Press Release
July 13, 2011

Billions in PCSO, Pagcor 'pork barrels' should be parked in the GAA

Discretionary funds tucked in the earnings of Philippine Charity Sweepstakes Office (PCSO) and Philippine Amusement and Gaming Corp. (Pagcor) should be chanelled into the national budget to make its disbursement transparent and liberate it from abuse.

Sen. Ralph G. Recto yesterday said the 'pork barrel' or discretionary funds of two state-run agencies are practically made into a personal kitty of those running it without clear accountability.

"The scandals plaguing the PCSO and Pagcor over allegations of fund misuse could have been avoided if the discretionary funds were written into the General Appropriations Act (GAA) or the national budget," Recto, Senate chair of the government corporations and public enterprises panel, said.

"What you see is what you get. No more add-ons or off-budget items. The funds are parked in the GAA, not in the cash drawers for everyone to dip into," he added.

The senator said discretionary funds in PCSO should be tapped to augment the funds of Philippine Health Insurance Corp. (PhilHealth) to finally provide a universal health care coverage for all Filipinos, which is estimated to reach 100 million in a couple of years.

As of June 2010, PhilHealth has a total of 21.65 million registered members, the bulk of which comes from the private sector.

Recto noted that PCSO has some P9 billion to P10 billion in discretionary funds at its annual disposal, which represents 30 percent of the agency income that is set aside for "charity" programs. Such discretionary funds will grow more to P30 billion by 2016.

Recto said that instead of funneling the funds to its various state hospital beneficiaries, PCSO's "charity funds" could be directly infused to PhilHealth since members go to these hospitals to seek treatment anyway.

"Kung dati pumipila pa sa PCSO at pagkatapos pipila pa ulit sa PGH, ngayon dapat isang pilahan na lang. Diretso nasa hospital kung san gamit ang PhilHealth nila," Recto said.

The senator said Pagcor's discretionary funds could be channeled to boost the government's budget on educational reforms such as the ambitious K+12 program that adds more years in elementary and secondary education.

Recto said similarly, the proceeds from the Malampaya gas project, which varies from P100 billion to P200 billion depending on which agency is keeping tabs, should also be included in the GAA to arrest its "disappearing acts."

"I have no problem if Malampaya shares can be used in reducing universal charge to bring down power rates or use it for modernizing the AFP," Recto, who is also chair of the Senate ways and means panel and senior Senate finance vice-chairman, said.

He said the same should also apply to income-generating GOCCs and government financial institutions (GFIs) wherein their annual remitted dividends should be ultimately factored into the annual budget.

"This way, the President can appropriate it in the budget," he said.

He said GOCCs-GFIs like Development Bank of the Philippines, Bangko Sentral ng Pilipinas, LandBank, Philippine National Oil Corp. (PNOC), Metropolitan Waterworks and Sewerage System (MWSS) and the National Development Corp. (NDC) should provide annual projections of their dividends to government, which would be made part of the budget.

At present, GOCCs/GFIs keep their revenues but remit half of these in the form of dividends pursuant to a law. Last year, the 14 monitored GOCCs including PNOC, NDC and MWSS remitted P25 billion worth of dividends.

He also said the formal 'debut' of the funds in Budget of Expenditures and Sourcing of Funds (BESF) of the national budget, would make it easier for the President to manage it and would effectively expand government's revenue profile.

Recto said such new 'budget entries' would also improve the government's revenue to GDP (gross domestic product) ratio, which currently stands at 13 percent.

Revenue-to-GDP ratio is the value of the government's revenue collection--both tax and non-tax--relative to the country's overall output or GDP. A high ratio indicates strong ability of the government to increase revenue collection while a low ratio reflects government inefficiency in revenue collection.

The ratio is used by credit-rating firms as a gauge of a government's ability to pay maturing debts and meet other financial obligations.

"Effectively, we are increasing revenues and reducing deficit without raising new taxes," Recto stressed.

"Instead of waiting two or three years for a credit upgrade, you get a better credit rating by doing this," he added.

As currently practiced, state budget framers do not include the incomes of PCSO, Pagcor, proceeds from Malampaya and GFIs dividends when crafting the national budget which gives a not so faithful snapshot of the true budget landscape.

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