Marcos admin ramps up spending to spur growth

MANILA, Philippines —Budget utilization of state agencies rose in the first month of the year, as the Marcos administration learned its lessons from last year’s underspending that crimped government contribution to economic growth.

The cash utilization rate stood at 70 percent in January 2024, data from the Department of Budget and Management (DBM) showed. This means the national government, local governments and state-owned corporations were able to use P205 billion out of P293.6 billion in notice of cash allocations (NCA) released to them last month.

That was higher than the 66-percent budget utilization rate recorded in the same month last year, when government agencies utilized P187.5 billion out of P284.5 billion NCAs issued to them.

Turnaround

Meanwhile, unused cash allocations amounted to P88.5 billion in January, lower than P97 billion that state agencies failed to utilize a year ago.

An NCA refers to quarterly authority given by the DBM to agencies to withdraw money from the Treasury to fund their programs and spending requirements.

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Michael Ricafort, chief economist at Rizal Commercial Banking Corp., said the better NCA utilization in January reflected the government’s effort to make public spending contribute more to economic growth.

Data showed government expenditures collapsed by 1.8 percent in the fourth quarter of 2023, a turnaround from 6.7 percent growth in the third quarter, after the state’s efforts to catch up on spending were restrained by the need to keep the budget deficit in check.

“The higher cash utilization could be partly due to some acceleration, learning from the lessons earlier in 2023 when the year-on-year decline in government spending dragged on economic growth,” Ricafort said.

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“For the coming months, there could be further acceleration on cash utilization to support faster rollout of various government projects, including at the [local government]-level as part of the preparations for the midterm elections in 2025, as voters would look at accomplishments by incumbent officials for reelection,” he added.