Saturday, May 17, 2014

Hooray for PNoy! (2)



07 November 2013

Relating my take on President Noynoy’s October 30 primetime TV message in last Tuesday’s column (PJ, November 5), I mentioned that I felt he did right in directly addressing to the citizens his views regarding the Pork Barrel and DAP issues, now being muddled in the ongoing public debate.

Identifying the opposing sides as the government together with his kababayans versus the officials allegedly involved in the Pork Barrel Scam, the President stressed that the real issue is that of the “crime of stealing” which those who are accused are trying hard to divert from the public’s attention.  And since they would have difficulty justifying their repeated use of the same fake NGOs, and not checking even once whether the funds served the proper beneficiaries, they resorted to throwing counter charges to muddle the issue, and get the public to view the administration as of the same kind as them.

I expressed the view that even if the President did not verbalize it, he was referring to the privileged speech of a senator who insinuated that “senator judges” were bribed with P50 million during the trial of the convicted former justice. The same senator later on, during interpellation, said that the P50 million was not a bribe.

 The “bribe” issue however snowballed, prompting the DBM to explain and counter the accusation and in the process cited the DAP as the mechanism used in speeding up the capital project expenses to improve the GDP growth which nosedived in 2011. This explanation however was not acceptable to certain sectors who questioned the DAP’s legality as well as the real intention of the administration in adopting such mechanism.

President Noynoy, in his TV message strongly rebuffed the claim of the accused scammers that they and the administration are of the same kind, and categorically stated that he and his team are not thieves, and instead are the ones going after thieves. He also continued to state that the DAP is not a Pork Barrel, and it is not stealing because the Constitution allows the use of such a process in spending funds wherein the government is enabled to spend savings, as well as new and additional revenues.

 Such savings used for the DAP came from the successful efforts made in some agencies to curb “connivance of some in bidding for contracts, in padding cost, overpricing and kickbacks…proper spending of … [the] budget…[and] … from good governance now seen in … [the] GOCCs.”

 Digressing a bit from the President’s message, the effort to eliminate leaks was already strongly emphasized through various controls, even in the very first budget – for 2011 - the Aquino administration submitted to Congress (see http://www.dbm .gov.ph/?page_id=632). And although these controls enabled some agencies (e.g. DPWH, DepEd, etc.) to achieve a certain level of success in generating savings, they also disrupted the rate at which the government’s capital projects spending (already reduced by 5.7% in 2011 vs. 2010) was implemented, and this  – together with the unrealized expectations from PPP - dampened the country’s GDP growth. 

This GDP downturn was felt during the first two quarters of 2011 (4.9% and 3.4% respectively for  the 1st and 2nd quarters vs. 7.6% for 2010), and this alerted the government to take action and implement remedial measures that would accelerate capital project spending and arrest the GDP’s downward slide. Such measure, I surmise, was found in Article VI, Section 25, Sub-section (5) of the 1987 Philippine Constitution, made operational by Sections 39 and 49, Book VI of E.O. No. 292, Administrative Code of 1987, and implemented as the DAP starting with the last semester of 2011. I say this because the quarterly GDP growth swung upwards to 3.6% and 3.7% during the 3rd and 4th quarters of 2011 (http://www.focus-economics.com/en/economy/charts/Philippines/GDP), and “according to the World Bank, DAP contributed 1.3 percentage points to our GDP growth in the fourth quarter of 2011.”

The government learned a lesson from 2011, so in their 2012 budget (presented to congress in July 26, 2011 – see http://www.gov.ph/2011/07/26/president-aquinos-2012-budget-message/) they increased the year’s Capital Outlay allocation by 25.4 %, and “In particular, Infrastructure and Other Capital Outlays by 33.1%” versus 2011. At the same time, provisions for the “…reduction of leakage, inducement of efficiencies and better selection of project priorities” were intensified.

Among these provisions are the use of zero based budgeting which would minimize “lump sum budgeting”, as well as  check “over budgeting” or the allocation of excessive funds by agencies which could end up unused, thereby generating savings, which can then be an item for the much abused practice of  “conversion.”  Also strengthened is the DBM’s oversight function on the realignment of funds across allotment classes within capital outlays, and over the agencies’ use of funds.

Going back to the President’s message, he emphasized that DAP funds were allocated only to “…projects that were within the proposed budget and [those] that had a clear benefit to the country.” Dormant funds of implementing government agencies (because of slow paced or unimplemented projects) are tapped and (together with funds from other sources) channeled to projects/programs of agencies that have been proven to be fast and efficient in their implementation.

Among the projects funded through the DAP were the DOST’s “Nationwide Operational Assessment of Hazards” which gives accurate and timely warnings during calamities, the “Training for Work Scholarship” of TESDA which provided vocational/technical education to 150,000 Filipinos (enabling 90,000 of them to get employed), projects that benefited the Air Force and the Police, construction of infrastructure for Mindanao and other parts of the country, restoring the GSIS benefits of the DepEd employees.

Another beneficial effect of the DAP, the President explained, is it’s being instrumental in the growth of the economy (in 2012 and continued to do so during the 1st semester of 2013) because through it the government was able to accelerate spending for essential capital projects.

 And why is this so? Well, my small research indicated that the 4th major component of GDP (which is the internationally recognized measure of the size of a country’s economy and indicator of its economic health), aside from “the country’s entire consumer spending”, “the sum of all the country’s business spending on capital”, and “the country’s total net exports” is the “sum of government spending.” So the increase in government spending, particularly  on infrastructure and capital projects, automatically increases GDP.

The improved GDP, thanks to DAP, helped our country earn new respect from the international financial community which no longer regard it as the “Sick Man of Asia” and has instead been afforded us with new labels such as “Asia’s Fastest Growing Economy”, “Rising Tiger”, and “Brightest Spark.” The improved GDP, thanks to DAP, also served as a major factor in our country being granted an investment grade rating by the 3 most reputable investment rating agencies in the world, which to my mind is an excellent indicator that the DAP funds have been used diligently by those who were tasked to administer it.

Due to space constraints, the continuation and final part of this article will follow as part 3 in the next column. Meanwhile, comments/reactions will be appreciated and can be sent through this writer’s email (sl3.mekaniko @gmail.com) or this writer’s blog (http://mekaniko-sl3.blogspot.com)

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