State spending hits 92% in November

MANILA, Philippines - Spending by state agencies went up nearly to the level not seen since the last year of a controversial disbursement program, representing improved absorptive capacities which were two years in the making.

From January to November, state departments and offices have already utilized 92 percent of their notices of cash allocation (NCAs), data from the Department of Budget and Management (DBM) showed.

That was up from 87-percent utilization rate recorded last year and nearly hit the 93.77 percent posted in the same month two years ago.

NCA issuance marks the final step in withdrawing state funds. Once an NCA is utilized, disbursements are automatically recorded in the government balance sheet.

As of November, P1.547 trillion of the total P1.675 trillion in NCAs released were already spent. The budget for this year was pegged at P2.606 trillion.

"NCAs are now issued more often and faster. There is cost to holding cash so we do not want agencies holding idle cash," Budget Secretary Florencio Abad said in a text message.

"Agencies obligate and disburse faster," he added.

In July 2014, the Aquino administration suffered a setback on spending after the Supreme Court ruled against its Disbursement Acceleration Program (DAP), which re-aligned unused funds in agencies to other departments.

The ruling caused contraction in state expenditures by as much as 15 percent that same month before recovering to a 25-percent uptick in July this year. 

But Emilio Neri Jr., economist at Bank of the Philippine Islands, said it will be difficult to attribute faster spending as of November to better department utilization.

"It's a welcome development, but it will be hard to connect that to how departments are proceeding considering the ruling last February," Neri said in a phone interview.

After the government filed a motion to reconsider the July 2014 decision, the high court partially granted petition to finance off-budget items using public funds.

"I think the government took advantage of that ruling to accelerate spending," Neri said.

In a round table discussion last week, World Bank country director Motoo Konishi said it is normal for agencies not to be able to use all funds allocated them because of the double-digit budget increase.

For instance, the 2015 budget was 14.9 percent up from previous year's P2.268-trillion outlay.

"Never have I seen an increase in the budget this big... So if you give an agency a budget up significantly from previous year, it is natural that they will not be able to take it all in," Konishi told The STAR.