Diokno: Frontloading claim not reflected in spending

The Department of Budget and Management (DBM) announced yesterday that almost half, or P800 billion, of the P1.645-trillion budget for this year has been frontloaded in the first quarter, an exercise which top economist Benjamin Diokno said cannot be reconciled with the low spending level shown in the state data for the period that showed the government actually underspent heavily.

DBM Secretary Florencio Abad said yesterday that the frontloading in the first quarter was done to accelerate project implementation in the first semester of the year, as well as to take advantage of good weather in the early months for infrastructure projects.

“President Aquino had instructed us to frontload releases and accelerate project implementation so we can get the economy perked up early in the year,” he said.

Diokno, however, said that public spending, including interest payments, was 6.4 percent lower in the first two months, with a budget approved on time, compared to spending in the same period a year ago which ran under a re-enacted budget.

“For the first quarter, planned expenditure program was P431.3 billion with P101.2 billion allotted for interest payments, and the actual expenditure level was P224 billion, or a difference of P207.3 billion between actual and target spendings,” he said.

He said that this suggests that P207.3 billion should have been spent in March to meet the government target, which he called a “tall order.”

Abad said that as of March 2011, a total of P618 billion under the budgets of departments and agencies had already been released, or 81 percent of the amount programmed for the year. This amount includes 91 percent of the programmed personal services (PS) budgets to cover the salaries, allowances and other personnel benefits, including pensions.

It also included 82 percent of departments’ programmed maintenance and other operating expenditures (MOOE) and 55 percent of their capital outlay (CO) programs to cover their regular operating requirements, including the implementation of ongoing priority programs and projects.

He said spending during the first semester will further increase once key departments with huge budgetary balances for this year submit their program of allocations, especially of those under lump sum funds. In particular, these are the Departments of Education (P33.5 billion), Public Works and Highways (P25.3 billion), Agriculture (P13.7 billion) and Agrarian Reform (P12.5 billion).

Diokno said that the underspending in the budget may have contributed to the worsening poverty and hunger situation based on the March survey of the Social Weather Stations (SWS).

Abad said total releases from Special Purpose Funds (SPFs) in the first quarter reached P12 billion, bulk of which went to the payment of terminal leave and retirement benefits amounting to P4.5 billion, payment of subsidies to government corporations (P2.6 billion); and the International Commitment Fund (P2.9 billion).

He said the balance of SPFs amounts to P157 billion, of which P70.6 billion is lodged under the Miscellaneous Personnel Benefits Fund (MPBF) where the requirements for the second and third tranches of salary increase authorized under the Salary Standardization Law (SSL 3) will be sourced.

Also under the SPF balance is the P30-billion Retirement Benefits Fund, from which the payment for the terminal leave and retirement gratuity of retiring employees will be sourced. SPF also covers the P24.6 billion Priority Development Assistance Fund and the P4.8 billion Calamity Fund.