic appropriation in the Basic Law means that the BBG will not be included in the annual General Appropriations Act, but will be in the “existing” appropriations component of the national budget, meaning it will be continuing and automatically appropriated.

One question to be asked is whether the BBG is a lump-sum appropriation that is prohibited under the Constitution. This was an issue that the Supreme Court discussed at length when it struck down the Priority Development Assistance Fund (PDAF). With respect to the BBG, however, the following characteristics may remove it from the ambit of unconstitutionality:  (a) Congress, as a whole, approves the block grant formula that sets the amount of the block grant – the actual amount may vary every year, but the formula is fixed – therefore, the total amount is determinable by automatic application of the formula; (b) The purpose of the block grant is set forth in the BBL, which provides the specific powers and functions for which public funds will be spent, and while the Bangsamoro Assembly has the discretion to allocate the block grant according to need, the BBL should set the boundaries of such discretion; (c)The block grant will be subject to the audit of the Commission of Audit (COA).

With respect to auditing the funds it receives, Article IX of the Annex on Revenue Generation and Wealth Sharing provides that the Bangsamoro shall have an independent audit body, which shall have auditing responsibility over public funds utilized by the Bangsamoro. This is provided for in the BBL. The Bangsamoro auditing body shall be however without prejudice to the power, authority and duty of the national Commission on Audit (COA) to examine, audit and settle all accounts pertaining to the revenues and the use of funds and property owned and held in trust by any government instrumentality including GOCCs.

Under the 1987 Constitution, the COA shall have the power, authority, and duty to examine, audit, and settle all accounts pertaining to the revenue and receipts of, and expenditures or uses of funds and property any subdivision of the government, which shall include the Bangsamoro. In essence, the COA acts as the external auditor of the Bangsamoro public funds. However, the power of COA to conduct examinations and audits is not exclusive and may be concurrent with private auditors. Thus, parallel to the COA, the Bangsamoro auditing body, which shall be created by the Bangsamoro Basic Law, may operate as an internal auditor for the Bangsamoro funds, for its own internal purposes (which may include internal controls, checks and balances, evaluation purposes).

In order to meet the minimum demands of the 1987 Constitution, the following must however be provided: (a) The BBL must not, in any guise whatsoever, attempt to exempt the Bangsamoro from the jurisdiction of the COA; (b) The COA must continue to have the exclusive authority to define the scope of its audit and examination, establish the techniques and methods required therefor, and promulgate accounting and auditing rules and regulations, including those for the prevention and disallowance of irregular, unnecessary, excessive, extravagant, or unconscionable expenditures or uses of government funds and properties; (c) The COA must continue to have the exclusive authority to decide on disallowances of unnecessary government expenditures. Other government agencies and their officials, as well as private auditors engaged by them, cannot in any way intrude into this exclusive function of the COA; and, (d) As the constitutionally mandated auditor of all government agencies, the COA’s findings and conclusions necessarily prevail over those of private auditors, at least insofar as government agencies and officials are concerned. These safeguards should be incorporated into the BBL.

Whenever I give a talk about the Bangsamoro in Mindanao cities like Davao, Cagayan de Oro, and Zamboanga – I point out that it is to the benefit of these cities, all outside the Bangsamoro, that the new autonomous region is a success. Who will not want to have peaceful and prosperous neighbors? Surely that will redound to the benefit of our cities and we too will profit from that. But first the Bangsamoro must be created and financially supported. Definitely, it will be a good investment for Mindanao and for the country.

 

Facebook page: Dean Tony La Vina Twitter: tonylav

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