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Gov’t disbursements decline in first 5 months after budget delay

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Department of Budget and Management (DBM) facade

FUNDING releases backed by Notices of Cash Allocation (NCAs) fell 13.48% to P1.136 trillion in the first five months, the Department of Budget and Management (DBM) said.

In the five months to May, P1.050 trillion of the releases was utilized, down 3.22% from a year earlier, the DBM said.

However, DBM said the utilization rate on NCAs was 92% in the first five months, up from 83% a year earlier.

“This is an improvement from the NCA utilization rate in the same period last year at 83%, although total NCA releases was lower this year by P177.4 billion with the delayed passage of the 2019 General Appropriations Act (GAA),” the DBM said in a statement.

NCA refers to the disbursement authority issued by the DBM to government servicing banks such as the Development Bank of the Philippines, Land Bank of the Philippines, and the Philippine Veterans Bank to cover the cash requirements of agencies’ programs, activities and projects.

NCAs are valid up to the last working day of the quarter covered.




Asked to comment, Ruben Carlo O. Asuncion, chief economist of Union Bank of the Philippines, said, “In terms of the potential improvement of the NCA utilization, UnionBank’s Economic Research Unit (ERU) thinks that the second half of 2019 has a higher probability of higher utilization rate. This is also in line with the view that government spending will improve and be higher in the second half since the passage of the 2019 General Appropriations Act last April.”

Robert Dan J. Roces, Chief Economist of Security Bank, meanwhile said, “The higher NCA is tied to the delayed budget signing, as agencies play catch up with expenditures programmed for the year that went unreleased. Most of this might constitute the MOOE (Maintenance and Other Operating Expenses) and wages of government offices.”

“Moving forward, we expect utilization to improve to initiatives tied to the infra programs for the second half of the year, as the touted infra spending program gets underway,” Mr. Roces added.

Meanwhile, Nicholas Antonio T. Mapa, senior economist of the ING Bank NV Manila, said he is not sure whether utilization rate will improve in the coming months.

“It’s unclear if NCA will improve in the coming months even if government attempts to conduct ‘catch-up’ spending… 1Q NCA was close to 99% as government focused on the projects that could be funded. With the budget suddenly passed, unless the government doubles efforts to get warm bodies to enact all that spending, we could see actual NCA slip despite government’s shift to the 2019 budget,” Mr. Mapa said.

According to the DBM data, the Commission on Audit (CoA) was able to post the highest utilization rate, using P4.655 billion out of P4.672 billion. The Commission on Elections (Comelec) used P7.382 billion out of its P7.384 billion in NCAs.

The Department of Foreign Affairs (DFA) had the lowest budget utilization ratio of 59%, using only P3.711 billion of its P6.260- billion allotment.

Line departments had an average NCA utililzation rate of 90%, using P784.49 billion of the P868.85 billion NCA releases, the DBM said.

The DBM noted that unused NCAs amounted to P85.340 billion as of the end of May, which is equivalent to 8% of total NCA releases, which may still be utilized in June as the cash authority is valid until end of the quarter. — Reicelene Joy N. Ignacio

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