World Bank pushes 5% cap after unprogrammed funds ballooned in past budgets

World Bank division director Zafer Mustafaoglu says the Philippines should keep unprogrammed funds 'at the minimum viable level' and clearly identify their purpose to preserve budget credibility

AT A GLANCE

• The World Bank recommends the Philippines to limit unprogrammed appropriations (UA) to 5% of the General Appropriations Act to enhance budget scrutiny.
• UA has significantly increased in recent years, averaging P769 billion, which undermines the government's budget discipline and allows discretionary spending to bypass regular processes.
• The proposed 2027 budget reflects a decrease in UA to P111.984 billion, the lowest since 1991, as more expenditures are moved to programmed appropriations for better oversight.

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MANILA, Philippines – The World Bank (WB) is suggesting the Philippines to put tighter limits on unprogrammed appropriations (UA) after finding that the supposedly standby funds had grown large enough in previous budgets to weaken the government’s normal process for scrutinizing spending.

In its Philippines Public Finance Review, the WB suggested capping UA at 5% of the General Appropriations Act (GAA), with releases dependent on triggers certified by the Development Budget Coordination Committee. It said the measure would help close a channel through which discretionary spending has been able to “bypass the budget’s own discipline.” 

“Our suggestion is to cap it around 5%,” World Bank senior economist Jaffar Al Rikabi said during the report’s launch on Monday, September 28. “The idea is both a cap and clear criteria on the use of UAs.”

The World Bank’s concern and proposal stems from how bloated these funds have became in recent years. UA averaged P769 billion in 2023 and 2024, equivalent to around 12% to 15% of the respective annual budgets, with some of the money going to infrastructure and social programs that could have been placed in the regular budget from the outset, according to the lender.

“The resources actually spendable in any year are therefore materially larger than what the GAA presents, and spending outside the GAA framework is not subject to the same appraisal, prioritization, and authorization standards as programmed expenditure,” the World Bank said in its report.

The proposed 2027 budget does show a turnaround from the much larger UA amounts of previous years. The Department of Budget and Management (DBM) proposed only P111.984 billion in UA, equivalent to about 1.5% of the P7.2-trillion total expenditure program, the lowest ratio since 1991. DBM said more expenditures were moved into programmed appropriations so they would undergo regular budget scrutiny.

Still, World Bank Division director for the Philippines, Malaysia, and Brunei Zafer Mustafaoglu said that there are legitimate reasons to keep standby funding.

“In any country, you would need some unprogrammed funds for unexpected changes” Mustafaoglu said. “But it’s important to keep it at the minimum viable level and also determine the usage so that it is known for which purposes this would be used, for budget credibility.” – Rappler.com