State firms improve Q1 budget absorption

MANILA, Philippines – State agencies improved their capacity to absorb their budget ahead of an election ban on public projects by the end of March.

As of the first quarter, 27.39 percent or P711.26 billion of the P2.6-trillion allotments were already obligated, data from the Department of Budget and Management (DBM) showed.

That was up from 21.72 percent in the same period last year and breached the quarterly “benchmark of 25 percent,” Budget Secretary Florencio Abad said in a text message.

“First quarter rate is above the norm, but there is room for further improvement,” he said last Friday.

Under the budget process, obligation means funds are already contracted for a particular project and may soon be subject to actual disbursement.

Before getting spent, agencies will need to secure notices of cash allocation (NCA) from DBM to be presented to the Bureau of the Treasury to claim their checks.

Obligated funds are not covered by the poll prohibition on public spending.

For the past five years, the Aquino administration has consistently fallen below its spending targets, which at times, partly slowed down economic growth.

The DBM, for its part, has consistently blamed the line agencies for not disbursing fast enough despite more than 90 percent of the budget already released to them during the first months of the year.

“Half of the (spending) problem is not related to formal procurement, it’s the inability of the agencies to really define the specification of the projects and to make realistic costing,” the budget chief said in a recent interview.

“It’s not easy. Many of the agencies were not trained to do that,” he added.

He said he would like to believe it had since been reversed, pointing to the Department of Public Works and Highways (DPWH), the primary infrastructure agency, as an example.

According to DBM data, DPWH had the second highest obligation rate of 38.13 percent as of March, next only to the Autonomous Region in Muslim Mindanao’s 42.69 percent.

“Infrastructure spending was very good. I was told the DPWH already awarded more than 60 percent of their projects before the election ban,” Abad said.

This, in turn, allowed economic growth to accelerate to 6.9 percent in the first quarter and beat other major Asian economies, including China, he added.