The real reason for DAP

Posted: July 13, 2014 in Uncategorized

A lot has been said about the Disbursement Acceleration Program especially after the Supreme Court came out with its unanimous decision declaring acts and programs under DAP and NBC 541 as unconstitutional.

A lot has also been said about the good intentions of DAP.

But what was the real intent of the DAP? Was it really aimed at stimulating the economy? Think-tank Ibon believes DAP was economically irrational and disputes that claim that DAP was a stimulus program that had a significant impact on the economy.

So if DAP wasn’t all that, what was it for? Why was it introduced by the Aquino government?

From documents submitted by the DBM to the Supreme Court, it would appear that economic stimulus was never really the intent of DAP. Centralizing and controlling funds were. It was never about the economy. It was all about giving the president control and discretion over billions of pesos, using this as his own slush fund to influence other branches of government and to serve as a well of corruption for those in power.

Why do we say this?

Two DBM memoranda issued on October 12, 2011 and December 12, 2011 indicate that the practice of centralizing unreleased appropriations began as early as November 25, 2010 or barely five months into the term of President Benigno Aquino III.

According to the two memos, the President declared as “savings” some P21.544 billion in unreleased appropriations for “slow moving projects and programs for discontinuance” in November 2010. The so-called “savings” were centralized under the office the President and were cleared for use for “other priority projects.” This happened BEFORE there was even a DAP.

The defenders of DAP will argue that such a move was necessary then because there were presumably questionable projects that were part of Arroyo’s enacted national budget. Remember that Aquino took office on June 30, 2010, after the budget had already been enacted.

However, the unconstitutional practice of declaring as “savings” the “unreleased appropriations”, as well as unprogrammed funds, would continue until 2011 and 2012, even under the budget supposedly scrutinized by Aquino and formulated under the ‘daang matuwid’.

So if the presumption was that there were no more anomalous projects under this regime, why not release appropriations for projects? What was the government’s definition of “slow-moving projects” that funds would not be released? Why allow the withholding of funds?

Meanwhile, since billions were not being released for government projects, there were already reports that the government was under-spending. Presidential spokesman Edwin Lacierda even claims that the slowdown in GDP growth was already being felt during the last quarter of 2010 and way into the start of 2011.

When Aquino declared as savings P21.544 billion in unreleased appropriations from 2010, he did not immediately spend the amount even if he approved its use for “priority projects”.

He waited until he could centralize more funds at which time the slowdown would be more pronounced or felt.

On October 2011, Aquino and Abad placed more funds under the control and discretion of the president. This included P12.336 billion from the 2010 unprogrammed funds, P30 billion in unreleased personal services appropriations for 2011, and P482 million in unreleased appropriations for “slow moving” and discontinued projects for 2011. Also placed under presidential control were P7.7 billion for realignment within agencies.

The P30 billion unreleased personal services appropriations could have come from the failure to hire now personnel or the streamlining or firing of government employees. Certain funds for the benefits or bonuses of government workers normally given at the end of the year were centralized and declared as savings.

Towards last quarter of the year, the slowdown and underspending were becoming more apparent and so government thought it was the perfect time to introduce a “stimulus program”.  Nearly a year of government underspending became a convenient justification for DAP

By October 2011 when the DAP was first introduced, Aquino already had discretion over P72.1 billion in DAP funds which he could appropriate for projects not found in the national budget and for augmentation of special purpose funds like the PDAF of lawmakers. The practice would continue for the next two fiscal years as savings would be declared midyear, for projects that were not completed or finally discontinued.

On December 21, 2011, Aquino approved additional projects worth P13.3 billion.

On June 27, 2012, Aquino signed and approved another Abad memorandum seeking the “omnibus authority to consolidate savings/unutilized balances and their realignment. The approved projects amounted to P32 billion, including P2 billion for Tarlac roadworks and another P8.3 billion “various local projects”. Aquino also approved the withdrawal of unobligated balances of NGA’s for “slow moving projects”, declaring them savings and authorizing their realignment.

On September 5, 2012, Aquino signed and approved Abad’s September 4, 2012 memorandum seeking the “release of funds for other priority projects and expenditures of government.” Projects for this period amounted to nearly P6 billion.

On December 21, 2012, Aquino approved the release of P33.3 billion in DAP funds, once again chargeable against “available savings and the 2012 Unprogrammed Fund.” This again included the item “other various local projects” this time amounting to P2.79 billion.

In May 2013, Aquino approved more DAP releases amounting to P10 billion. This included again an item called “various local projects” amounting to P4.6 billion, the biggest item for the period.

Lastly, on September 25, 2013, Aquino approved the release of P10.534 billion in funds for the Task Force Pablo Rehabilitation plan, supposedly for livelihood, resttlement, infrastructure and social services.

From November 2010 to September 2013, Aquino had wide discretion over P177 billion, which included funding projects not identified in the General Appropriations Act as well as funding projects outside of the Executive.

It was only on January 29, 2014 that the Solicitor General and the DBM secretary declared before the Supreme Court tha the DAP was already terminated at the end of 2013, supposedly because the goals of stimulating the economy have already been met. The announcement that DAP was terminated was aimed at declaring moot the petitions filed before the SC.

However, the SolGen and the DBM maintained that the “authority” to declare and pool savings and use such savings for priority projects identified by the President still remained. This simply meant that while there was no more DAP, the program can be resurrected in the future, under different circumstances, but with the same end of centralizing funds under the control of the President and spending these funds as presidential pork. One wonders, had the SC not declared the DAP unconstitutional, a new incarnation would take place just before the 2016 elections, when the President would need to secure the victory of his LP llies.

The real reason for DAP was fund control. All along the chief executive wanted to have discretion over billions of pesos of funds. DAP was no doubt the president’s special all-purpose fund that could be allotted based on the sole discretion of the chief executive. With the DAP, the president usurped the congressional power of appropriation.

The DAP did not meet its own criteria for disbursing projects; namely  their multiplier impact on the economy and infrastructure development, their beneficial effect on the poor, their translation into disbursements. Instead, DAP would end up in projects not at all beneficial to the poor, and with little impact on economic growth. In the worst cases, DAP would end up lining the pockets of corrupt officials, as can be seen in the DAP funds that went to bogus Napoles NGO’s.

There can be no good faith if there was an intent violate the law, all because of one’s bid to centralize funds and usurp the power of a co-equal branch of government.

Whenever the President would speak on DAP, such as on July 14 and in his upcoming SONA on July  28, let us remember one thing: DAP is presidential pork. In order to enlarge this pork fund, government took away funds from other projects and from its own employees from 2010 to 2013. In order to fulfill DAP’s role as pork, it was dispensed as a bribe or incentive to lawmakers and was used to grant favors for local officials and served as a well of corruption for those in power.

The authors and implementors of DAP thus have to be made accountable. The President has to be made accountable. On Wednesday, we will file an impeachment complaint.  ###





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