Budget surplus means government underspent

CEBU, Philippines - The government’s ability to drive up spending is crucial in fueling the growth of the country’s economy.

Dionisio Ledres, Jr. of the National Economic and Development Authority-7 said budget surplus is usually experienced because government agencies “are not good” in spending money for projects.

In other words, poor budget execution of government implementing offices has contributed to the low state spending which has dragged economic growth.

“The government has money -- we have a lot of money -- the problem is that government agencies are not good in spending money in implementing programs and projects. In fact, the concern is underspending. That’s a big hurdle,” said Ledres, the agency’s chief economic development specialist, in an interview.

The slow reconstruction spending for calamity-hit areas is also a bad thing for the Philippine economy which slowed down to 5.3 percent in third quarter last year due to lack of monetary stimulus. The weakest pace in the third quarter for more than five years brought year to date growth of 5.8 percent

According to data from the Department of Finance, government spending in October last year grew slower at 6 percent, bringing down the nation's Q3 GDP growth. The data further showed the government spent P1.6 trillion from January to October 2014.

Ledres pointed out implementing agencies of the government should fast track project execution to create more jobs and help the economy grow. Government has targeted GDP growth of 6.5 to 7.5 percent for 2014.

When asked what keep agencies from implementing projects faster, the official noted most of them are probably now more careful on the adjusted spending rules.

Public spending slowed during most of 2014 following the controversies on disbursement acceleration program and priority development assistance fund. However, the government insisted the DAP was an economic stimulus fund designed to spur state spending. The Supreme Court ruled the fund was partly unconstitutional.

For his part, NEDA-7 director Efren Carreon stressed the spending capacity of agencies should be enhanced as they have bigger budget allocations now.

“There are ways to fast track projects without necessarily not following government rules and regulations. We need to be more focused in doing things,” Carreon said in the same interview. “And we can’t just sacrifice the quality [of the projects].”  (FREEMAN)