IT was reported that the Bangko Sentral ng Pilipinas is worried that government underspending would slow down the nation’s economic growth in the second half of this year.
That worry is well-founded. As every Economics 101 student will tell us, this is not a time to underspend, not when the global economy is struggling to climb out of recession, not when our exports are down and certainly not when fiscal revenues, if the government’s assessments are correct, are way above expectations.
So what gives? The answer comes down to the intellectual caliber of our government and its working style. By government, we mean the Executive branch, even if the Legislative branch can be shown as even more deficient. The Judicial branch, despite its turtle-like pace in making decisions, deserves commendation for its independence, despite great external attempts to intimidate it.
In a normal state of affairs, a government will underspend if it: 1) lacks the funds to serve as the counterpart of external grants or loans to get projects started; 2) is suffering from serious cash-flow problems; and 3) lacks the technical plans necessary to underpin action, like implementing rules and regulations, bidding rules, engineering plans, financing plans and so on. Of course, in an abnormal state of affairs, the government will underspend simply because it has no inkling of the relevance of government spending to national development.
We have a feeling that we are in an abnormal state of affairs, because the events of 2011 and 2012 seem to suggest it. In 2011 we underspent by impounding savings from public-works projects, and in 2012 we overspent to compensate for the preceding year’s naïveté by resorting to using the Disbursement Acceleration Program, parts of which were later declared by the Supreme Court as unconstitutional.
But let’s focus on the normal state of affairs. Of the normal-state conditions, the third—that our government has been underspending because it lacks the technical plans necessary to underpin action—seems relevant.
This is a pity. The unending delays in biddings, the ever-continuing review or threat to review completed deals or processes, mean lack of action: no output produced, no employment created, no income earned.
For sure, there are some departments that know their duties and are doing them. But there are other departments that cover themselves with public-relations spin to divert public attention from their involvement in questionable deals.
More generally—and, perhaps, reflective of the culture at the top—the rest of the departments are busy doing little beyond nothing. Indeed, they seem to be trying to establish a new normal—that if you are not associated with graft and corruption, you are an exemplary department, even if you are doing nothing.
That’s wrong. Let’s insist that the government be worthy of its remuneration, respect the old normal and support development or, at least, not impede it.
Image credits: Jimbo Albano