‘Social, infra projects funding to boost 2016 GDP growth’
THE Department of Budget and Management (DBM) said there was “significant underspending” by the government in 2015, but believes that better budget utilization will support the country’s economic growth enough to hit at least the lower end of the government’s official target this year.
The government targets 6.8 percent – 7.8 percent growth in gross domestic product (GDP) this year.
In a disbursement performance report for full year 2015, the agency said underspending was largely evident during the first two quarters where close to 55 percent of the underspending was recorded–P78.2 billion or 13.4 percent short of the government’s programmed expenditure in the first quarter and P101.5 billion or 15.2 percent in the second quarter.
By the third and fourth quarters, DBM said underspending slowed down to P96.7 billion or 14.8 percent, and P51.9 billion or 8.0 percent, respectively, to bring total underspending to 12.8 percent of the P2.558 trillion program by the end of the year.
“Although a significant amount of underspending was recorded… the government remains optimistic of utilizing the programmed spending for 2016 to fund critical social development programs and higher investments in public infrastructures, particularly with the national election in May and the impending change in administration in June 2016,” it said.
With this level of spending, the economy is expected to grow by at least 6.8 percent this year, or the lower end of the 6.8-percent to-7.8 percent official target of the government, the budget department claimed.
GDP growth eased to 5.8 percent last year from 6.1 percent in 2014.
New expenditure measures
To improve agency spending, DBM said, expenditure measures would be in place this year, based on the lessons learned from the underspending in the previous years.
“With the implementation of expenditure measures under AO [Administrative Order] 46, agency fund utilization recovered toward the latter part of 2015. Although the improvement was not enough to reverse the large underspending recorded in the first half of the year, the measures proved to be effective in pushing upward the spending performance of the line agencies,” it said.
Hence, the agency highlighted that measures under AO 46 will likely be sustained this year, specifically guidelines on advance procurement to enable the agencies to implement their programs and projects on time.
As a corollary to this, DBM noted that almost 86.0 percent of agency regular budgets for 2016 have already been released at the start of the year under the General Appropriations Act-as-a-Release Document policy.
“This policy allowed line agencies to bid out their various programs and projects and jump-start implementation ahead of the election ban,” it said.
The government is also strengthening its operational planning exercise and monitoring mechanisms.
The department added it would soon release a fiscal calendar as a guide for agencies in their planning and budgeting exercises.
The calendar will synchronize the schedule of specific fiscal activities and will determine and clarify the roles and responsibilities of oversight and concerned government agencies.
At the same time, the regular frequency of full-time delivery unit (FDU) meetings will enable the better tracking of the progress of agencies in their program/project implementation and resolve implementation issues as they arise.
The direct release to local governments modality will also be scaled up, where projects will be implemented by qualified local governments and funding will be shouldered by the national government.
This modality aims to fast track the completion of small infrastructure projects, and is expected to speed up the disbursements of funds, it said.
Lastly, DBM said a number of local infrastructure development projects under the Bottom-Up Budgeting (BUB) and Konkreto at Ayos na Lansangan at Daan Tungo sa Pangkalahatang Kaunlaran (KALSADA) programs are already included under the Local Government Support Fund in the enacted 2016 National Budget, and of these, 95.5 percent of the corresponding budgets had been released as of the end of the February 2016.