By Angelina Celis, August 28 2019; Malaya

Image Credit to Business Mirror

The government is optimistic it will meet its disbursement target for the year, despite the adverse impact of the delayed passage of the 2019 budget coupled with the election ban, as officials have noted an uptick in spending in August.

For the year, disbursements are targeted to hit P3.77 trillion, equivalent to 19.6 percent of gross domestic product. As of end-July, expenditures totaled to P1.93 trillion, just 0.11 percent lower than a year ago, after being weighed down by the delayed approval of the 2019 budget coupled with the election ban on new public works.

The government has implemented a catch-up plan to speed up its disbursement performance and hopefully meet its targets for the year.

“Despite the fact that the budget was approved only in April, we have a catch-up plan. We’re really trying to catch up, in the sense that even the delayed budget approvals, the departments concerned are doing their best,” Wendel Avisado, Department of Budget and Management (DBM) acting secretary, said in his first press briefing as the agency’s chief yesterday.

Asked if the government is on track with its efforts, Avisado said: “Yes. This is the catch-up plan that they have submitted and committed to do… We really cannot second guess what’s going to happen to the weather, but this is a deliberate effort on the part of the government.”

Avisado said the Department of Transportation (DOTr) has committed to spend about P53 billion in the last two quarters of this year or about 56.5 percent of its full year target for 2019.

The Department of Public Works and Highways (DPWH) has programmed some P542.6 billion disbursements also in the second half of the year, equivalent to 71.8 percent of the P755.6-billion spending commitment.

“As of end-June 2019, the two major infrastructure departments, DPWH and DOTr, have obligated about 32 percent and 53.6 percent, respectively…. with the implementation of new programs and projects which are currently underway. This is expected to propel government spending in the second semester with the completion and partial completion of infrastructure (projects),” Avisado said.

In the same press conference, Tina Rose Marie Canda, DBM undersecretary, said “there was an uptick (in government disbursements) for the month of August.”

“So July there’s a flat, from negative to flat, and August it rose. We expect that…disbursements, being what it is, the behavior is they usually grow very fast during the last quarter, so we are optimistic that we will hit the program, the disbursement targets by the end of the year, barring no unprecedented event that will happen,” Canda said.

This was supported by a separate statement by Rosalia de Leon, national treasurer, in an interview with reporters also yesterday.

“We’re watching closely the August performance, and we’re seeing strong pick up in terms of disbursements. So if that will continue, there’s still the chance that we’ll be able to hit the deficit target of 3.2 percent,” de Leon said.

“We’re looking into the August, and we’re seeing a significant jump in terms of the disbursements. I suppose there’s really a strong utilization for August. If revenues are doing well and expenditures are doing well, then I suppose we will be meeting the program for August,” she added.

Ernesto Pernia, socioeconomic planning secretary, also said at the sidelines of the Economic Journalists Association of the Philippines economic forum that further revisions in the macroeconomic assumptions for the year will be unlikely.

“The budget releases have already been… 90 percent of the budget for 2019 have already been released, so that’s going to speed up spending. I am optimistic that we will reach at least six percent growth rate for the whole of 2019,” Pernia said.

To recall, the delay in the budget approval dragged economic growth in the first half of the year.

“No more (revisions) because it’s already in the budget for 2020,” noted Pernia.

Meanwhile, Avisado said in the same press conference yesterday the fiscal impact of the Supreme Court’s ruling that the internal revenue allotments (IRA) of local government units (LGUs) should be based on all national taxes will be “revenue neutral.” The government estimates this would increase the IRA by P300 billion annually.

“In other words, there’s not going to be an increase in deficit to make up for the larger transfer to LGUs because it does not also pose any threat in the national government’s Build, Build, Build programs even as it will shift some resources from the national to the local,” Avisado said.

“But looking ahead, to ensure our optimal local development and fiscal sustainability, we need to match the revenue and expenditure functions. Hence, more disbursement for LGUs should translate to a wider scope of fiscal responsibility… just as we give them more resources, they have to be more prudent and make sure that there is responsible management of fiscal resources, and much more, improvement in the delivery of programs and services,” he added.

Avisado said the national government is currently identifying functions, programs and projects that may be redevolved.

“These are functions that we believe they should be the ones to implement but are currently being implemented by the national government. And therefore, we are looking at agriculture extension projects and programs, social services, which are very good candidates for devolution,” he said.