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UNEDITED (Part 1)

Q: Good morning, sir.

LACIERDA: Magandang umaga. Much has been said about the contra SONA of congressman
Lagman. So, we have invited Undersecretary Mario Relampagos of the Department of Budget
and Management to explain the budget process and after that we would be able to fill your
questions.

RELAMPAGOS: Thank you, sir. Good morning everyone.

Let me just start a little background on the spending process in government.


Before we can spend a single centavo we have to get authorization from Congress and that’s
what we call appropriations. Whenever we have that appropriations and for this year there’s a …
of P1.540 Trillion that’s for 2010. Now, based on that authorization given by Congress, DBM
now issues also allocation or authority to agencies to spend and that’s what we call ABM or the
agency budget matrix or what you always hear the SARO (Special Allocation Release Order).
So, that’s just an authorization for the agencies to spend. So, para bang bibigya sila ng authority
to spend for their programs and projects. Pagtanggap nila ng SARO at saka ABM they can now
enter into contracts. Whether for services or purchase of goods and services or infrastructure
projects.

And then, when they are ready to pay what they have committed, what they have
obligated, what they have entered into contracts we will release what we call the NCA (Notice of
Cash Allocation). And that is telling the agency, Mr. Agency, there is now an amount in your
bank account let’s say Landbank or DBP to pay whatever obligations your agency has entered
into. So, that’s the payment. So, from here you can see right away three concepts of budget;
appropriations, the allocation and the NCA.
So, that’s the context of our discussion today. Now, there were questions on how
the President can still make room for the priorities that he has set out for the rest of the year.
There are still available appropriations at hand. So, there were two figures that you were seeing
so far. One, is June 30 figure that we use in the SONA of the President. And another figure May
31 as presented by Congressman Lagman. Because when we prepared the SONA we said, as of
June 30, we have released P949 billion when to opt the P1.5 trillion budget for the year.
Whereas, in the case of the Congressman he was referring to what released in or on May 31, a
month before that. So out of the total budget of P1.5 trillion the unreleased portion is P591.4
billion or against the figures cited by the Honorable Congressman of P664.3 billion.

Now, on the right part of the chart it shows to you how the P100 billion was
arrived at. So, out of the P591.4 billion balances that consists of P313 billion for automatic
appropriations. And these automatic appropriations includes interest payments, the internal
revenue allotments that by law mandated these will be released and be paid. So, that is not easily
within the flexibility of the budget. The balance of P591.4 after deducting automatic
appropriations is we have P278 billion for spending for government agencies/departments as
well as some special purpose funds.
Now, if you look at P278 billion the composition there are the following. Some
P20 billion for what we call for later release to the government agencies because not all of the
budget of the agencies are released at the start of the year. Practically, 75% of their budget of the
agency is released at the start of the year. That’s the standard procedure we have been doing.
And this 25% is subject to evaluation of their performance to the first semester and we decide
with it to release it or not depending on the performance.

The other big component there is P62 billion, the balance of Congressional
initiatives. If you recall the Congress raised the expenditure program by P64 billion and of that
there is … billion left of that congressional initiatives. And the others for TS, MOE and CO. I
mean that’s for the salary, for operating expenses of the departments and agencies and some
capital outlay. Now, the P100 billion was taken out of the balances for later release and for …
that need clearance or that will come up to P100 billion.

So, this P100 billion, the President may declare savings and he can use that to
augment the priority programs that he has laid out for the year and coming years. So, that’s how
we arrived at the P100 billion.

Q: Usec. Relampagos, sir, can you just clarify iyong report na P949.2 billion iyong
releases. Tapos meron pa sir, data from the Treasury saying P788 billion. So, ano ba iyong
difference nung dalawa, sir?

RELAMPAGOS: If you look at the first chart we have, we have the SARO, the authorities
and the NCA the disbursements. What the Treasury is talking about is the cash to pay the
obligations. And what the balance of P591 billion is the authority to spend or the SARO. That’s
the difference for the two concepts.

