Gov’t cash utilization rate sharply lower year on year at end-July

GOVERNMENT agencies’ cash utilization in the seven months to July, based on an indicator known as the Notice of Cash Allocation (NCA), fell sharply to 76% from 93% a year earlier, with the pandemic disrupting normal spending activity, the Department of Budget and Management (DBM) said.

The department released P2.609 trillion worth of NCAs during the period, with P1.995 trillion used.

NCAs are clearances issued by the DBM, giving agencies the green light to disburse funds for their operations, projects and programs.

In the first seven months of 2019, the department released P1.688 trillion worth of NCAs to line agencies, of which P1.569 trillion was used.

Stronger growth may translate to higher cash usage but economic activity remains stagnant due to the pandemic, UnionBank of the Philippines, Inc. Chief Economist Ruben Carlo O. Asuncion, putting pressure on the government’s ability to spend.

He said “government spending for developing countries are critical for economic output growth.”

Economic managers projected a -4.5% to -6.5% gross domestic product (GDP) result this year. First-half GDP contracted by 9%.

“(The) undisbursed government spending… may be also because absorptive capacity was derailed by the pandemic,” Mr. Asuncion added.

NCAs used by line agencies totaled P1.38 trillion at the end of July, accounting for 73% of the P1.884 trillion released during the period.

The Commission on Elections recorded the highest utilization rate at 86%, followed by the Department of Public Works and Highways at 84%, and the Commission on Human Rights at 81%.

The DBM added separately that NCAs released for coronavirus disease 2019 (COVID-19) measures totaled P360.456 billion at the end of June. — Beatrice M. Laforga