Spending to dictate worthiness of 2016 budget

Analysts said the economic impact of next year’s record P3-trillion national budget will only be felt if the government succeeds where it has failed in the last four and a half years—spending.

President Aquino’s economic managers have promised as much since the administration came in, but the government has fallen short when it comes to infrastructure development.

“There’s still some uncertainties whether statements from the government—that it will backload expenditures this year to catch up with the first quarter backlog—will actually be delivered,” Bank of the Philippine Islands lead economist Emilio Neri Jr. said Wednesday.

Budget and Management Secretary Florencio Abad earlier this week said government disbursements rose by 12.4 percent in the second quarter, but still fell short of target.

He declined to provide specific numbers, but computing a 12.4-percent jump from the P505.2-billion disbursements during the second half of last year would put this year’s figure at about P567.8 billion.

The projected government spending from April to June, however, fell below the P669.4 billion in disbursements programmed under the Development Budget Coordination Committee’s quarterly fiscal program for 2015.

The Aquino administration transmitted its proposed record P3-trillion 2016 national budget to Congress last Tuesday. The budget will dictate how the government will operate in the president’s last year of service, also an election year.

In one key promise at the start of Mr. Aquino’s term, economic managers said annual government spending on new roads, bridges, airports, and other infrastructure would be hiked to at least 5 percent of gross domestic product (GDP). “Throughout the term of President Aquino, it has not even [reached] 3 percent of the GDP,” Neri said.

He highlighted, however, the government’s successes when it comes to spending for social welfare programs in education, health, as well as cash handouts to the poor. “It’s clear that they’ve been able to deliver those.”

While there is improvement on physical infrastructure spending, “they’re [government] still behind.”

Four “first-tier” agencies are expected to receive the bulk of the 2016 budget. These are the Department of Education, which will get P406.74 billion; the Department of Public Works and Highways (P289 billion); Department of National Defense (P142.9 billion); and Department of Interior and Local Government (P126.3 billion).

In a note to clients this week, Standard Chartered said the 2016 budget is consistent with the previous years’ efforts and “provides a continued focus on medium-term development.”

The bank also noted that implementation remains the key challenge. About 46 percent of the shortfall in government disbursements this year was caused by structural weakness within key departments and agencies, it said.

“Further progress will depend on continued efforts on implementation,” Standard Chartered Asia Economist Jeff Ng said.