The Department of Budget and Management (DBM) vowed to speed up government spending in the third quarter and the rest of the year after a slowdown in the second quarter, which it attributed to “administrative bottlenecks.”
“We are hoping that we can hit the maximum [deficit ceiling]because as I’ve said, we want to spend as much as we can. In DBM, our mantra is spend, spend, spend on the priorities. But it’s been improving. I think the August numbers are much better than July,” Budget and Management Secretary Florencio Abad said on Tuesday.
For this year, the government is targeting a budget deficit of about P266 billion, equivalent to 2 percent of the country’s gross domestic product (GDP).
In July, disbursements by the national government declined by 15 percent to P168.5 billion, or P29.4 billion lower than comparable figures last year, while year-to-date expenditures stand at P1.16 trillion, 6 percent higher than similar spending for 2013.
As a result, the government’s cumulative fiscal performance resulted in a lower budget shortfall of P55.7 billion for the first seven months of 2014 compared to P104.5 billion in the same period in 2013.
“If you go by experience, we have really been below program on the deficit cap. But as I’ve said, as much as possible I want to hit the maximum to keep the economy moving,” Abad said.
In the government’s second quarter gross domestic product report last week, it said the slowdown in disbursements in Personal Services and Maintenance and Other Operating Expenditures or MOOE led to zero growth in government consumption during the period.
Government’s final consumption expenditure was flat, while public construction contracted by 12.9 percent during the period.
The DBM explained that the slower spending was partly due to administrative bottlenecks as some government agencies also needed to revise their work programs to increase service delivery in the Yolanda-affected areas.
Despite this, the budget chief believes that government spending will improve in the third quarter from the slowdown recorded in the second quarter.
“We’re still thinking that the third quarter can be even better than the second quarter. If you look at the expenditure growth, it’s zero growth.
So we can, in fact, accelerate spending more and it’s certainly a good signal to the private sector that the government wants to intensify development,” he said.