MANILA, Philippines - Administration allies in the Senate have criticized the underspending of the government for infrastructure programs, saying it has adverse effects on economic growth.
Sen. Franklin Drilon, chair of the committee on finance, said the economy needs to be strengthened through aggressive public spending, especially now that the recent downgrade of the credit rating of the United States is expected to affect economies worldwide.
On Monday, Drilon directed government economic managers to provide an assessment of the impact of the US credit rating downgrade on the government’s expenditure program.
The Bangko Sentral ng Pilipinas believes the effect of the credit downgrade on emerging markets – including the Philippines – would be short-lived and would reflect in the volatility in foreign exchange markets.
Drilon noted that out of the P1.711-trillion disbursement program for this year, the government has disbursed only P698 billion in the first half of the year. P613 billion of the balance is allotted for the salaries of government employees, internal revenue allotment of local government units and similar expenditure.
This leaves P399 billion for “non-mandatory items” such as capital outlay, infrastructure spending and maintenance and other operating expenditures.
“We have noted that because of the underspending on the part of government, it had adverse effects on GDP (gross domestic product) and the unemployment-underemployment data because when the government underspends, the economy generates less jobs because of lack of infrastructure spending, for example,” Drilon said.
Sen. Edgardo Angara said there is no justification for the underspending when many sectors need funding.
There was no justification for the government’s tactic of hoarding so much public funds when there are so many sectors that are crying out for funding, he said.
“As I understand it in public finance, money unspent is money useless, a useless asset,” he said during yesterday’s briefing by the Development Budget Coordinating Council on the 2012 national budget at the Senate.