Budget transparency causes temporary lag in state spending

MANILA, Philippines - The Philippines is not alone in experiencing a slowdown in public fund disbursements as a result of budget transparency efforts by the government, but officials said such effects are only “temporary.”

“What we know is that the more transparent governments tend to have more predictable budgets and tend to spend according to their plans. If ever there is a slowdown in spending, we don’t think that is necessarily a bad thing,” said Vivek Ramkumar, director at the International Budget Partnership (IBP).

“Caution is a necessary part of the process so if this will result in a temporary lag on spending, then it’s okay for as long as later on, we will be able to spend fully and rightfully,” he told reporters last Friday.

The IBP sponsors the annual Open Budget Survey, which ranks governments according to how transparent and accountable are their national outlays.

The Philippines has made “substantial” progress in making the state budget transparent, scoring 64 out of 100 on the latest index.  This came at a time the government is being accused of underspending.

For the first seven months, the budget deficit—the difference between expenditures and revenues—only amounted to P18.5 billion, way behind this year’s cap of P283.7 billion, Treasury data showed.

Budget Undersecretary Janet Abuel admitted there may be “some” impact on spending from the Aquino administration’s anti-corruption drive, but added other factors also came into play.

“It’s not really because of transparency, it’s been there for a while and when we tried to diagnose the problem, there are other factors that contributed to it such as poor planning of the agencies,” Abuel said in the same briefing.

“Stringent” procurement rules are also to blame, while a “chilling effect” as a result of unfavorable Supreme Court rulings on discretionary funds also had an impact.

Last year, the High Court declared as unconstitutional the priority development assistance fund or “pork barrel” of lawmakers and the disbursement acceleration program, which re-allocated unused funds to other agencies in 2012.

“The chilling effect is there,  not because we are guilty, but because we are not guilty and we are trying our best to follow. We know that this is something that we can surpass with clear rules,” Abuel explained.

 For his part, Budget director Rolando Toledo said budget transparency should in fact encourage agencies to spend more.

“It should move us not to delay the implementation process, but to trigger and incentivize spending on the part of the agency because now everything is clear,” Toledo pointed out.

 On the government’s part, both Abuel and Toledo said efforts have been made to accelerate spending. Among others, they cited a presidential issuance that put in place permanent spending delivery units on state agencies and the budget acting as a “release document.”