Sequestering "unused" funds, a case of bad fiscal management

PHILIPPINES - In Brief 09 Sep 2024 by Diwa Guinigundo
It is easy to abstract the issue surrounding the Philippines’ Department of Finance circular directing all government owned and controlled corporations (GOCCs) including the Philippine Health Insurance Corporation (PhilHealth) to remit what it called excess funds back to the Bureau of the Treasury. Bottomline is to allow the government to fund unprogrammed appropriations. With the fiscal deficit continuing to be substantial at over P1 trillion every year since the pandemic, and the option to impose new or higher taxes ruled out, the only option available is for the Philippine Government to borrow more from both global and domestic capital markets. The problem is that the country’s public debt at P15.69 trillion is already inching towards 61 percent. With many priority projects kicked out of the programmed appropriations and onto unprogrammed appropriations, but with higher allocations for the Office of the President, Senate, House of Representatives, Department of Public Works and Highways, the Government is now scraping the bottom of the financing barrel. For PhilHealth, the fundamental issue is whether the total P89.9 billion funds to be sequestered really constitute excess or unused funds. When decent health care in the Philippines remains inaccessible for many Filipinos, even the P500 billion in PhilHealth’s reserve funds are short of its requirements to deliver on the law on universal health care. Why, it is no less than unconscionable for PhilHealth leadership, then and now, to even talk about profitable operation and reserve funds. Reserve funds are supposed to be used to increase the benefits or to reduce member contributions pursuant to the law. It is also an ...

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