THE National Economic and Development Authority (Neda) is confident government spending will significantly increase in 2015, the economic managers having learned the hard way of the impact of below-target disbursement this year on the broad economy.
Socioeconomic Planning Secretary and Neda Director General Arsenio M. Balisacan acknowledged the underspending of the government affected the country’s growth, particularly in the second and third quarters.
But, Balisacan assured, the government will rectify the situation next year. The funds, he said, will be deployed to sustain the various infrastructure projects of the government, including those in the Supertyphoon Yolanda (international code name Haiyan) corridor.
“The underspending in the past two quarters, this quarter and last, would mean or should mean overspending next year because we [need to] absorb all the resources next year and the government sector a major contributor to growth next year,” Balisacan said.
“We’re confident that we have learned our lesson this year very well, and we can deploy those lessons to get the spending program in time next year, [starting in the] first quarter [of] next year,” he added.
The disbursement of public funds slowed to only P170.6 billion in the third quarter, sharply down from P221.7 billion in the second quarter, based on data obtained from the Bureau of the Treasury. Analysts have worried the government’s continued inability to disburse as required by fiscal planners, the $270-billion economy being primarily domestically driven, eventually translates to weaker-than-projected growth.
The projects in the Yolanda corridor are outlined in the Comprehensive Rehabilitation and Recovery Plan (CRRP). The projects under the plan covers infrastructure projects in the 171 affected cities and municipalities in 14 provinces and six regions affected by Yolanda in 2013. Under the CRRP, Balisacan said resettlement projects account for the biggest slice of the proposed budget at P75.67 billion.
The Department of Budget and Management, he said, has already released P51.98 billion from the national budget for the rehabilitation plan in the Yolanda corridor since November 2013.
“The challenges we face are complex and thus require a high degree of cooperation and coordination within the government and among development partners, private sector and citizens,” Balisacan said. “As we sprint toward 2016, let us not allow ourselves to be sidetracked.”
The government’s underspending was among the major factors that caused the economy to post lackluster economic growth in the past three quarters.
In the third quarter of 2014, the government’s under- spending pulled down the country’s economic growth to 5.3 percent.
Balisacan said the chilling effect created by the unfavorable decision of the Supreme Court on the Disbursement Acceleration Program and the recent issuances of disallowance by the Commission on Audit were among the major factors that caused public spending to contract by 2.6 percent in the third quarter.
It can be noted that this was the second time during the Aquino administration that low government
spending pulled down economic growth.
The first time the Aquino government’s low spending cut economic growth was in 2011 when full-year gross domestic product (GDP) growth only reached 3.7 percent.
The Neda then estimated that underspending for public construction cost the economy around 0.7 percentage point and underspending for other government expenditures cost 0.1 percentage point of GDP growth.
The government said the contraction of 29.4 percent in public construction was attributed to government underspending.
It added that even if public construction posted a 49.9- percent growth in the last quarter of the year, this was still not enough to make up for three consecutive quarters of decline brought about by spending delays.