Friday, 1 May 2009

Philippine Government’s ‘pump-priming’ efforts on track — NEDA official

MARIA ELOISA I. CALDERON, Senior Reporter
BusinessWorld
http://www.bworldonline.com/BW050109/content.php?id=054

GOVERNMENT AGENCIES are right on track in meeting their goal of frontloading their expenditures in amounts equivalent to 60%-80% of their approved budget in the first half, economic managers of the Arroyo administration yesterday said.

Line agencies were mandated to report progress in their commitments to pump-prime the economy on a fortnightly basis to the Cabinet, and judging by the pace of spending in the first quarter, the 60%-80% target would be met, acting National Economic and Development Authority (NEDA) Director General Rolando G. Tungpalan said.

The Public Works department, which cornered the highest budget for 2009 next to Education, has already sealed contracts worth P59 billion, or 95% out of the P62 billion it vouched to spend in the first semester, Mr. Tungpalan said, citing results of a Cabinet meeting held Tuesday.

"About 95% of the programmed expenditure of Public Works for the semester has been obligated and we expect expenditures to be at a higher rate this coming quarter," he said in a phone interview.

Shelter agencies, with the Housing and Urban Development Coordinating Council at the helm, have already released P19 billion in the first quarter through granting more housing loans and foregone revenues due to lowering of interest rates, Mr. Tungpalan added. Other line agencies would follow suit, he said. The official disbursement data for the first quarter is due for release next month.

"The commitment is at least 60% by the end of the first semester. That’s on track," the NEDA official said.

Data from the Department of Budget and Management showed disbursements of the national government in the two months to February amounted to P226.5 billion, or a 12.3% increase over the outturn during the same period last year, owing to higher spending for capital outlays. The government has approved in March a national budget of P1.414 trillion for 2009.

The disbursement rate posted a record 97.9% during the two-month period, indicating an increasing absorptive capacity — a measure of how much output is actually used — among line agencies. Multilateral lenders and credit watchers have earlier pointed out that while the Philippine government could have money to spend, the absorptive capacity of its line agencies has yet to improve.

Budget Undersecretary Laura B. Pascua said that while the numbers are encouraging, "that maybe due to the change in funding system we have," which shifted from quarterly release of budget to semi-annual, or every six months.

"But there’s a provision for lapsing. At the end of six months, if the cash is not utilized, it has to be returned. So that’s encouraging the agencies to hasten up, and implement the cash disbursement programs," she said in a separate phone interview.

At least four infrastructure-related departments — — Public Works, Transport and Communication, Education and Agriculture — have entered into a memorandum of agreement with the economic managers of the Arroyo government to hasten spending, Ms. Pascua said.

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