Q: Sir, what if the previous administration says that, we needed to release the
moneys, what’s wrong with that? They have been appropriated. Can you cite anything,
anomalies about the releases?

RELAMPAGOS: Legally, there is none. It may just be that if you notice we have to frontload
the releases on the first semester of the year. And that is part of the program to release it, we just
take advantage of the weather especially for the infrastructure projects. So, there is no illegal
because everything is within the authority granted by Congress to the Executive branch to spend
for the year.

Q: It’s just that, there is no more money left for the President to use for his own
programs?

RELAMPAGOS: Shown here there is still available of P100.

Q: Pero sir, di ba maliit na siya. Ibig sabihin iyong previous administration kasi hindi
sila nakapag-increase ng revenue. What’s wrong with it ba na maliit na lang iyong remaining?
Kasi if that’s all that you’ve got sabi niyo wala namang anomalies dun sa paggastos nila ng first
half of the year. So, ano iyong naging problema sa previous administration? Maybe that’s what
you have to clarify. Kasi sinasabi nila, ano ba ang pagkakamali namin, appropriated naman ng
Congress lahat ng ginastos.

RELAMPAGOS: Well, if you look at our deficit for the period January to June, we overshot
the target by P51 billion. And that is because – cause by two factors: one, there was a revenue
shortfall of twenty three which would have signaled to slow down our spending or releases. But
however, if you look at our spending for the same period we exceeded by P27 billion.

Q: Sir, malinaw sinabi nyo po, legally there is nothing anomalous dun sa mga naging
– iyong sa budget. So, sir, ano po iyong mga sinasabi ni President Aquino sa SONA niya na
parang pinapalabas niya na nilimas daw po ng Arroyo administration iyong budget o iyong pera?

RELAMPAGOS: It is the pattern of spending that in the first semester of the year the budget
was released. And if you look at the balances P591 but then if you scrutinize the composition of
P591, P313 of that cannot be tasked (?) because these are automatically appropriated especially
for debt service and for internal revenue allotment. So, there is an imbalance of the pattern in the
spending of the government.

Q: Sir, parang may nabasa po ako sa comment ni Representative Danilo Suarez,


kilalang kaalyado ni dating Pangulong Arroyo na sinasabi niyang iyong gobyerno daw po ay
parang inihahalintulad sa isang tindahan na kung sakali man iyong P100 billion na yan kung
naliliitan si Pangulong Aquino raw, meron pa siyang paraan para i-increase iyong pera na yan.
Kasi sa ngayon hindi pa naman tapos daw iyong pangongolekta ng revenue ng gobyerno. So,
may mga paraan pa para-i-increase iyong P100 billion na yun kung naghahanap siya ng mga
paraan para magastusan iyong mga programa niya. Ano po ang masasabi niyo dun?

RELAMPAGOS: Outside of what Congress has authorized the Executive branch to spend
there is no other source except a supplemental budget. But if you look at our fiscal position as
described earlier the fiscal – the deficit level for the first semester was exceeded by P51 billion.
Is that appropriate or proper this time to seek for supplemental budget from Congress? It will just
worsen the fiscal situation unless that new supplemental appropriation bill is supported by new
revenue sources. That is deficit neutral otherwise it is not advisable to ask for supplemental
budget.

Q: Sir, kahapon po may sinabi si Secretary Abad iyong tungkol sa Congressional


Initiatives P62.1 billion daw yun na maaaring nagalaw. So, inimbestigahan nila ngayon, pwede
po bang paki-expound iyong tungkol dun?

RELAMPAGOS: Actually, the total Congressional Initiative is P67 billion but P5 billion of
that was released to what we call the (unclear) group, the Constitutional Group. Iyong COA, the
Ombudsman, these are constitutional bodies, autonomous group. By law, their appropriations to
be released in full and incidentally part of their budget were also increased by Congress which
we consider as Congressional Initiatives. So, P67 minus P5 you are left with P62 billion.

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