By Bianca Cuaresma and Butch Fernandez
The Aquino administration, aiming for “more efficient government spending,” is moving to kick-start vital projects and remove “bottlenecks” to drive economic growth in his last year, with underspending blamed for the less-than-expected 6.1-percent growth in 2014.
According to Deputy Spokesman Abigail Valte, the kick-starting measures include steps by the Department of Budget and Management (DBM) to get rid of “structural problems and bottlenecks” in implementation, as well as Administrative Order (AO) 46 signed by President Aquino in March.
Even as Valte conceded that the administration missed its target last year, she disputed reports describing Mr. Aquino’s 2014 economic performance as “dismal.”
“While it is true that the 2014 target was not met, we would not classify the 6.1-percent full-year GDP [gross domestic product] as dismal,” Valte told the BusinessMirror.
The Palace official pointed out that, for this year, “strategic measures have been designed to allow for more efficient spending.”
Valte recalled that Malacañang’s AO 46, aimed to facilitate the implementation of programs and projects to achieve the administration’s economic and social goals.
“The DBM has also been implementing other budget reforms that would ease structural problems and bottlenecks in government spending,” she added.
Valte was responding to a query if the Palace is taking steps to reverse government underspending blamed for the Aquino administration’s failure to hit last year’s target.
ING Bank Manila economist Joey Cuyegkeng said on Tuesday that the low first-quarter government spending imparts a downside risk to the 6.6-percent consensus forecast in the first quarter.
The economist added that the low government spending would raise the likelihood of monetary-policy shift toward easing the rates, as opposed to tightening.
“We think some of the rally in Philippine financial assets this year has been a repricing for a less hawkish BSP [Bangko Sentral ng Pilipinas]. The rally may have room to run,” Cuyegkeng said. The government reported on Monday that the budget deficit of the national government stood at P33.5 billion for the first quarter of 2015. The end-March figure is significantly less than the P84.1-billion shortfall recorded for the same period in 2014.
The 6.1-percent growth in 2014 had been attributed to several factors by various quarters. At its annual forum last week, the state-run think tank Philippine Institute for Development Studies said the chances for boosting growth this year would depend on how well the government reverses the slow spending in the past and untangles the bottlenecks in domestic infrastructure, seen accounting for the 6.1-percent growth in 2014.