News Analysis: Budget outlay stirs controversy, rocks Aquino gov't

MANILA, Philippines (Xinhua) - The release of millions of pesos in public funds by the government of President Benigno Aquino III has stirred a national controversy that could impact the country's economic growth and even destabilize the remaining two years of the Aquino administration.

On Friday, amid the public outcry over the release of the funds, Budget Secretary Florencio Abad, the main architect of the so- called disbursement acceleration program (DAP), offered to resign but his resignation was immediately rejected by Aquino.

Aquino said that he was standing by his budget secretary. "I cannot accept the notion that doing right by our people is wrong," Aquino said.

Abad is an old political ally of the president and both are ranking officials of the ruling Liberal Party.

Earlier, the country's Supreme Court declared as unconstitutional the pooling of savings from the executive department for distribution to government agencies for projects that have not been provided with funding in the regular national budget.

The pool became the DAP, a stimulus package introduced in 2011 to accelerate economic growth through faster government spending, particularly for infrastructure projects.

Under the Philippine Constitution, only the legislature can appropriate public funds which the executive department would spend for government projects.

During the early part of his administration, Aquino was criticized by multilateral financial institutions for not spending enough to rev up the economy and provide jobs for the people.

Malacanang, the seat of the Philippine government, has insisted that the DAP was spent properly and that proof of its success was the high 7.2 percent GDP growth of the Philippines last year.

Abad said that through the DAP the government has spent some P150 billion ($3.5 billion) for various projects from 2011 to 2013. "The DAP as a fiscal stimulus measure has achieved its purpose," he said.

In claiming good faith, Abad said that the reform intervention ushered in a "regime of transparency, efficiency and accountability in public spending," adding that this has benefited the economy and the Filipinos.

But government critics argued that the DAP, aside from being unconstitutional, was used by the government in its massive campaign to oust then Supreme Court Justice Renato Corona by doling out huge amounts of DAP funds for lawmakers who voted for Corona's ouster last year.

The rejection by the president of Abad's resignation has also triggered harsher criticisms against Aquino from the political opposition.

Representative Toby Tiangco said that by absolving Abad, Aquino has shown "utter disrespect" for the Supreme Court.

"The President is duty-bound to uphold and defend the Constitution. By rejecting Abad's resignation and by harboring a constitutional offender, the President's act is a direct insult to the Supreme Court," Tiangco said.

Representative Terry Ridon of the Kabataan (Youth) Party said that this only showed that Aquino was unrepentant about the DAP despite the ruling of the Supreme Court and the public clamor.

"This gives us further resolve to impeach the President for betrayal of public trust, including cronyism and favoritism," Ridon said.

Two impeachment complaints have already been filed at the House of Representatives against Aquino. But leaders of the legislature said that the impeachment complaint would not prosper because the president has still the support of majority of the legislators who are members of his political party.

Aquino's six-year term ends in 2016 or two years from now. When he assumed the presidency in 2010, he vowed to revive the ailing Philippine economy and restore peace and stability in the country.

For the past two years, the Philippine economy showed remarkable growth, second only to China among the emerging economies in the region. But lately, some multilateral financial institutions have revised downward their growth forecasts for the Philippines this year.

One of the reasons is that there has been a noticeable slackening of the release of public funds for infrastructure projects as a result of the Supreme Court's ruling on the DAP.

They are saying that the Philippines may not even be able to achieve its low-end growth forecast of 6.5 percent in 2014. The government's growth forecast for this year is from 6.5 percent to 7.5 percent.