DBM defends overspending amid criticism from former officials
The Department of Budget and Management (DBM) has defended as justifiable the three consecutive years that the Marcos administration spent beyond its annual budget, as it claimed additional spending was covered by loans or excess revenue, not by increasing the fiscal deficit.
DBM Secretary Amenah Pangandaman told Manila Bulletin on Monday, Feb. 17, that the Marcos administration has been spending beyond its planned budget “primarily due to the additional releases charged against the unprogrammed appropriations (UA), special account in the general fund, increased interest payments, and tax expenditure fund (TEF) for customs duties and taxes.”
Pangandaman argued that these additional releases were covered either by loan proceeds or excess revenues, while releases for interest payments and TEF are made solely for booking or recording purposes.
As of end-2024, the government’s outstanding debt reached ₱16.05 trillion, marking a 9.8 percent or ₱1.44 trillion rise from ₱14.62 trillion in 2023.
Citing careful evaluation of requests for additional programs, the budget chief further asserted that the overshoot is a managed adjustment rather than an uncontrolled breach of the budget.
Extra funding is approved by the DBM only if the requesting agency has extra income to cover the added expenses, or the agency can adjust its spending. With this, the additional program will not widen the government’s budget deficit, the DBM claimed.
“The total cash requirements for these years were lower than the total annual expenditure program, ensuring that the annual program was not breached,” Pangandaman noted.
But former Budget secretary Florencio Abad told Manila Bulletin on Tuesday, Feb. 18, that the current administration is "not fiscally prudent and responsible."
"A lot of public funds are going to pork and patronage projects, displacing basic education, public health, nutrition and social welfare, and agriculture and strategic infrastructure investments," said Abad, who was the DBM chief during the administration of former President Benigno Aquino III.
"For example: flood control projects are now 22 percent of the Department of Public Works and Highways' (DPWH) budget and are bigger than the total budgets of the departments of Agriculture (DA) and of Agrarian Reform (DAR) combined," he said.
"Or take the case of the Department of Transportation: in the 2024 General Appropriations Bill (GAB), ₱157 billion of the DOTr's foreign-assisted projects (FAPs) were de-funded and used somewhere else," Abad added.
Meanwhile, GlobalSource Partners analyst and former Bangko Sentral ng Pilipinas (BSP) deputy governor Diwa Guinigundo said that “exceeding the budget will bloat the fiscal deficit and reduce the so-called fiscal space.”
Guinigundo noted that borrowing is the “only one quick way” to tackle the overspending of the government. Such a move, he said, would “further undermine fiscal sustainability.”
Beyond this, Guinigundo also said this would “increase both the debt-to-GDP [gross domestic product] ratio and the debt servicing (principal and interest) ratio.”
Debt, fund redirection concerns
Abad argued that the government can spend beyond the original budget if additional revenues, grants, or loan proceeds become available, without using funds allocated for the budget.
While he did not point to the deficit risks, he cited the country’s debt-to-GDP ratio as a concern. It has exceeded the International Monetary Fund’s (IMF) 60 percent threshold, reaching 60.7 percent at end-2024.
As per Abad, the problem was the redirection of billions from the Philippine Health Insurance Corp. (PhilHealth) and the Philippine Deposit Insurance Corp.'s (PDIC) deposit insurance fund, violating legal guidelines to finance unprogrammed spending. Some funds, he said, were redirected to lower-priority projects.
“If they had been prudent in using public funds, they shouldn’t have touched those. Now, they have used them for other purposes and must find additional funds to restore the President's priorities,” he asserted.
Abad, on the other hand, clarified that some government expenditures may appear excessive due to delayed project implementation, leading to carry-over spending from previous budgets.
Procurement delays push project costs into the next fiscal year, inflating current disbursements. He said it’s essential to distinguish between funds used for past projects and those allocated for the current year.
According to the former budget chief, these carry-over appropriations, along with unprogrammed funds, contribute to the perception of overspending.
While the budget overshoot is justifiable, Abad doubts that the government has excess revenues in 2024. “It’s very possible they have carryover expenditures, plus loan proceeds, which will be credited to the year they were budgeted, not the current year,” he said.
Latest data from the DBM showed that releases from last year’s budget hit ₱6.37 trillion, surpassing the ₱5.76-trillion programmed allotment by ₱610.9 billion, or 10.59 percent above-program.
In 2023, releases exceeded budget by ₱374.38 billion; in 2022 by ₱218.46 billion.
Last year, UA reached ₱531.37 billion. Major agencies with large shares include the DPWH's ₱244.74 billion, the DOTr’s ₱70.5 billion, the Department of Health’s (DOH) ₱52.89 billion, the Department of Education’s (DepEd) ₱33.1 billion, and the Department of Agriculture’s (DA) ₱30.74 billion.
In 2023, UA stood at ₱328.37 billion and amounted to ₱184.84 billion in 2022—the starting year of the Marcos administration.
The budget deficit stood at P1.18 trillion in the first 11 months last year, widening further by ₱65.73 billion or 5.92 percent from the gap recorded during the same period in 2023.