"We will fund it (the P10 billion) out of our own resources and then augment (the shortfalls)," Andaya disclosed yesterday.

Initially, the Department of Budget and Management would source P2.3 billion from its own Miscellaneous Personnel Benefits Fund to address claims. "We have three applicants so far," he said, referring to workers opting for early retirement.

The bulk of required funds or P7.7 billion will come from the unprogrammed funds of government. "I will get it (P7.7 billion) from the un-programmed funding in the 2005 reenacted budget," which is P10 billion, he said.

The Senate has removed this allotment from the 2006 budget of P1.053 trillion since the government has been failing to properly disburse the funds for two years.

The P10 billion was supposedly money allotted for retiring workers under the rationalization and streamlining program.

In 2004 and 2005, the government has set aside P5 billion and P10 billion to pay for retiring state employees however the amount was unused. And since the budget was unutilized, it was siphoned off by other budgetary needs.

President Arroyo has been pursuing her program of re-engineering the government, which would cut down the population of government employees through an early retirement scheme. There are currently 1.2 million personnel in various departments and agencies under the executive branch.

Two years ago President Gloria M. Arroyo issued Executive Order 339 pushing for the early retirement of state employees as part of the bureaucracy rationalization.

Last year the Government Service Insurance System was expecting some 26, 600 government employees – across all positions, to avail of the DBMfunded early retirement program.

Under EO 339, the National Government will give the incentives while the GSIS would continue paying for retirement benefits.

DBM sources said the government’s employee downsizing program is a budget drain but pushing for an early retirement now is still cheaper than retaining unnecessary positions, which would only continue to siphon-off much needed cash from the state. In the last two years, 102 government agencies and commissions have been abolished. There are 30 more agencies, which will soon face the axe.

The DBM estimates that the government will save P4 billion from the voluntary retirements