Poll spending bloats May budget deficit

The country’s budget deficit ballooned to P12.6 billion in May from only P7.8 billion in April because of government spending to conduct the May 10 national elections, Budget Secretary Emilia Boncodin reported yesterday.

"Bulk of the disbursements came in May because of the conduct of the (general) elections on May 10, " Boncodin said.

"It is election spending but not in the way that people think," Boncodin said. "This was spending related to the actual conduct of the elections such as electricity, extra pay for the personnel that actually conducted the exercise."

With the latest figure, the country’s budget deficit for the five-month period amounted to P77 billion, or only P2.4 billion away from the first semester target of P79.6 billion.

Boncodin, however, said the government remains on track to stay within the full-year budget deficit ceiling of P197.8 billion, or 4.2 percent of gross domestic product (GDP). This is in line with the government goal of balancing the budget by 2009.

Aside from spending to conduct the poll, election rules barred the government from spending for new projects from April to May 10. After the voting, the government was finally able to release the money, Boncodin explained.

The Arroyo administration has made the commitment to its international creditors and investors that it would pare down the deficit to P197.8 billion this year.

Boncodin said the May deficit was no surprise except for the unexpected increase in the so-called constructive cash which represented in-coming materials and equipment from foreign-assisted projects.

Constructive cash items, according to Boncodin, were P5 to P6 billion over the programmed Official Development Assistance (ODA) releases in May. "This was the only unexpected item in the budget," she said.

Boncodin said the settlement of accounts payable for government projects also bunched up in May after the lifting of the ban on new government-funded projects.

Under Philippine laws, the government is prohibited from undertaking new projects right before the elections with the intention of preventing the incumbent candidates from using public funds in their campaign.

"When the ban was lifted, then all these projects began and payments for a lot of contracts were made in May," Boncodin said.

However, Boncodin said the budget department did not anticipate the surge in constructive cash items in May despite regulations and strict monitoring that the agency has already put in place exactly to prevent it from happening.

"This is one thing I have to check this because that should not have happened anymore," Boncodin said. "There are already regulations in place that should have prevented this."

Boncodin however discounted the possibility that since government agencies were not allowed to undertake new projects, they instead used ODAs to come up with highly-visible projects during the ban on new projects.