Mar defends government underspending

MANILA, Philippines – Transportation and Communications Secretary Manuel “Mar” Roxas II defended the Aquino administration’s under-spending, saying the reduction in capital spending posted by the government was generated by savings brought by “good governance.”

Addressing questions raised by fund managers during the recent Deutsche-REGIS Partners investors’ conference in Makati, Roxas said the government has generated so much savings because it was able to get favorable credit rating upgrades as well as successfully negotiating the costs of government infrastructure projects to lower prices.

“If we look at the components of the so-called under-spending, they are really the fruits of good governance,” he said.

He explained that the government had reductions in the cost of capital consolidated to about P30 billion, which earned favorable rating upgrades from various international rating agencies, because of the ‘Matuwid na Daan’ principle.

“If you’re able to spend less because you were able to negotiate better terms, then you’ve under-spent, and you get criticism for that. In the private sector, if a company spends less at the end of the year, the CEO will get accolades,” said Roxas.

The secretary, however, said that reduced spending substantially cut capital cost of government for significant investments, including those for infrastructure.

He also cautioned fund managers and other attendees of the conference that there was a huge difference between the government’s capital budgeting works to that of a private company’s budgeting system.

“The government’s budget process is very different from the private sector process which is accrual. In the government, it’s all cash accounting. At the start of the year, you allocate X amount of what you think you’re going to spend for interest,” he said, adding that the government should get taxpayer’s gratitude for omitting considerations for “lagay,” “kotong,” and “tongpats.”

Roxas cited the case of the Department of Public Works and Highways that was among government agencies’ with biggest savings the previous year, which he said was the P12 billion reduced cost for building the same length of road-same width, same number of kilometers, and same specifications.

“Because DPWH was stricter, because it used a sharper pencil, because it was scrupulous in following rules, it was able to save about P12 billion. It was more efficient, transparent, and example of good governance. Now, that’s underspending,” he said. –Rainier Allan Ronda (The Philippine Star)