Infra underspending rate narrows to 7.5% in 2016
THE GOVERNMENT improved its spending performance on infrastructure last year, greatly from road projects from the Public Works department, but has kept underspending levels “minimal”—in line with the new government’s goal.
In an assessment of the national government’s disbursement performance, the Department of Budget and Management ( DBM) reported that infrastructure spending hit P493 billion in 2016, up 42.8%.
The jump in spending was credited to road widening and rehabilitation of national roads, the Armed Forces of the Philippines modernization program, the Health department’s construction of medical facilities and purchase of medical equipment, and construction and repair of State Universities and Colleges’ facilities.
The full-year infrastructure disbursement however still fell short of the P533.1 billion budget, leaving 7.5% of the funds unspent, but an improvement from the 20% shortfall seen in 2015.
The DBM said in the report that the unused funds were the result of “procurement difficulties such as failure of bidding, non- compliance of bidders with bid requirements or diff iculty in complying with product or service specifications.”
The agency said the Departments of Health, Transportation, Finance, and Foreign Affairs faced such procurement diff iculties, leaving a combined P14.2 billion unspent.
“Underspending in infrastructure outlays also stemmed from the P1.8 billion funds which were not yet requested by the PNR (Philippine National Railways) and PPA (Philippine Ports Authority) in connection with their Memorandum of Agreement with the DoTr (Department of Transportation) for various rail and port projects,” it added.
Government agencies spent most of their allotments in the fourth quarter. Infrastructure spending hit P140.8 billion, up 37.7% from a year earlier, but was 2.7% under the budget.
In December, infrastructure disbursements grew P13 billion to P66.9 billion year on year, and more than doubled from the P30.3 billion released a month earlier.
The rise was credited to the implementation of road infrastructure programs and projects of the Department of Public Works and Highways which include flood control projects and the regular maintenance, repair or rehabilitation and upgrading of existing road networks and bridges nationwide.
It was also attributable to the construction of hospitals and acquisition of medical equipment under the Health Facilities Enhancement Program ( HFEP) of the Health department, and completed irrigation projects of the National Irrigation Administration.
State disbursements totaled P2.549 trillion at end-2016, up 14.3%. The total was 3.6% below the P2.645 trillion program.
The DBM earlier reported that the government posted a P353 billion fiscal deficit, equal to 2.4% of gross domestic product (GDP). Budget Secretary Benjamin E. Diokno said that the deficit was an improvement, saying: “We want to spend more, underspending will be a thing of the past.”
Moving forward, the Budget department said that spending is expected to accelerate while transitioning in the second quarter, after spikes due to base effects at the starting months of this year.
“The growth of disbursements for the first few months this 2017 will be moderate partly due to base effect considering the high disbursements recorded for the same period in 2016 and since most line agencies are still in the process of obligating their allotments at the earlier part of the year. However, spending is expected to rack up in the succeeding months towards the summer season,” the report said.
According to the DBM, poor planning and weak structural capacities play a part in underspending. It said that it is looking to implement the Medium-Term Expenditure Framework, to ensure the consistency and responsiveness of the spending program.
The DBM also expects the Budget and Treasury Management System to be rolled out in January next year, which would link budget execution and cash management operations.
For 2017 the government set a P3.35 trillion budget, earmarking P860.7 billion on infrastructure spending, equivalent to 5.4% of GDP, against the P756.4 billion programmed in 2016.
Until the end of its term, the administration is looking to jack up infrastructure spending to 7.1% of GDP, as it aims to spur the economy to growth of between 7-8% over the same period, from 6.5-7.5% currently. —