SEVERAL SENATORS on Wednesday urged government agencies, especially those implementing infrastructure projects, to boost spending to help the economy bounce back from the pandemic, upon learning that less than half of the allocated budgets have not been disbursed.
Senator Ralph G. Recto said 30% of the total obligated funds in the seven months to July have not been spent despite public spending’s crucial role in reviving the economy.
“Here, we are talking about a bigger budget [of P5 trillion for 2022, which is] okay. And yet, we cannot spend [this year’s] budget. That is the point, and we are not spending enough on health during a pandemic. There seems to be a misplaced priority in that sense,” he said during the 2022 national budget briefing by the Development Budget Coordination Committee (DBCC) at the Senate.
Disbursements refer to the actual withdrawal of cash from the national Treasury by government agencies to cover their operations and projects, while obligations are liabilities that will be paid by the state immediately or in the future.
Even the obligation rate of 75% in the first half was still below target since this should be hovering at 85-90% under the ideal scenario, Budget Undersecretary and officer-in-charge Tina Rose Marie L. Canda said during the hearing.
Mr. Recto also noted that departments with higher capital outlays, particularly the infrastructure-implementing agencies like the Public Works and Transportation departments, tend to log slower disbursement rates despite their critical role in job creation.
Ms. Canda attributed the slower spending to the nature of infrastructure projects and the requirement to get prior approvals from the Office of the President for new projects before the funds are released.
She said allocations for projects that are tagged as “for later release” in this year’s budget stood at P140 billion, and only 23.6% or P33 billion has been released upon getting the President’s go signal.
Mr. Recto, who was a former director-general of the National Economic and Development Authority, said the slow project implementation pushed government spending 4.9% lower year on year in the second quarter.
“That also explains why it is difficult to have this economic recovery and create jobs in the process,” he added.
Senator Franklin M. Drilon said actual public spending remained a challenge, which has affected its contribution to gross domestic product (GDP). He also cited the funds sitting idly in the offices of Procurement Service-Department of Budget and Management (PS-DBM) and the Philippine International Trading Corp.
“Based on the statement of the DBM, for every P1,000 that we budget, only P750 is obligated, and of the P750, only 30% is disbursed. For every P1,000 that we allocate, only P225 more or less is disbursed,” the lawmaker said.
At this pace, Senator Maria Lourdes Nancy S. Binay said, “there’s no recovery happening on the ground” since budgeted funds for projects and programs are not being disbursed on time.
“It’s slower than intended. We have to ask the Executive to somehow help the country to speed up the expenditures,” Senator Juan Edgardo M. Angara said.
“Because the idea is, in a pandemic you do stimulus spending. The government provides the economic stimulus, the vacuum provided by the private sector demand, the slack is taken up by the public sector. But apparently, that may not be happening,” he added.
Meanwhile, latest DBM data showed allotment releases reached P4.148 trillion from January to August, or 92.1% of the P4.5-trillion 2021 budget. That leaves the agency with P357.88 billion to release in the remaining four months of the year.
Of the total, budget releases to line agencies had reached P2.44 trillion as of August, or 92.7% of the P2.64 trillion allotted to them. The DBM has P193 billion left to release for the rest of the year.
About 55% of special purpose funds worth P242.42 billion have been released out of the P440.1-billion budget. This leaves P131 billion in funds to be disbursed.
Special purpose funds are allocations for specific socioeconomic purposes, which include budgetary support for local government units, the contingent fund, the miscellaneous personnel benefits fund, and the national disaster risk reduction and management fund.
Meanwhile, automatic appropriations such as retirement and life insurance premiums, internal revenue allotments, block grants and interest payments, among others, logged an 86.5% release rate equivalent to P1.14 trillion during the eight-month period.
The DBM has also released all the P251.15 billion from continuing appropriations last year, P94.4 billion allotted to unprogrammed appropriations, and P27.23 billion in other automatic appropriations.
This year’s P4.5-trillion budget has been touted as a stimulus measure to help the economy bounce back from the pandemic.
Article and Photo originally posted by Business World last September 9, 2021 12:31am and written by B. M. Laforga.