Budget releases hit P2.68 T from January to July

MANILA, Philippines – Budget releases of the new administration surged in July, consistent with President Duterte’s promise to spend more and widen the deficit.

A total of P2.68 trillion or 89.1 percent of the P3.002-trillion outlay has been released to agencies in the first seven months, data from the Department of Budget and Management (DBM) showed.

This was the fastest recorded so far this year. Allotment means budget is released to agencies, which may now enter into contracts with the private sector to pay for goods and services.

“We expected some adjustment from the new administration and we factored that in our slower growth forecasts. It seemed like that is not happening,” said Alvin Ang, economist at Ateneo de Manila University.

“This is good and it seems like this administration has learned its lesson from the previous one,” he said in a phone interview yesterday.

Following persistent underspending during the previous administration, the Duterte administration promised to widen the deficit to 2.5 percent of economic output this year from 0.9 percent last year.

The target was adjusted from the original two percent left by the past administration last June. For succeeding years, a three percent goal was set.

According to DBM data, a total of P1.52 trillion of departmental budget has been released as of July. This accounted for 94.1 percent of P1.62 trillion for the year.

Nearly 54 percent or P242.89 billion of P451.21-billion on special purpose funds were also made available. These include calamity fund, pension and gratuity fund and contingency fund, among others.

The remaining P876.72 billion represented automatic appropriations, which are yearly budget for debt payments, tax expenditure fund, grants and local government share of national revenues.

They accounted for 94.2 percent of the P930.7-billion allotted for the year, data showed.

“This is a welcome development but I guess it is too early to say if this will have an effect on economic growth,” said Astro del Castillo, managing director at First Grade Holdings Inc.

Growth, as measured by gross domestic product, expanded 6.9 percent in the first quarter, within the adjusted target of six to seven-percent. Second quarter data will be released this month.

“This (better allotment releases) could just be a knee-jerk reaction and there could still be a learning curve,” Del Castillo said in a phone interview.

“There may be no problem with the DBM releasing the funds, but going down to the agencies, there could be some adjustments,” he added.