Economic cluster to review spending target

MANILA, Philippines — The Duterte cabinet’s Economic Development Cluster (EDC) is set to review this week the government’s spending target to determine if it is still achievable given the delay in the passage of the 2019 budget, the Department of Finance (DOF) said.

In an interview last Friday, Finance Secretary Carlos Dominguez said the DOF would convene the EDC to discuss whether line agencies, particularly the Department of Transportation (DOTr) and the Department of Public Works and Highways (DPWH) would still be able to spend as targeted this year.

“We are going to discuss again next week with the EDC exactly what we have to do, what are really the new targets,” Dominguez said.

The national government has an expenditure program of P3.78 trillion this year, equivalent to 19.4 percent of gross domestic product. In the first quarter of the year, actual disbursements reached P778 billion, only 0.8 percent up from the P772 billion recorded a year ago.

Economic managers estimate that there was underspending of P1 billion per day or as much as P90 billion in the first quarter, with the government forced to operate under a reenacted budget.

The finance chief, however, said the government is not yet conceding that there would be underspending for the rest of the year.

“We are not conceding that yet, we are just saying what is needed and I have to talk to the DOTr and DPWH and see if they can still do it,” he said.

Dominguez once said that implementing catch up measures to meet the spending program may be tough for the government considering many factors, including the weather and labor costs.

 “You know, I’m telling you that catch-up is a myth. I’ll tell you what happens, people who have not been in operations don’t realize that when you try to catch up it costs you more, you will pay overtime, so the same road you’re going to build will cost more,” Dominguez told reporters.

“I’ll tell you something else, when you are rushing you will make more mistakes. I’ve experienced that when we were in the banana business, when you’re trying to rush planting or opening new areas. It’s better to do it in a deliberate way. Plus on top of all of that, there’s the weather to contend with,” he added.

As such, the finance chief called on line agencies to assess their capability to fast-track the implementation of projects this year, in such a way that these would be no additional costs.

“I mean don’t do it foolishly just for the sake of spending. You have to do it in a rational way and that won’t cost us more or whatever. So it’s really a different problem,” he said.

The finance chief said the EDC meeting will also determine whether or not the Development Budget Coordination Committee (DBCC) would need to review the country’s deficit ceiling this year.

“We have to look at the physical targets first and then we will go with the DBCC to look at the deficit target,” Dominguez said.

For this year, the government’s fiscal deficit is capped at 3.2 percent of GDP, higher than last year’s ceiling of three percent. This translates to a nominal deficit figure of P631.5 billion. For the first three months of 2019, deficit narrowed to P90.2 billion, or 2.1 percent of GDP.

Considering spending requirements, the finance secretary said the DOF would also need to discuss with a Bureau of the Treasury (BTr) if the government would still proceed with the planned Samurai bond offering later this year.

“I have to talk to Leah because our expenditures really went down,” he said, referring to National Treasurer Rosalia De Leon. “We still have enough time for the Samurai bond, the plan is still in August.”