Spending risks in focus at DBCC meeting

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By Elijah Joseph C. Tubayan, Reporter

ECONOMIC MANAGERS will discuss in a meeting next month of the Development Budget Coordination Committee (DBCC) ways to mitigate the economic impact of a partially reenacted budget and the public works ban ahead of the May 13, 2019 midterm elections, the chairman of the interagency body said on Wednesday.

His statement coincided with a Department of Budget and Management (DBM) report showing government agencies’ budget use in proportion to total allocations slipped in the 11 months to November from the same period last year, even as amount was more than a year ago.

“DBCC will address that before end January, when we would have a better handle of the situation — how early or late the 2019 budget will be approved, the size of the infra[structure] budget that will be affected by election ban, which I think will take effect in the last week of March,” Budget Secretary Benjamin E. Diokno said in a mobile phone message.

“Will use the first month of the year to assess where we are and how to move forward, with the least damage to the economy in mind.”

The DBCC is mandated to set and review macroeconomic assumptions for state budgeting purposes; as well as revenue projections, borrowing level, aggregate budget amount and expenditure priorities; and recommend the fiscal program to the Cabinet and the President.

The body consists of the DBM, the Department of Finance, the National Economic and Development Authority, the Office of the President and the Bangko Sentral ng Pilipinas as a resource institution.

Congress went on a month-long break on Dec. 15 without passing the P3.757-trillion 2019 national budget and Malacañang said it won’t ask Congress to hold a special session as the Senate said it will not be able to finish deliberations on the proposed fiscal plan regardless.

Failing to enact a new budget would mean that the current spending plan will be reenacted, meaning no new project can begin.

Lawmakers return to work on Jan. 14.

The Senate’s budget timetable shows the chamber aims approval on third and final reading on Jan. 16, ratification by both chambers on Jan. 29 and submission to Malacañang for signing into law by President Rodrigo R. Duterte on Feb. 7.

The economic managers had warned that a reenacted budget for the whole year may cut economic growth by 1.1-2.3 percentage points, although Mr. Diokno said that he expects the government to operate on a new budget some time in February.

Delays in processing the proposed 2019 national budget began at the House of Representatives, halting committee-level deliberations for two weeks due to confusion over the shift to an allocation system based on the limited spending capacities of departments and agencies. Hence, this year’s budget is slightly bigger at P3.767 trillion.

The House approved the spending plan on final reading on Nov. 20.

The Senate argued that this left it will little time to examine the budget version that left the House.

At the same time, Batas Pambansa Bilang 881 or the Omnibus Election Code prohibits the government from releasing funds for public works 45 days before a regular election — which next year falls on May 13 — except for projects that have been awarded prior to that period. It also prohibits public works construction within 45 days before elections.

The Senate plans a joint resolution with the House that will provide for selective exemption from that public works ban in hopes of mitigating the economic impact of budget reenactment.

The DBCC targets a 7-8% economic growth rate for 2019-2022, which, if realized, is faster than the actual 6.7% in 2017 and 6.3% in the first three quarters of the year.

Also on Wednesday, the DBM reported that overall utilization rate of the DBM’s Notice of Cash Allocations (NCAs) stood at 88% as of November, lower than the 90.7% recorded in the same period last year even as it was more higher than the 81% logged in the 10 months to October.

The NCA is a quarterly disbursement authority issued by the DBM to government offices, allowing them to secure checks from the Bureau of the Treasury to pay for contracted projects. Once encashed, funds are deemed disbursed.

State departments and agencies utilized a total of P2.6 trillion in the 11 months to November of the P2.94 trillion released to them by the DBM, which was up 26.86% year on year. This leaves P339.54 billion in total unused funds, 61.69% higher year on year.

“It’s more than the frontloading we are seeing this year,” Budget Undersecretary Laura B. Pascua said in a mobile phone message when asked for an explanation.

“For some reason, contractors are speeding up the implementation of prior obligations which is consistent with the ACBA (Annual Cash-Based Appropriations). We want to wind down prior-year obligations which have yet to be implemented.”

The Department of Public Works and Highway (DPWH) had the highest NCA utilization ratio at 95% of the P535.73 billion released to it, marking the biggest sum of NCAs released by the DBM as of November.

National government agencies that received some of the biggest releases include the Department of Education, which used 88% of the P479.30 billion funds released to it; the Department of Interior and Local Government, which used 88% of its P240.33-billion allocation; the Department of National Defense, which used 90% of P224.47 billion; the Department of Social Welfare and Development, which used 84% of P135.32 billion; and the Department of Transportation, which used 69% of the P49 billion it got.

The National Economic and Development Authority logged the lowest utilization rate at 52%, followed by the Commission on Elections’s 61%.