Economic impact of budget impasse bigger than initially thought

The delay in the implementation of this year’s national government budget—brought about by the three-month deadlock between the two chambers of Congress over the final version of the 2019 General Appropriations Act—prevented the Duterte administration from spending P43.7 billion worth of economic stimulus in January and February, the Department of Finance said.

This means the government was unable to spend some P740.7 million a day over the two-month period, Finance Assistant Secretary Antonio Lambino II said, revising upward the underspending figure of P500 million a day disclosed earlier by Finance Secretary Carlos Dominguez III.

Lambino said these unallocated resources represented “idle funds that the Duterte administration could have otherwise spent on priority programs to sustain and boost the growth momentum and expand social protection initiatives for the poor.”

Although tax policy and administration reforms have led to higher collections by the bureaus of Internal Revenue and of Customs since last year, Lambino said the government was not able to spend all of the programmed funds at the onset of 2019 because Malacañang had to operate since January on the 2018 reenacted budget.

It will have to continue running the government on last year’s budget until the 2019 spending plan is signed by President Duterte.

Data from the Bureau of the Treasury showed that actual cash expenditures totaled P490.7 billion over the January-February period, or P43.7 billion less than the estimated programmed funds of P534.4 billion for these first two months of the year.

The national government could spend only P212.2 billion in January as against the estimated programmed funds of P267.9 billion, or lower by P55.7 billion. In February, cash expenditures accelerated to P278.5 billion against the estimated programmed funds of P266.5 billion, higher by P12 billion. The net total for the first two months was a negative P43.7 billion relative to program.

Lambino recalled that as the Senate-House budget impasse entered its second month in February, the President’s economic managers expressed concern over its adverse impact on the economy, prompting them to revise and pare their original gross domestic project growth target for 2019 to the 6-7 percent range from the previous 7-8 percent.

“The number one casualty of this forced underspending is President Duterte’s signature ‘Build, Build, Build’ program,” said Lambino.