Abolishing unprogrammed appropriations

The practice of including unprogrammed appropriation (UA) in the National Expenditure Program, often modified and reflected in the General Appropriations Act (GAA), has been a feature of the budget system in the last four decades. From 2010 to 2022, its share to total budget ranged from 2 percent in 2016 to 2018 to 8.4 percent in 2012. In 2023, the percentage share noticeably jumped to 11.2 percent (P588.1 billion), of which P378.2 billion (64 percent) was for loan proceeds from foreign-assisted projects (FAPs) of the Department of Transportation (DOTr). Availability of these loan proceeds was deemed highly uncertain in light of historical proof of its absorptive capacity.

In the 2024 GAA, Congress decided to increase UA from P281.9 billion originally submitted by the executive branch to P731.4 billion (an increase of 159 percent), of which P178.8 billion or 24.4 percent was for FAPs. In the 2025 General Appropriation Bill submitted by Congress to the President, UA was pegged at P531.7 billion. However, in response to reported anomalies in the legislative process, particularly in the reconciled House and Senate version of the GAB, the President vetoed P168.5 billion or 31.7 percent, thereby leaving P363.2 billion as unprogrammed. After the veto, the share of UA to total budget (P6.326 trillion) came down to 5.74 percent from 8.4 percent before the veto. But the share of FAPs (P112.1 billion) to unprogrammed appropriation increased from 21.1 percent before to 30.9 percent after the veto.

In response to public calls for an explanation of the significant increase of UA in the 2023 GAA, the Department of Budget and Management (DBM) issued an official statement pointing out that it was due mainly to the amount allocated to DOTr. Excluding that amount, the share of UA to total budget would only be 3.4 percent.

FAPs are funded through Official Development Assistance loans or grants, supplemented by local counterpart funds in most cases. Loan proceeds need covering appropriation, along with local currency counterparts for both loans and grants. Grant proceeds that are off-budget, i.e. directly paid to suppliers, are “deemed” automatically appropriated. Release of funds is triggered upon request of executing agencies based on progress or final billing submitted by contractors. Payment could be direct from the ODA source or by the implementing agency. If the former, statements of loan disbursements are provided to the Bureau of Treasury which serve as basis for DBM to issue the notice of Non-Cash Availment Authority .

In the House-approved version of the 2026 GAB, support to FAPs is again under UA. This would require the implementing agency to comply with a myriad of requirements to obtain Special Allotment Release Order and Notice of Cash Allocation for fund release. Among others, the implementing agency must submit the following to DBM: (a) Special budget request, (b) copy of loan agreement, (c) certification of loan effectivity from DOF, (d) project profile, (e) budget execution plan.

FAPs obviously rank high in the spending priorities of government as they involve commitment with foreign governments and multilateral sources of financing such as the World Bank and Asian Development Bank. Moreover, they are subjected to detailed feasibility studies to confirm their technical and economic feasibility, followed by a rigorous evaluation at the technical and cabinet level for approval of the Economic Development Council, chaired by the President. Their expeditious implementation should be facilitated rather than restricted to prevent cost overruns and delays in the realization of their expected economic and social benefits. In that light, a legitimate question arises: why would and should appropriation of funds for implementation of FAPs be on a standby basis under UA as if they rank low in the spending priorities of government?

If programmed appropriations for a line department, e.g., Department of Public Works and Highways, need to be increased for whatever reason based on the collective wisdom of Congress, transfer of budget items from PA to UA should instead be sourced from lower priority projects.

Funding of FAPs on standby basis partly allowed congressional insertion of projects in the GAA by “unprogramming” their appropriation. Indeed, FAPs should be “programmed” under PA. Considering the reported anomalies associated with UA arising mainly from its “pork barrel” character, it is unfortunate that UA is still included in the House approved GAB. That the Senate is considering to abolish it in the 2026 GAA is a welcome development. As a complementary measure, the Senate should also consider declaring ODA loan funds automatically appropriated as they are readily available subject to the implementing agency’s absorptive capacity and their use is an international commitment. Doing so would go a long way in restoring trust and confidence of the public in the budget system and that economics more than politics drives critically important public investment decisions of government.

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Romeo A. Reyes is a former senior economist, United Nations Development Programme (UNDP), and Assistant Secretary, National Economic and Development Authority (Neda), now Department of Economy, Planning, and Development (DepDev).