Philippines: Government sees sustained public spending growth

MANILA, Philippines – The government sees sustained growth in public spending in the coming months after a recovery in its disbursement performance last May, the Bureau of the Treasury (BTr) said.

In an interview last Friday, National Treasurer Rosalia De Leon said the government is confident it would be able to maintain the improvement in its spending performance exhibited last May until the rest of 2017.

“Yeah (we are confident). In June also we are seeing that the preliminary results are very good. In fact, we see the improvements in terms of the trajectory in the agencies’ (spending) will be sustained,” De Leon told reporters.

Data from the Treasury showed the national government’s spending last May jumped 20 percent to P261.7 billion from the P217.4 billion recorded a year ago.

This was a reversal from the disbursement performance posted in April, which declined four percent to P183.1 billion from P191.6 billion in April 2016. It was also the fastest growth in spending recorded this year.

“This reflects the typical project cycle which is like an S-curve, slow at first then it accelerates as the projects progress. Also the mid-year bonus was supposed to be paid for not earlier than May 15th,” Budget Secretary Benjamin Diokno told The STAR earlier when asked about the recovery in spending growth.

Furthermore, Diokno said the growth of disbursements had also started to normalize as the impact of higher government spending in 2016 due to the elections had already started to taper off.

De Leon, for her part, also attributed the growth in disbursement to efforts to expedite the procurement process, the release of the mid-year bonuses of government personnel, and a “big spike” in capital expenditures of agencies.

She said these factors, particularly the measures initiated to plug loopholes in the procurement process, make the government confident that it would be able to meet its expenditure target for the year, thereby, raising the budget deficit to three percent of the gross domestic product (GDP) from the previous two percent.

The Development Budget Coordination Committee (DBCC) recently approved a revised disbursement program of P2.91 trillion for 2017, or equivalent of 18.3 percent of the GDP. This is below the P2.96 trillion originally programmed by the inter-agency committee.

The Duterte administration is planning to embark on a massive public spending program, particularly on infrastructure, human capital development and social protection, to sustain economic growth, create jobs and reduce the poverty rate in the country.

Its infrastructure program, dubbed as “Build Build Build” would need P8.4 trillion in total investments over the medium-term, with infrastructure spending projected to reach 7.4 percent of GDP by 2022.