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Government spending to accelerate in H2 – DBM

 (The Philippine Star)

MANILA, Philippines – Government spending should accelerate as early as this quarter, Budget Secretary Florencio Abad said, noting that the lack of it dragged down economic growth in the first three months of the year.

“If you look at the figures, there’s actually a progression, there’s actually an improvement. Those will be felt in the latter half of the second quarter and certainly in the second semester,” Abad said during a forum hosted by the Economic Journalists’ Association of the Philippines and ING Bank yesterday.

Philippine economic growth decelerated to 5.2 percent in the first quarter from a revised 6.6 percent in the fourth quarter and the 5.6 percent recorded in the first three months of 2014.

Underspending was partly blamed for the slower-than-expected first quarter gross domestic product growth, as expenditures only amounted to P504 billion, 13 percent below the P582-billion program for the period.

Abad said his department is already reviewing the “root causes” for under-spending during the first quarter, and President Aquino himself has also called for a Cabinet meeting to discuss this problem.

But more concrete steps have also been taken, he noted, with the creation of a “permanent delivery unit system” in the Department of Budget and Management recently that will keep track of each local agency’s spending.

The budget chief also noted President Aquino in March has already issued an Administrative Order to fast-track spending and this was implemented in April this year.

Abad recounted that factors pulling down spending in agencies include “technical deficits” in which project plans were revised, and thus, did not push through with its original timeline.

An example, he said, would be the Department of Education’s classroom building projects which were reviewed to make them typhoon-proof following the aftermath of the deadly typhoon Yolanda. If it weren’t for the changes in the plans, Abad said there would be no delays in executing them.

“If all agencies had been faithful to their cash program, we could have achieved easily the above-seven-percent growth so what we’re trying to do is get them churning faster than [what they did] in the first quarter,” Abad said.

“I don’t think the institutional weaknesses should be an excuse to slow the economy down… The name of the game is for us to catch up, and to catch up much faster than what we have been doing in the past,” he continued.

Faster spending for the rest of the year will be supported by the “election ban” that will take place prior to the presidential polls next year.

“I think many of the infrastructure projects [will be done] in the second, third, and the last quarter and of course the rush to get these going before the election ban takes place will also be a factor in pushing for a greater pace of implementation for these projects,” Abad said.

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