THE DEPARTMENT of Finance (DoF) ordered government agencies to come up with a “catch-up” plan to address underspending in the first half of the year.

“We talked to agencies, and we asked them to come up with their own catch-up plan. The problem is they are underspending. Their budget has been increased significantly this year (but) they’re still not spending,” Finance Secretary Benjamin E. Diokno told reporters at the DoF office in Pasay City, Friday.

“We are still optimistic they will be able to catch up.”

The National Government’s budget deficit narrowed by 18% to P551.7 billion in the January-to-June period as revenue collections exceeded the target while spending slowed. However, it was 28.49% lower than the P771.5-billion program for the period.

State spending inched up by 0.42% to P2.41 trillion in the first half but missed its P2.58-trillion expenditure program by 6.6%.

“I’m worried we aren’t meeting our expenditure target. I’m not happy with a smaller deficit,” Mr. Diokno added.

This year, the government has set a budget deficit ceiling of P1.499 trillion, equivalent to 6.1% of the gross domestic product.

Mr. Diokno said agencies may have been underspending due to “birth pains” as the Marcos administration has only had one year in office.

“There are adjustments. Let’s call it birth pains. Congress made a lot of changes in the budget, there are new projects introduced in the budget. And since they are new, they may not have feasibility studies and engineering (plans) so they cannot start building,” he said.

“Though our underspending is not as big, unlike other years. This time, it’s just a matter of procurement delays. The weather was cooperating in the first six months,” he added.

Mr. Diokno expressed optimism that government agencies will still be able to catch up with spending in the second half.

Data from the Department of Budget and Management showed that government agencies’ budget utilization rate stood at 98% at the end of the second quarter, slightly slower than the year-ahead pace of 99%.

As of end-June, the newly formed Department of Migrant Workers registered the lowest utilization rate at 44%.

This was followed by the Department of Agriculture (76%), the Office of the Vice-President, the Department of Information and Communications Technology, and the Department of Social Welfare and Development (80%).

Meanwhile, Mr. Diokno said that the government is planning to maintain its full-year revenue program for the year.

“We’re not revising. In fact, for the Bureau of Customs (BoC), we actually adjusted it downward. That’s mainly because oil prices have gone down significantly, and the peso has stabilized. If you look at the peso value of our oil imports, there was a huge decline. So, we adjusted the target of the BoC,” he added.

The government plans to collect P3.729 trillion in revenues this year, equivalent to 15.2% of gross domestic product.

In the first half, revenues rose by 7.68% year on year to P1.86 trillion, exceeding the P1.81-trillion program by 2.72%.

According to the BoC’s Financial Service, the agency’s adjusted collection goal for this year is at P874.166 billion. This is lower than its previous target of P901.3 billion.

The Bureau of Internal Revenue (BIR) raised its revenue collection goal for this year to P2.64 trillion, slightly higher than its previous target of P2.599 trillion.

Mr. Diokno said that the government has been efficient in collecting nontax revenues.

“I think we are really performing very well. Right now, if my recollection is correct, we (have raised) around P90 billion from privatization. During other administrations, that’s what they achieved from their entire term. We are very quick to deal with privatization, that’s why nontax revenues grew much faster than tax revenues, though both are above target,” he added.

Nontax revenues rose by 9.13% to P203.1 billion in the January-to-June period. Revenues from other offices, which include privatization proceeds, fees, and charges, jumped by 34.26% to P110.2 billion, surpassing its P81.7-billion target.

Mr. Diokno also said that the government is also working on reviewing the regulations of its collection agencies to improve the ease of doing business.

“We continue to review our existing regulations for both the BIR and BoC. There is a plan to do e-invoicing for the BoC… so importation will be more efficient. We continue to improve the regulations, simplify requirements,” he said. — Luisa Maria Jacinta C. Jocson