Unconstitutional

PHILIPPINES - In Brief 01 Jul 2014 by Romeo Bernardo
The Supreme Court today declared President Aquino's Disbursement Acceleration Fund (DAP) "partially" unconstitutional. The DAP is a mechanism adopted by the administration to boost economic growth by using unspent funds in the budget for other priority needs within the year. These funds amounted to 0.9% of GDP in 2011 and 0.6% of GDP in 2012. In particular, the high court objected to three practices dealing with (a) premature declaration of "savings" in the budget, (b) transfer of savings from the Executive to offices outside the Executive, and (c) funding programs that were not in the approved budget. It may be recalled that it was the accusation by an opposition Senator that the administration used DAP funds to influence the Senate's vote during the impeachment trial of the Supreme Court Chief Justice in 2012 that led to the many legal cases filed against the DAP. Knee-jerk calls for the impeachment of President Aquino have no chance of prospering in our view, with the Speaker of the House saying that the President acted in good faith and thus, any attempt will not muster enough votes. Rather we expect the Supreme Court decision, coming on the heels of the pork barrel list, to give rise to increased agitation for the resignation of President Aquino's Budget Secretary. Secretary Abad is a valuable "point guard" of the administration and a close adviser of the President and his departure can be expected to cripple the Executive, something that the opposition knows full well. Meanwhile, from an economic growth point of view, the question is what impact this loss of flexibility in managing the budget would have on government spending. Last year in response to the uproar,...

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