Gov’t to miss 2021 deficit goal due to underspending

The Philippines is poised to end 2021 with a budget deficit smaller than programmed due to faster-than-expected recovery in revenues while government agencies remained beset by underspending, according to the economic managers belonging to the Development Budget Coordination Committee (DBCC).

Budget Undersecretary Rolando Toledo told a press briefing on Tuesday that the emerging full-year budget gap of P1.61 trillion, equivalent to 8.2 percent of gross domestic product (GDP), will be narrower than the original program of P1.89 trillion or 9.5 percent of GDP.

As the Philippines emerged from the most stringent lockdown restrictions and reopened more economic sectors, year-to-date revenues were on the rise, such that the DBCC expects to end the year with a P3.03-trillion collection, higher than the P2.88-trillion goal.

On the other hand, actual government spending on public goods and services were seen reaching P4.63 trillion by yearend, lower than the P4.74-trillion expenditures target.

“Disbursements are a direct factor of implementation. At the moment, agencies are still in that adjustment period where implementation is affected by the pandemic,” Budget officer in charge Tina Rose Marie Canda said.

In particular, Canda said agencies that rolled out big-ticket infrastructure projects were the “worst-hit” by underspending. Also, “some of our disbursement patterns, for instance, for travel or training [have] been put on hold,” she added.

Canda nonetheless said that “these past two months, especially after November, we saw a huge, significant jump in disbursements,” although figures were not yet available.

Canda explained that agencies likely fast-tracked spending as the end of the year drew near and this year’s budget funds could expire. The legislature, however, had moved to extend the implementation of the P4.51-trillion 2021 national budget until next year.

Pending in Congress was the P5.02-trillion 2022 general appropriations bill, while the DBCC on Tuesday approved to pitch a record-high P5.24-trillion budget for 2023.

Despite slow budget utilization among agencies, Canda said the economic team was optimistic that spending would quicken alongside further reopening of the economy and the postpandemic rebound.

“When we loosened our quarantine restrictions, we saw a significant improvement in disbursement rates,” Canda said.