Iin a previous column, we argued that the Budget Code of the Philippines, although necessary, will not be enough if it simply includes procedures without strengthening the parameters that protect the public fund.
That raises a more difficult question: Why are those safeguards weak in the first place?
The answer lies not in technological design, but in the political economy of the budget.
BEYOND THE TECHNOCRATIC PERSPECTIVE
Budgeting is often presented as a technical and administrative function – the systematic process of planning, allocating, disbursing, and managing public resources.
That view is incomplete.
In fact, budgeting is where policy meets politics. This is where national priorities are translated into numbers, and where those numbers are shaped by negotiation, pressure, and competing interests.
Those who work within the program understand this well.
The challenge is not just to design better laws. It is working within a system where the allocation of limited public resources is heavily entrenched in political relationships, regional concerns, economic interests, and, in many cases, a long-term culture of patronage.
BUDGET POLICY
At the heart of this political economy is a fundamental asymmetry.
Budgetary institutions – especially officials – are expected to apply the rules, maintain discipline, and ensure that public funds are used in accordance with policy and law.
But they operate in an environment where elected officials often have a large influence on the allocation of resources.
This influence is not always clear. It is used through negotiation, anticipation, and full understanding that budgets are also tools of political support.
In this area, experts face structural difficulties. They can design systems. They can make laws. But they cannot, by themselves, eliminate political pressures.
The result is predictable.
Bureaucracy retreats to what it cannot control – the legal, administrative, and technical dimensions of the budget – while the broader political arena is largely given to politicians.
This is not avoidance. It is life.
That is why experts prefer to see strictness in the rules that are included in the law, rather than being issued by them.
IF THE RULES ARE NOT ENOUGH
This dynamic helps explain the emerging pattern of Philippine public finances.
Well-designed rules are in place. Procedures are being developed. Modernized systems. And yet, over time, the same risks reappear – especially in the area of budget implementation, where discretion is too great and oversight too weak.
This is not because the laws are poorly designed.
It is because the laws themselves, cannot balance power.
Without political support, even the most well-designed guard lines can be bent, stretched, or crossed in practice.
WHEN THE CHANGE IS EFFECTIVE
However, there are times when change is successful.
One of the clear examples is the Sin Tax Reform Act of 2012.
For decades, reforming the excise tax on tobacco and alcohol proved politically difficult. Prices remained low, incomes were low, and the public health costs of smoking continued to rise.
The reform that was finally passed had two clear goals: to reduce smoking – especially among the poor and young – and to generate revenue to support the expansion of public health, including universal health care and investment in health facilities, equipment, and services.
Both of these goals were achieved.
But the success of the revolution was not driven by technological innovation alone. It required political ownership.
President Benigno Aquino III made the reforms a priority and made it clear that they would be protected. That signal changed the terms of communication.
It allowed managers to take strong positions, knowing they were supported at a higher level. It restructured negotiations with lawmakers, making it clear that while accommodation was possible, the core objectives were negotiable.
The result was not only higher incomes and better health outcomes. These reforms have also increased the area of local government finances, increased the share of revenues provided to tobacco-growing states, and increased the accessibility of health services throughout the country.
The lesson is clear: experts and authorities have absolutely no means to counter political pressures and advance development goals. When supported by clear political leadership, discretion can be limited, oversight can be asserted, and institutional rules can be more powerful than they otherwise would be.
LIMITATIONS ON CODE ENFORCEMENT
This brings us back to the proposed Budget Code.
Code integration can strengthen systems. It can clarify rules and improve consistency. But that does not, in itself, change the underlying political dynamics.
The code can define how the budget should work. It will not ensure that those with the power to shape outcomes will choose to operate within those rules.
That is a political question.
NEWS REQUIRES POWER — AND GRIP
The most important monitoring of the budget is not found in manuals or programs.
They are found in institutions – and in the willingness of those who lead them to exercise restraint.
This includes the President, who has the authority to impose restrictions, enforce discipline, and, if necessary, use constitutional tools such as the veto power and, where appropriate, the prospect of re-budgeting to maintain the integrity of the process.
It also includes Congress, whose funding powers carry with it the responsibility of careful oversight and ensuring that appropriated funds are used for their intended purposes.
Without this alignment, even well-made changes will be difficult.
With it, even imperfect systems can be made to work.
THE REAL PLAN
The barrier to budget reform in the Philippines is not a lack of ideas. It is the gap between what is technically sound and what political actors are willing to support.
The Budgeting Code can help close that gap – but only if it is understood for what it is: Not a reform in itself, but part of a larger process that should involve both institutions and benefits.
In the next column, we turn to what real budget reform requires – not just in design, but in practice.
Florencio B. Abad was once the chairman of the Committee on Appropriations of the House of Representatives and the secretary of the Department of Budget and Management. Currently, he is a professor of Praxis at the Ateneo School of Government and a qualified senior lecturer at the De La Salle Tañada-Diokno School of Law.
