DBM taking steps to keep agencies from gaming fund utilization rates

THE BUDGET department said it will propose rules in the 2022 General Appropriations Act to deter the “abuse” of fund utilization metrics by government agencies in order to arrive at a more accurate picture of how appropriations are used.

At a Senate finance committee hearing, Senators had raised the issue of high budget obligation rates being presented during budget deliberations which do not reflect actual utilization, but rather the transfer of funds from various offices without assurance of utilization.

“We have seen how agencies try to go around the system. The only way we can probably rectify it is in the next couple of years, similar to the Bayanihan law, it was provided that transfers of funds will ultimately mean reversion if at the end of the year it has not been utilized,” Undersecretary Tina Rose Marie L. Canda said during the hearing Wednesday.

“Some agencies have (adopted the) practice of… (making) interagency transfers within the department,” she added. “They transfer from one agency to the next within the department, so it’s also considered obligated.”

Minority Leader Franklin M. Drilon said a system needs to be adopted “that will make the utilization better monitored.”

“We want the economy to get better, and it won’t get better as you said if these are just paper transfers or paper releases,” Senator Juan Edgardo M. Angara, who chairs the committee, told the hearing.

Between 2014 and 2020, Mr. Drilon said, the Philippine International Trading Corp. (PITC), the government company that specializes in international procurement, took in P50.7 billion in fund transfers from agencies. Fund transfers to the budget department’s procurement service amounted to P91.8 billion.

“These were all considered obligated, but if you look at the aging of these transfers, you will discover that these are being resorted to improve the performance of the agencies by showing that they have obligated what is allocated to them, but in truth, these are transferred,” Mr. Drilon added during the hearing.

Director Joshua S. Laure said that as of Wednesday, the interagency fund transfer balance has fallen to P26.1 billion.

Mr. Drilon also noted about P31.7 billion in funds parked with PITC, and P31.6 billion with the budget department’s procurement service.

The increasing reliance on procurement services, Ms. Canda said, was the reason behind the high levels of parked funds.

“We have veered away from the very mandate of the procurement service,” said Ms. Canda. “The procurement service is supposed to be for common-use supplies and equipment. Through years of not implementing this and expanding PS as a procurement agency for others, the parked funds increased.”

“If we prohibit procurement agencies and allow other agencies to undertake their own procurement in so far as their big-ticket items are concerned, then the growth of these parked funds will definitely not be that huge,” she added. — Alyssa Nicole O. Tan

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