MANILA, Philippines -- President Gloria Macapagal-Arroyo has abused the “automaticity of debt service payments” when she allegedly bypassed the House of Representatives by pre-paying foreign loans without its approval, a former budget secretary has claimed.

In a presentation for Budget Advocacies for Media, former Budget Secretary Benjamin Diokno said Arroyo has, “in recent years, invoked the automaticity of debt payment, has prepaid some foreign loans without congressional approval.”

This could put Arroyo at risk for possible criminal and civil sanctions according to budget laws, he added.

Diokno, who served as budget secretary under then president Joseph Estrada, said the automaticity of debt payment meant that a certain portion of the government budget was set aside for payment of debt services to “preserve the government’s credit standing in the global community and to get the best possible loan terms by reducing the risk of non-payment as a result of executive-legislative gridlock,” he said.

But Diokno added that Congress has the power to limit this automatic debt service appropriation. He called this the “power of the purse,” where all budget proposals and expenditures of all branches of government would have to go through Congress for approval.

This will give the Congress authority to approve or disapprove budget proposals of different government agencies as it drafted the General Appropriations Bill.

Although Arroyo does have the power to veto the budget, she should still seek the approval of Congress when incurring or paying foreign loans, said Diokno, citing the budget laws.

“Existing budget laws provide that all loans -- domestic or foreign, their loan proceeds and local counterpart requirements -- should be disclosed in the Budget of Expenditures and Sources of Financing, and approved by Congress,” he added.

Arroyo’s alleged move to contract and pay foreign loans without the approval of the Congress was “poor economics,” Diokno said.

The country incurred losses when the government paid loans at an exchange rate of P50:$1 “when it could pay now at P41:$1,” he said.

But Diokno said Congress failed to assert its power of the purse.

Because the “legislature as an institution is weak,” the best solution was for civil society groups to intervene during the budget implementation stage, he said.

There are also four areas of intervention groups can make in foreign-funded projects: project preparation stage, loan negotiation phase, authorization, and project implementation.