A national budget has three parts

"A national budget has three parts"

The chamber of Congress authorized by the Constitution to initiate money measures, the House of Representatives, is now on its third month of deliberations on the proposed national budget – the general appropriations bill – for 2021. As in years past, what is happening in that chamber is a combination of a meeting of Cosa Nostra chiefs, a magicians’ ball and an economics school lecture on public finance.

Without exception, all national-budget proposals and all General Appropriations Act are made up of three parts, to wit: 1) the pork barrel; 2) the non-essential items and 3) the expenditures that the economy really needs for its growth and development.

Intelligent estimates are offered from time to time by entities, including international financial institutions, as to what percentage of this country’s national budget the pork barrel and the non-essential items account for. What is certain is that considerably less than 100 percent – perhaps as little as 70 percent – of every national budget peso gets to finance this country’s economic development. Seen in this light, a figure like P4.37 trillion – the size of the proposed national budget for 2021 – becomes far less impressive, Is the 30-percent estimate for pork barrel and non-essentials is close to the mark, a national budget of P3 trillion will suffice for the nation’s 2021 needs. This translates to a potential P1.3-trillion savings for the government in 2021. What the Philippine economy can do with P1.3 trillion!

At the start of this year’s national budget-making process, some legislators were heard to assure the nation that the 2021 budget would be pork-barrel free for as long as representatives and senators are not totally barred from participating in the project decision-making process. Several years ago, the chief of staff of a representative told me, in all candor, that his boss got a 20-percent cut from all projects – especially public works projects in his district. The governor and the mayor also received their cuts, he added. By the time a district project is ready for implementation, only around 60 percent of every peso of appropriation is left for purchases of highway and bridge materials, school equipment, medicine, fertilizer, etc.

The hijacking of scarce public funds is very bad, but what is arguably worse is the enrichment of public officials to a point where they can buy future elections and perpetuate themselves in power. It goes without saying that only through overpricing and bid-rigging can the pork barrel payments be made possible.

So, a pork-free 2021 GAA? Don’t hold your breath.

Every proposed national budget fails to undergo a thorough necessity test. The result is that man an expenditure item gets into the GAA that would not if a more rigorous test were applied to all expenditure proposals. Non-essential expenses need not be tainted with corruption, but they nonetheless represent non-optimal uses of public funds.

In the end, the people of this country are left with a national budget that is only around 70-percent rational. Much positive change has to take place before it is possible to speak of truly sound national budget making.