GOVERNMENT infrastructure spending remained deficient as of the third quarter compared to 2010 disbursements and the 2011 program as agencies’ projects failed to get off the ground.
The government spent only P86.1 billion for infrastructure from January to September, data from the Department of Budget and Management (DBM) showed. It missed the P176.9-billion programmed for the period; the amount also comprised less than half the P183.8 billion spent during the same period in 2010.
With nine months gone, the government has only been able to spend roughly a third of its full-year infrastructure budget.
Total capital outlays — which includes infrastructure, equity, capital transfers to local government units and land acquisition for agrarian reform — for the three quarters also remained sluggish, despite economic managers’ repeated pronouncements that spending would be ramped up to boost growth.
Capital outlays totaled only P138.3 billion as of September, well under the P240.3-billion target for the period. It was also over a third lower than the P229.5 billion released a year earlier. The capital outlay disbursed in the nine-month period was likewise equivalent to only 43.3% of the full-year program.
According to a DBM disbursement assessment report, the drop was due to the lower accounts payables of the Department of Public Works and Highways (DPWH). Implementation of Department of Health and Department of Education projects such as the Health Facilities Enhancement Program and the Basic Educational Facilities Fund was also delayed.
“In part, this has been due to the review of project cost structures, as in the case of DPWH, the many requests for realignment of funds, also in the case of DPWH, and the delay in identifying activities to be prioritized and funded from lump-sum appropriations, in the case of many departments,” the report explained.
The P12.5-billion Strategic Support Fund for public-private partnership deals also remains “almost untouched,” along with allocations for the modernization of the Armed Forces of the Philippines (P5 billion) and the construction of farm-to-market roads under the Agriculture department (P1.1 billion) that have yet to be released.
Government underspending was one of the critical factors that brought down economic growth to only 4% in the first semester. Public construction dropped by 37.3% in the first quarter and an unprecedented 51.2% in the second quarter.
In response, the Aquino administration last month approved a P72-billion disbursement acceleration program in an attempt to reach this year’s growth target of 5-6%.
Analysts, however, have criticized the so-called stimulus package as it does not involve any new spending.
The government, however, was able to ramp up expenditures in personal services, amounting to P353.5 billion, as of September, up from the P336.5 billion registered the year before. This was due to the implementation of the third tranche of the Salary Standardization Law and the release of salaries and allowances for Philippine National Police personnel.
Subsidies also increased to P19.1 billion by September, more than double the P9.7 billion granted last year. Among the biggest recipients were National Power Corp. and the National Electrification Administration.
Budget Secretary Florencio B. Abad again promised that there would be a “significant uptick in spending” in the remaining months of the year.
“We will try very hard to fulfill our spending program and get the projects moving,” he told reporters last week on the sidelines of the Philippine Investment Summit for Global Fund Managers.
If government agencies cannot disburse their funds within the year, they must at least obligate them, Mr. Abad said. Obligation entails the awarding of contracts to a winning party and the commitment of funds for the project.
“If we can obligate the funds this year, they will no longer be carried over to next year and will not have an impact on spending or the deficit next year,” he explained.
Government expenditures totaled P1.07 trillion in the first three quarters, a 7.31% decline from the P1.155 trillion spent in the same period last year. It also fell short of the P1.275-trillion program by roughly P200 billion.
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By: Diane Claire Jiao
Source: Business World, Oct. 31, 2011
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