Growth seen to continue slowing down

Budget Secretary Florencio Abad INQUIRER FILE PHOTO

The government has more money than it knows how to spend cleanly, stunting economic growth, a senior economic manager admitted this week.

Budget Secretary Florencio “Butch” Abad said the government has become very efficient at collecting revenues in the past five years. Getting the money moving through the bureaucracy, however, has proven more challenging.

“The problem of underspending is brought about by institutional weakness that may take some time to address,” Abad said on Tuesday.

Speaking before local journalists in a forum hosted by ING Bank, Abad said economic growth in the coming months might continue to slow down as the state deals with a “technical deficit” that has kept it from being faithful to its annual budget.

Underspending has emerged as a chronic problem for the Aquino administration. Last year, the government failed to spend more than P300 billion of its P2.26-trillion budget due to bureaucratic bottlenecks. As a result, gross domestic product (GDP) growth slowed to 6.1 percent, falling short of the state’s 6.5- to 7.5-percent target range.

The situation may have worsened this year as first-quarter figures showed growth slowing further to 5.2 percent, short of the more ambitious goal of 7 to 8 percent this year.

Abad said the decade preceding the Aquino administration had bureaucrats tightening their belts due to tightness in the state’s finances. “Now, after a long period… we have the resources to spend on the right projects,” Abad said.

“The truth is, the bureaucracy [is] unprepared to support growth target,” Abad said.

Many agencies lacked the manpower or capability to bid out projects as fast as the national government’s spending plans and growth targets required, the DBM chief said.

In some cases, agency heads nearing their retirement have gone to the extent of simply shelving projects rather than risk Commission on Audit (COA) investigations that might freeze their pensions.

COA itself has become “unreasonably strict” in its investigations following Supreme Court rulings last year that annulled the Priority Development Assistance Fund (PDAF) or “pork barrel” and the DBM’s controversial Disbursement Acceleration Program (DAP).

“We have to find ways by which auditors can be oriented so that they aren’t too rigid,” Abad said.