MANILA -- The Department of Budget and Management (DBM) pointed out that the previous administration committed no illegal budget spending but just lacked prudence in using the funds.

On Wednesday, DBM Undersecretary Mario Relampagos explained that all the releases of funds during former President Gloria Macapagal-Arroyo last six months in office underwent legal process and authorized by the Congress.

Updates on President Benigno Aquino III's presidency

But Relampagos pointed out that the preceding government lacked prudence in spending the national budget, leaving the country with only P100 billion to spend for the rest of the year.

"If you look at our deficit for the period January to June (2010), we overshot the target by P51 billion. And that was caused by two factors -- one there was revenue shortfall of P23 billion and overspent by P27 billion," he said.

Recently, President Benigno Aquino III, during his State of the Nation Address (Sona), criticized his predecessor for allegedly overspending the P1.54 national budget.

Relampagos explained that it is a standard procedure to frontload the budget in the first semester of the year to take advantage of the dry season to accommodate infrastructure projects of the government.

"Practically 75 percent of the budget of the agency is released at the start of the year. That is the standard procedure we have been doing. The 25 percent will be subject for evaluation," he said.

However, he pointed out that the past administration should have calibrated their spending depending on status of the economy.

"If you can have a good assessment of the growth of the economy and its impact on your revenue then prudence dictates that you should calibrate your spending so that it will not lead to excessive spending in the deficit target."

Relampagos also denied that President Aquino was misinformed about the remaining budget as what House Minority Leader Edcel Lagman (first district) alleged during his counter-Sona Tuesday.

He said the P100 billion remaining budget that the President noted during his Sona was the money Aquino could spend for the rest of the year.

Citing the data of the DBM, Relampagos said that unreleased budget actually amounted to P591.4 billion. But this could not be spent by the President since it has already a special allotment release order for debt service and internal revenue allotment.

Ethics on calamity budget

While the DBM admitted that there was nothing anomalous in the spending, Presidential spokesperson Edwin Lacierda stressed that allocating a big chunk of calamity budget in Pampanga's second district was still an issue of equity and propriety.

Lacierda said the entire issue on budget is not about legality of spending but the ethics on how the budget was spent.

"They were saying that they are good fiscal managers but it turns out that we got severe shortfall on collection, and overspending, and that it is the reason we incurred so much deficit. It is really fiscally irresponsible for them to do that."

He said he will not compel Arroyo, who now secured a seat in Congress, to explain budget spending in her term.

"I don't know if she would break from the mold that she has started from the very beginning after she refused to speak to media. And she has always let her spokespersons do their job. I have no position to dictate upon her what she has to do," added Lacierda.

On depleted budget

Meanwhile, an economist lauded the effort of President Aquino to bare the real status of the country's coffers in his Sona last Monday.

"Well, I think it's important that he brought to our attention the budget of the country since that is a pillar of macroeconomic management," Cid Terrosa, professor at the University of Asia and the Pacific (UA&P) told Sun.Star.

Bagong Alyansang Makabayan (Bayan), for its part, asked the President to make a categorical statement with regard to paying up of the country's burgeoning debt, which stands at P4.4 trillion as of April this year.

"I think it would have been good if he made a clear statement on automatic appropriations for debt servicing. Debt payments should be given less priority than social services," Renato Reyes, Bayan secretary-general, told Sun.Star.

Sonny Africa, research head of think-thank Ibon Foundation, said Aquino failed to outline concrete solutions in addressing the "fiscal crisis."

"It would have been nice to hear proposals regarding cutting debt service, making tax system less regressive by charging big corporations and wealth and cracking down on big corporate tax evaders," he told Sun.Star by phone.

Ibon also urged the new administration to address tax leakages amounting to P170 billion based on government estimates this year.

According to the group, if government recovers these potential revenues, it would translate to around P429 billion, more than enough to cover the government deficit target of P325 billion in 2010.

Finance Secretary Cesar Purisima said the deficit might widen to four percent of the country's Gross Domestic Products (GDP) in 2010 from 3.9 percent last year.

"Our fear is that greater budget for health, education and housing will not be forthcoming and that privatization and commercialization of government assets would be the main thrust," said Reyes.

Budget process

Under the Constitution, the President should submit to Congress the national budget proposal a month after he delivers his Sona.

The months from August to December are usually allotted for budget deliberations including its passage but experience has shown especially during the Arroyo administration that the budget was not passed on time.

Arroyo earlier made vetos in the budgets for 2005, 2007, 2008, and 2009, on top of her power to reenact the budget in 2002, 2004, and 2006 and early months of 2010.

For 2011, Aquino said that he would strictly enforce a zero-line budgeting scheme so that government funds will not be wasted under a tight fiscal position.

"This is the point of what we call the zero-based approach in our budget. What used to be the norm was every year, the budget merely gets re-enacted without plugging the holes," the President earlier said.

"Next month we will be submitting a budget that accurately identifies the problem and gives much attention on the right solution," he assured. (Jill Beltran/Virgil Lopez/Sunnex)