Although expenditures are still surging due to accounts payable, prompting budget and finance officials to impose tighter controls on disbursements, documents from the Department of Finance (DOF) revealed that based on the fourth quarter fiscal outlook, the Bureau of Internal Revenue (BIR) – the country’s main source of revenue – is expected to recoup its shortfalls in September to reach its full-year target of P424 billion.
On the other hand, the papers showed that the over-performance of the Bureau of Customs during the first three quarters would be eroded in the fourth quarter, with the BOC only expected to collect its original target of P100 billion.
Finally, the Bureau of Treasury is projected to collect a total of P43 billion, about P13 billion more than the original projected collection.
"The likely scenario for the revenue program is a high of P602 billion against a program of P584 billion," the document said.
The upper scenario, according to the DOF, left room for additional disbursement of only P18 billion to keep the 2003 deficit target intact at P202 billion. As of August, however, disbursements have already exceeded the program by P11 billion, indicating that expenditures were catching up mainly due to accounts payable.
"In order to put a lid on disbursements, especially constructive cash disbursements, the DBCC (Development Budget Coordinating Committee) has proposed the issuance of a circular requiring agencies to seek clearance before they draw down from creditors," the DOF said.
The clearance would require checking whether the disbursement was covered by a special allotment release order and included in the agency cash program. This measure, according to the DOF, would affect mainly loan releases of foreign-assisted projects.
According to the DOF, the Department of Budget and Management said the strict requirement would apply to fourth quarter disbursements only.
The national budget has been under tight controls this year, especially disbursements for foreign-assisted projects that fall under the constructive cash items in the budget.
Previously unmonitored, constructive cash disbursements have caused the under-estimation of expenditures in the first quarter that prompted the Arroyo administration to investigate unpredictable surges in spending.
The constructive cash items in the budget exceeded the programmed amount by at least P3 billion during the first quarter of the year, representing the only unprogrammed item in the budget.
Constructive cash represents the amount that government draws down from foreign loans or aids in the form of equipment, materials and supply. The foreign donor pays the supplier directly so that the foreign assistance is delivered in kind to the respective agency.
Although no cash actually leaves the national coffers, the expenditure is reflected as a cash drawdown from active foreign loans or aid. Items listed as constructive cash however, have been unpredictable.
When government agencies receive the equipment or the material and supplies from the suppliers which have been earlier paid in cash by the foreign donor, said Budget Secretary Emilia Boncodin, they do not always report the receipt of such item.
"They have no incentive to report and the agencies often take so long to do the paperwork," Boncodin said. "So when they do come in and when we have to reconcile our reckoning, suddenly we have billions worth of constructive cash that sometimes represent equipment that were delivered two years ago or a year ago."
In 2002, Boncodin said constructive cash items were programmed to reach only P12 billion but the actual full-year figure was twice this peg at P24 billion. "We could not figure out when the items came in and when they were recorded. They end up being lumped together and suddenly we have overshot our target by 100 percent," she said.