State offices improve use of their budgets

Font Size

GOVERNMENT OFFICES continued to improve use of their budgets, as shown by an increase in their Notice of Cash Allocation (NCA) utilization rate as of October, the Department of Budget and Management (DBM) said on Tuesday.

The DBM said that the national government’s NCA utilization rate improved to 93% in 10 months to October, as P2.448 trillion out of the P2.638 trillion worth of NCAs released in that period were used, compared to 81% the past year.

NCAs refer to the green light given by DBM for state offices to disburse funds allocated to them.

A higher utilization rate means state offices were able to “disburse their allocated funds and implement their programs and projects” on time, the DBM said.

NCAs used increased by P110 billion from the P2.338 trillion utilized out of the P2.877 trillion released in 2018’s first 10 months.

The Budget department said that line departments alone used P1.772 trillion of the P1.956 trillion NCA released, translating to a 91% year-to-date NCA utilization rate.

Government-owned and -controlled corporations registered a 97% NCA utilization rate, while local governments’ allocations were “fully used” as of October, the DBM said.

Sought for comment, Nicholas Antonio T. Mapa, senior economist at ING Bank NV-Manila Branch, said that the higher utilization rate indicates the government’s “promised catchup spending” has been taking place. Mr. Mapa said that the increase in state spending has given “a glimpse of the ability of the government to roll out spending.”

State spending as of end-September was up 5.51% year-on-year at P2.627 trillion, with year-to-date infrastructure expenditures totaling some P546.3 billion, 4.3% smaller than the P570.8 billion spent the past year.

For Ruben Carlo O. Asuncion, chief economist at UnionBank of the Philippines, Inc., a higher NCA utilization rate “bodes well for economic growth” as it indicates more robust spending by the government.

“Increasing cash utilization means higher government expenditure (of course, as programmed in the national budget), and higher government spending means higher potential for economic expansion,” Mr. Asuncion said in an e-mail.

For ING’s Mr. Mapa, the latest NCA utilization rate “could mean that 4Q GDP does indeed accelerate to join robust consumption and a possible rejuvenated investment boom and help lift full year growth past that 6.0% finish line by December.”

Socioeconomic Planning Secretary Ernesto M. Pernia said he sees fourth quarter gross domestic product (GDP) to grow within the 6.5-7% range, giving the economy a chance to hit the low-end of the 6-7% GDP growth target for full-year 2019.

The economy expanded by 6.2% in the third quarter, picking up from the 5.5% average growth in the first half which was dragged largely by the delayed enactment of 2019 budget, according to economists and government officials. — Beatrice M. Laforga