THE PHILIPPINE ECONOMY would have expanded by 5.3% in the second quarter if the government was able to address underspending by key agencies.

The Department of Budget and Management (DBM) Secretary Amenah F. Pangandaman said the government was not able to spend P170 billion in the first semester, which led to a slower-than-expected gross domestic product (GDP) growth in the second quarter. 

“Our study showed that if we only spent at least P65 billion of the P170-billion gap, our GDP would have been 5.3%. So, sayang (what a waste),” Ms. Pangandaman said at an event hosted by the University of the Philippines School of Economics on Saturday.

The Philippine economy grew by 4.3% in the second quarter, the slowest in two years. This was weaker than the 6.4% growth in the first quarter and 7.5% in the same period last year.

For the first half, GDP growth averaged 5.3%, lower than the government’s 6-7% target.

The disappointing second-quarter growth was mainly attributed to weaker consumption and a decline in government spending. Government spending contracted by 7.1% in April to June, a reversal of the 6.2% growth in the first quarter and 10.9% a year ago.

Finance Secretary Benjamin E. Diokno partially attributed the underspending to the over P100 billion in government-issued checks that were not released in the first half.

Ms. Pangandaman earlier said there are P124.1 billion worth of government-issued checks which are currently held by banks. This prevents the funding of social programs that should have been implemented.

According to Mr. Diokno, during his time as a Budget secretary, government units tend to accept projects that are not ready for implementation.

“You have to be very strict. Do not accept projects that have no studies…Do not ask for more than what you can chew. If you will not be able to spend the budget, that is unfair to other departments that can spend the money,” he told reporters on Friday.

In coming up with the proposed 2024 national budget, Ms. Pangandaman said the DBM considered the past spending performance of agencies.

“Even if you want (a budget that is) as high as P100 billion for a certain project, but you won’t be able to spend it, it will be part of our formula,” she said.   

Still, Mr. Diokno said he is optimistic the economy will expand in the second half as easing inflation may boost household consumption and face-to-face schooling lifts economic activity.

He noted that government spending usually catches up in the second half.

Meanwhile, the DBM is pushing for amendments to the procurement laws to speed up government spending.

“I know that the current government procurement process is difficult, so we will reform that, and we will present it to the President next week,” Ms. Pangandaman said.

Ms. Pangandaman earlier said the Government Procurement Policy Board is working on simplifying the law’s implementing rules and regulations to address bottlenecks.

The DBM is also working on building the capacity of local government units (LGUs) amid the implementation of the Supreme Court’s Mandanas-Garcia ruling.

“We have to recognize that the capacity per LGU (is different),” Ms. Pangandaman said. “There are LGUs, especially those who are progressive, who can really create and implement projects that are highly impact and highly technical, but there are some who don’t have enough capacity.”

She said the National Economic and Development Authority (NEDA) will soon release a study that would identify which projects and programs would be better handled by the National Government or LGUs.

“Hopefully we’ll have the study soon so we will be able to identify which projects and programs can be delivered more efficiently by the National Government and what programs can be delivered by our LGUs,” she said.

The government is currently working on devolving national government functions and programs to LGUs to give them the capacity to govern.

Under the Supreme Court’s Mandanas-Garcia ruling, LGUs were granted a larger share of national taxes to support them in the devolution. — Keisha B. Ta-asan with inputs from AMCS