PM 231 – Public Fiscal Administration

Final Exam

Submitted to:

Jocelyn C. Cuaresma

Submitted by:

Aldwin P. Catada
QUESTION #1. Public accountability is a raging issue in the Philippines, especially from the
political, fiscal and human rights perspective. We look at public accountability from a fiscal
perspective. More specifically, we are interested in the generation and utilization of financial
resources, and the impact of these on the accomplishment of the government's goals for the
economy and society. Public accountability does not begin with the Commission on Audit
(COA) conducting  the external audit. Instead, it begins at the instance when government
plans and policies are formulated and followed through until resources are allocated,
budgeted and spent. News and Senate investigations on DEPED laptop procurement,
PhilHealth and DOH health supply procurement may be considered manifestations of the lack
of fiscal accountability of concerned government agencies. 
 
Your question (divided into three manageable chunks):
a)     What is fiscal accountability?

The word fiscal refers to fiscal policies which are instruments used by the government as
guidance for their operations and activities to meet their objectives. Such fiscal policies are
closely associated with other policy instruments of the government such as monetary and
price policy, trade, investment, and wage (Cuaresma, 1996). On the other hand, the word
accountability generally means that public officers and employees should create a trusted
relationship between the public sector and the public. Accountability is a way to demonstrate
the public sector’s competence, reliability, and honesty to the people. In all, fiscal
accountability is all about the public sector’s ability to be responsible in managing and
showing transparency in the implementation of fiscal policies (Office of the Auditor-General
New Zealand, 2022)

.
b)    From a fiscal administration perspective, explain the difficulty of some government
agencies  (you may give an example of an agency) to comply with policies on accountability
in budgeting, procurement and/or spending. In other words, why do you think certain
government agencies suffer from accountability deficit?

The reason for the difficulty to comply with policies on accountability is the culture of
corruption and patronage that spreads through political and governance institutions (ANSA,
2021). An example of an agency with an accountability deficit is the PhilHealth 15-B scam
because Government-Owned and Controlled Corporations (GOCC) high officers have the
power to control appointments to office or have the right to privileges and can’t be controlled
by democratically elected representatives.

c)     How can the COA help raise the level of fiscal accountability at the agency level? 

The Commission on Audit can help raise the level of fiscal accountability by using its power,
authority, and function to examine, audit, and settle all accounts pertaining to the revenue and
receipts of, and expenditures or uses of funds and property, owned or held by government
entities, agencies, including government-owned or controlled corporations (DBM, 2022). In
other words, if the government will allow COA to do its mandated function, fiscal
accountability will be enforced at all levels of government as all their financial activities will
be monitored and reviewed by the COA and may include in the monitoring process, the
checking of government agency’s outputs and quality of service to tell the discrepancy in the
management of agency’s funds and its resources and inputs.
QUESTION #2. The Maharlika Sovereign Wealth Fund (SWF) has been proposed by
Philippine economic managers. The MSWF shall be a state investment fund that will allow
the state to engage in global investment. As proposed, the MSWF will be funded from
pension funds of the SSS, GSIS, and assets of state-owned banks such as the LBP and DBP. 
As of late, the SSS and GSIS were removed as possible sources of fund.
 
Your question (divided into 3 manageable chunks):
a)     What is your opinion on the creation of the MSWF? Where should funds come from?

The MSWF is a good investment vehicle and economic driver. It should push through as long
as the economic team will be accountable and will promise the public that they will safeguard
the public’s money and ensure that this will never be used for corruption or any other illegal
activities. The economic team shall maintain transparency in managing the MSWF to make
people not worry about their hard-earned money invested for future economic growth. If
MSWF will succeed as planned, the public’s money will have the best absolute investment
returns as well as financial gains, where the money stored in Government Financial
Institutions (GFIs) will in turn be profited and be used for good purposes improving
employment, taxation, and economic activities with minimal risk to the public’s fund
(dbm.gov.ph, 2022).

b)    Where should the funds be invested? What provisions in law should be established to
ensure that proceeds and income to be generated from the MSWF will benefit the general
public?

The funds should be invested in outlets with the highest returns such as foreign currencies,
fixed-income instruments, domestic and foreign corporate bonds, commercial real estate, and
infrastructure projects, among others (dbm.gov.ph, 2022). The MWF is projected to start with
$4.2 billion which is just 5 percent of nationwide savings. To ensure higher earnings and
widespread development results, we could allocate more of our nationwide savings as long as
the economic team put safeguards in place for sound, secure and transparent investments of
our hard-earned money. Also, a benefit of the MWF is the investment for the development
such as infrastructure project for renewable energy generating facilities which would greatly
boost our power capacity and at the same time make money (The Manila Times, 2022).

c)     Who should be the fund managers? How do we make the managers of the MSWF
effectively accountable?

The fund managers should be the economic team so that they can monitor the fund’s
investment progress as well as protect the public’s money by ensuring accountability and
transparency in managing the MWF. The economic team states that they will abide by the
Santiago Principles of the International Working Group of Sovereign Wealth Funds, and
create a three-layer mechanism for checks and balances which includes internal audit,
external audit, and thorough examination and audit by the Commission on Audit. There will
also be an executive department reportorial requirement which will be implemented together
with congressional oversight (dbm.gov.ph, 2022).
References

ANSA (2021). Social Accountability Practice in the Philippines - ANSA-EAP. Retrieved

from https://ansa-eap.net/welcome-to-ansa-eap/resources/geographic/social-accountability-
practice-in-the-philippines/
Cuaresma, Jocelyn C. Public Fiscal Administration. University of the Philippines Open
University. 1996
dbm.gov.ph (2022). COMMISSION ON AUDIT - dbm.gov.ph. Retrieved from
https://www.dbm.gov.ph/wp-content/uploads/OPCCB/OPIF2012/COA/coa.pdf
https://www.manilatimes.net/2022/12/11/opinion/columns/maharlika-wealth-fund-whats-in-
it-for-the-poor/1869848
dbm.gov.ph (2022). Maharlika Wealth Fund, An Investment Vehicle and Economic Driver -
Economic Team. Retrieved from https://www.dbm.gov.ph/index.php/secretary-s-
corner/press-releases/list-of-press-releases/2511-maharlika-wealth-fund-an-
investment-vehicle-and-economic-driver-economic-team
Office of the Auditor-General New Zealand (2022). Part 3: Why public accountability is
important. Retrieved from https://oag.parliament.nz/2019/public-accountability/part3.htm
The Manila Times (2022). Maharlika Wealth Fund: What's in it for the poor? Retrieved from
https://www.manilatimes.net/2022/12/11/opinion/columns/maharlika-wealth-fund-whats-in-
it-for-the-poor/1869848