The Department of Budget and Management (DBM) vowed to accelerate disbursement of funds and implementation of projects in the coming months to make sure the promised improved government spending will be felt in the second semester of the year and prevent another slowdown in the local economy’s growth.
At the sidelines of the Economic Journalists Association of the Philippines (Ejap)-ING Bank Economic Forum on Wednesday in Makati City, Budget Secretary Florencio B. Abad admitted that the government’s problematic spending scheme has been hampering the growth of the country, and promised better spending in the quarters ahead.
“If you look at the figures there is actually a progression, there is actually an improvement; and I think those will be felt in the latter part of the second quarter and certainty in the next semester,” Abad told reporters.
The Philippine Statistics Authority (PSA) reported last month that the country’s economic expansion has slowed to 5.2 percent in the first quarter of the year—the slowest growth in about four years. The government’s inability to disburse funds was widely blamed for the disappointing growth.
As such, Abad said the DBM will hasten government spending to “catch up” with the pace of the potential growth of the Philippines through greater disbursements, faster speed of project implementation and institutional interventions.
Part of these institutional interventions is the recently issued Administrative Order (AO) 46 from the Office of the President. AO 46 seeks to improve spending efficiency and expedite the implementation of priority programs and projects under the 2015 budget.
“The AO 46 was issued in March and implemented in April so it really hasn’t had time to take effect. But the President called a meeting to further look into this so we have to be able to take a more decisive action on this concern,” Abad said. Aside from the Palace’s initiatives, Abad also bared that a new permanent delivery unit or system is also in the works to better handle the budget disbursements in the country.
“The National Economic and Development Authority and the DBM will co-chair the national delivery unit, and every department at the level of undersecretary will have to establish a full-time delivery unit and all it will do is to make sure that disbursements are accelerated,” Abad said.
“We will provide them with permanent staffing so they can rely on full-time people to monitor the disbursements of every agency and look into bottlenecks and deal with the bottlenecks and then report to the DBM, as well as to the National Economic and Development Authority any problem that’s beyond their departments to deal with, so this way, we have full-time people to deal with this problem and there’s a system of reporting it,” he added. He also said the upcoming election ban on spending will likely pressure other government agencies to speed up their project implementation before the prohibition takes effect.
“I think many of the infra projects will accelerate in the second to the third to the last quarter. Of course, the rush to get this going before the election ban takes place will also be a factor in pushing for a greater pace in the implementation of the projects,” Abad said.
Institutional weaknesses
In terms of addressing the root cause of the underspending problem of the government, Abad said the institutional weaknesses—which have been pinpointed as the reasons behind the sluggish movement of funds in the government system—are temporary, although they may take a while to be resolved.