Spending up on funding threat

PUBLIC SPENDING last month spiked to its highest level so far this year as government agencies responded to budget reforms, particularly a threat to withdraw all unused funds by the end of this quarter.

“According to preliminary data, public spending sped up because government agencies across the board improved their disbursement performance,” Budget Secretary Florencio B. Abad told BusinessWorld on Friday.

“We have been monitoring them very closely. We have also assigned account managers for the big agencies to help them resolve their spending bottlenecks,” he explained.

More importantly, agencies reacted after the Budget department required them to report allotments that remained unobligated as of end-June. If these are still unused by end-September, the funds will be withdrawn and realigned to help the government catch up in the fourth quarter.

“We threatened them that if they are unable to obligate allotments, we will be forced to move these to similarly important programs which are better at disbursing their funds,” Mr. Abad said.

The government spent a record P162.558 billion last month, dwarfing the previous peak of P151.304 billion in May. Public spending now stands at P957.961 billion as of July, a 15.1% increase from the P832.316 billion posted a year earlier.

Among the “exemplary” agencies, said Mr. Abad, are the Public Works and Social Welfare departments as these have rolled out road construction and conditional cash transfer projects, respectively, according to program.

Lagging are the Health and Agriculture departments.

“The Department of Health still has to submit the disaggregation plan for its funds to rehabilitate many rural health units,” he said.

A vaccine self-sufficiency project, to be implemented under the government’s public-private partnership program, has also “stalled.”

“They are applying to use the support funds to rehabilitate hospitals instead,” Mr. Abad said.

The Department of Agriculture, meanwhile, is still working to complete the construction of farm-to-market roads.

Other details of the government’s latest spending performance have yet to be released. Mr. Abad, however, claimed that infrastructure spending as of July had made a “strong showing,” rising over 60% year-on-year. Maintenance and other operating expenditures, he added, also jumped by more than 30%.

Public spending is closely watched as it has become one of the pillars of economic growth. Government consumption helped buoy economic growth to an unexpected 6.4% in the first quarter, well beyond the 5-6% target for the year.

Underspending dragged growth down to only 3.7% in 2011, below the goal of 4.5-5.5% and the record 7.6% the year before. — Diane Claire J. Jiao, Businessworld