THE DEPARTMENT of Budget and Management (DBM) expects state spending to continue improvement, even with the 45-day ban on such disbursements ahead of the May 2019 mid-term elections, its head said on Wednesday.
Budget Secretary Benjamin E. Diokno said the government took into consideration the 45-day disbursement ban before elections when it drafted its spending program.
“I don’t think there would be risk of underspending… we don’t see any slowdown as a result of any election ban. Everyone’s aware of that. We have a lot of practice… we don’t have any problem,” Mr. Diokno said during a media briefing at the DBM headquarters in Manila.
He explained that, “this early, you could already do the pre-procurement activities.”
“You can publish it, do the preliminary hearings and you can go through the whole process and even choose the contractor, but not yet award. Once the budget is approved, on January 1^st and 2^nd, you sign the contract then that’s it.”
Among others, Batas Pambansa Blg. 881, or the Omnibus Elections Code, prohibits “the release, disbursement or expenditure of public funds” for public works 45 days before elections, except those that have already been awarded prior to that period. It also prohibits public works construction during the 45-day period.
With “[e]verything… done on time, there’s a very slim possibility it [public works construction] will fall within the [election ban] period,” Mr. Diokno added.
Mr. Diokno also said that Congress and the DBM have agreed that the P3.757-trillion 2019 budget will continue to be “cash-based,” allocating funds only for projects whose procurement can be completed within the fiscal year, but with further extension from yearend for settlement of bills.
This, he said, should address potential bottlenecks faced by implementing agencies during the spending ban next year.
“We agreed that we will have a transitory cash-based program. We decided to extend the payment period for another three months. So this is one year plus six months. So, that’s 18 months,” he said, noting that the decision was made during his meeting with House Majority Leader Rolando G. Andaya, Jr. and House Appropriations Committee chair Karlo Alexei B. Nograles, among others, last Tuesday afternoon.
“Because next year is an election year, there will be an election ban. So we figured out there would be some delays [in payment]. We agreed that we will allow up to the end of June [of the following year] for payment of projects.”
The extended payment period, however, will apply only to projects covered by capital outlays in the 2019 budget.
Personnel services as well as maintenance and other operating expenses will observe the original payment time frame that includes three months after the end of the fiscal year.
The House of Representatives last Monday resumed budget hearings after initially suspending such deliberations in protest of the shift to a stricter cash-based system designed to impose fiscal discipline on implementing state offices by imposing the one-year procurement time frame, from two years previously under the former “obligation-based” system.
In crafting the proposed cash-based budget for next year, Mr. Diokno said his department had taken note of departments and agencies whose projects were “not moving”.
“They have to justify that they can implement the project as envisioned,” he said.
“Spend your budget or lose it. Some of the agencies have been losing it.”
The administration of President Rodrigo R. Duterte focused the first two of its six years on unclogging bottlenecks that had caused chronic state underspending in the past, in a bid to prod overall economic growth to 7-8% up to 2022, when it ends its term, from 6.3-6.5% in 2010-2016 under his predecessor, former president Benigno S.C. Aquino III. Mr. Aquino’s term saw successive credit rating improvements to investment grade for the Philippines as the government focused on improving revenue collections while fixing spending frameworks that were believed to have facilitated irregularities in past. That crackdown, however, caused the past administration to miss its spending targets.
Mr. Andaya said on Tuesday that House leaders still plan to file a supplemental budget to restore funds cut under the new cash-based system, particularly for health and education projects, among others.
But Mr. Diokno insisted that the supplemental budget should be pegged to Congress’ approval of remaining tax reform packages.
“The supplemental budget is a possibility but not a certainty. It’s difficult to initiate and pass a supplemental budget. It requires that the executive identifies the source of financing. If Congress will agree that we will pass all our tax measures, then there’s a possibility. That’s a requirement. We need the tax measures,” said Mr. Diokno.
“With the supplemental budget, you have to have a really overwhelming justification for it.” — Elijah Joseph C. Tubayan