Government must spend P2.996 trillion from Q2 to Q4 as economic managers agree on 'catch-up' plans.
Finance Secretary Carlos G. Dominguez III reported this after the meeting of the Duterte administration's Economic Development Cluster (EDC) on Friday morning at the DOF headquarters, as the economic managers tackled the catch-up plans in terms of spending by key government agencies handling infrastructure development in the country.
They earlier forged a consensus to lay out clear catch-up plans as a way of compensating for the adverse impact of the under spending, triggered by the budget standoff between both houses of Congress, in the first few months of the year.
'The spending commitment of our two main infrastructure agencies, the Department of Public Works and Highways (DPWH) and the Department of Transportation (DOTr), with an estimated combined amount of P803.1 billion, is enough to cover the national government's infrastructure target,' Dominguez said.
For 2019, national government disbursements are targeted to reach P3.774 trillion, 10.7 percent higher than the actual disbursement in 2018 of P3.408 trillion. This was noted as equivalent to 19.6 percent of the country's GDP.
'Total infrastructure disbursements would have to reach P1 trillion, equivalent to 5.2 percent of GDP, with the national government accounting for P808.7 billion of targeted infrastructure spending,' he added.
The government is targeting to disburse around P792.97 billion for infrastructure from the second to fourth quarters of the year, to help it reach the total of P1 trillion for this year.
Actual infrastructure disbursements during the first quarter of 2019 amounted to only P207.2 billion, according to the DOF.
'To enable us to hit a GDP growth rate above 6 percent this year, national government needs to ramp up its spending,' he said.
Earlier, the Bureau of the Treasury (BTr) reported that actual government disbursements amounted to P778 billion during the first quarter of this year, which only posted an uptick of 0.7 percent from the P772 billion recorded in 2018.
'For us to achieve this year's disbursement target, the government must spend a total of around P2.996 trillion from the second to fourth quarters of the year. Infrastructure spending accounts for almost one-third of the amount of disbursements programmed for the said quarters,' he added.
Dominguez explained further that infrastructure disbursements from other agencies such as the Department of National Defense (DND), Department of Education (DepEd), and the Department of Health (DOH) can further drive spending growth if they can accelerate implementation of their capital outlay programs and projects.
'Said programs include the Armed Forces of the Philippines (AFP) Modernization Program of the DND, the school-building program of the DepEd, and the Health Facilities Enhancement Program of the DOH,' he said.
The government has also agreed to fast-track the implementation of its priority socioeconomic programs including the National Identification (ID) System, Pantawid Pamilyang Pilipino Program (4Ps), social pension, unconditional cash transfers and fuel marking program, in line with increasing government disbursements.
The finance chief also pointed out that the government must double its efforts in the agriculture sector, which should expand by at least 2 percent per year.
'Henceforth, the economy is expected to expand at a higher clip over the April to June period and for the rest of 2019 as inflation continues trending towards the official target range of 2 to 4 percent and the government accelerates implementation of the Build, Build, Build infrastructure and human capital development projects to make up for state underspending. We will intensify our efforts to restore last year's upward momentum in our growth rate,' Dominguez said.
The nonpassage of the 2019 budget bill has led the government to underspend in the first few months starting 2019 on its projects and programs as it operated under a 2018 reenacted budget. The election ban on public works during the national elections earlier this month also contributed to the lower government spending.
Economy hit hard
'The delay in passing the 2019 budget during the first three months of this year hit our economy hard. This led to our GDP growth rate for the first quarter to fall below expectations, a four-year low of 5.6 percent. This is no surprise as national government spending accounts for around 20 percent of the economy,' he added.
The government set the fiscal deficit level for this year at 3.2 percent of GDP, higher than the 3-percent deficit capped in 2018. In nominal terms, this translates to P631.5 billion.
'As mentioned by Secretary Dominguez earlier, we are targeting about 6 percent of the growth rate. And based on the DBCC [Development Budget Coordination Committee] meeting last time, the approved rate of the deficit is 3.2 percent. The assumption is still that, but of course still subject to further confirmation by the Neda,' said Department of Budget and Management (DBM) Officer-in-Charge Janet B. Abuel.
Abuel pointed out that the DBM will ensure the fast release of funds for the projects and programs of the government, to help the government agencies implement their specific programs quickly.
In terms of revising growth target for this year, National Economic and Development Authority (Neda) Secretary Ernesto M. Pernia said the government will still have to see the progress of the implementation of the projects.
'We still have to do some numbers crunching to have more realistic numbers regarding growth rate and related numbers, so it is better that we wait until we are more confident with what we can tell you,' Pernia said.
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|Publication:||Business Mirror (Makati City, Philippines)|
|Date:||May 24, 2019|
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