Government to accelerate state disbursements

MANILA, Philippines – With barely a month left before the year ends, the Aquino administration has moved to fast track still below-target state disbursements by removing the waiting time state banks need to observe before they could convert government checks into cash.

 “Agencies are encouraged to settle all their due and demandable APs (accounts payables) …and advising their creditors/payees to immediately encash issued checks, to accelerate payments this year…,” the Department of Budget and Management (DBM) said under Circular Letter 2015-12.

 Under the circular, the DBM directed government banks to “immediately” encash checks they receive or credit the payment to contractors’ accounts for government contracted goods or services.

 Previously, banks had to wait for 24 hours from the submission of checks to the actual cash release.

 In a text message, Budget Secretary Florencio Abad said the move is “another way to accelerate spending.” As of September, state expenditures were 14-percent below the program.

The government disbursement process begins with the transfer of agency funds, as indicated in the budget, from the Bureau of the Treasury to their separate sub-accounts.

 Agencies then get an Advice to Debit Account (ADA) form from the DBM, which they later present to the banks to effect transfer of money from their individual accounts to their contractors for specific projects.

 Aside from ADA, agencies also present a List of Due and Demandable Accounts Payable (LDDAP) to banks to give them a complete tally of goods and services they nee to pay for a specified period.

 Once held by banks, both LDDAP and ADA facilitate the fund transfer from agency bank accounts to those of their contractors, or for agencies to issue checks to their private counterparts.

According to the DBM, the circular was issued “given the comfortable cash balances” and to “avoid undue pressure in the fiscal year 2016 cash disbursement program.”

 It will be valid for obligations that will be made until Dec. 31, 2015.

 The national government has fallen behind its disbursement program for the year despite recording double-digit gains in revenues, Treasury data showed.

As of September, the budget deficit— which indicates disbursements outstripping revenues— reached P25.55 billion, way below the P229.47 billion target. This year’s cap was set at P283.7 billion.

 Expenditures, in particular, amounted to P1.63 trillion as of the third quarter, 12 percent up year-on-year, but 14 percent below the P1.91 trillion program during the period.

 Disbursements are only recorded in the government balance sheet once actual checks are issued to pay for contracted goods and services.