DBM expects Moody’s ratings upgrade to hike government spending

Budget Secretary Florencio Abad on Tuesday said the recent upgrade by Moody’s Investors Service of the Philippine credit ratings could lead to government improved spending.

Abad said Moody’s action, which placed the Philippines just a notch below investment grade, only means that the international community has greater expectations on the country’s fiscal performance, especially on the aspects of spending.

“President Aquino is intent on fulfilling these expectations, and we, in the DBM [Department of Budget and Management], are equally inspired to take the necessary measures to ensure faster and more efficient spending across the bureaucracy,” Abad said.

Abad said Moody’s upgrade will also help expand the agency’s capacity to enforce key budget reforms in the government, including closing the fund leakages, unclogging spending bottlenecks and accelerating obligations.

“These will be done by eliminating lump-sum funds and enforcing a one-year validity period for appropriations, as well as by shifting to a regime where the General Appropriations Act becomes the release document itself,” Abad said.

The national government may have reached a budget deficit of P106.06 billion for the nine months of the year ending September, but it is still far below the P183.34-billion cap for the month because agencies still found it hard to spend or even to allocate the funds given to them.

Total disbursements from January to September fell short of the P1.35-trillion program by 9.5 percent, but narrower than 16.1-percent shortfall last year.

Expenditures reached P429.6 billion in the third quarter, which was higher compared with the first-quarter spending of P394.9 billion and P400.5 billion for the second quarter.

“Through the account-management teams deployed in key departments, as well as procurement, expenditure and other reforms, the government commits to continue improving the capacity of agencies to implement priority programs and projects, as well as to remove bottlenecks and inefficiencies,” Abad said.

“President Aquino reversed a decade’s worth of credit-rating decline after a little more than two years in office. This just shows how good governance can bring about good economics,” Finance Secretary Cesar Purisima said in a statement. –VG Cabuag / Reporter, Businessmirror