Budget misuse hounds Aquino

By Luis Leoncio

The inefficient use of the budget, which economists have identified as a major cause for the Philippines economy’s failure to achieve its full potential, has become an international concern, with even a United States think tank saying that the Aquino administration, aside from misusing the budget, has also been remiss in reporting government expenditures.

GlobalSource Partners, in a report on the Philippine economy, took special notice of the lack of updated data on public expenditures. This has cast a cloud of uncertainty over the government’s ability to meet its spending target for the year, the think tank said in a report.

Titled, “Heading for the Homestretch,” the report said the absence of an expenditure-performance report to date “worries us and we are taking an administrative order from the President, issued end-March, urging prompt budget execution as a sign that money is not moving well.”

“Government has yet to release a single month of cash operations report for 2015, something that it used to do with only a one-month lag,” GlobalSource said.

GlobalSource said that in collecting data for the report, it had to rely on different sources outside of the government.

“From the bits and pieces that we’ve hard from sources, spending—including for [disaster] reconstruction activities—is picking up, albeit apparently not as much as hoped,” the report said.
“One can be sure that government failed to meet expenditure targets for the first quarter, which is about 22 percent of the full-year program, net of interest payments,” the report noted.

GlobalSource said it expects GDP to expand by 6.7 percent this year, which, if realized, would be faster than last year’s pace but would still fall short of the official 7-percent to 8-percent target.

Both revenues and spending fell short of program last year, leading to a P73.09-billion deficit in the budget which was far lower than the P266.2-billion government projection that proves massive government underspending.

Last March 30, President Aquino signed Administrative Order 46, which required all government agencies to implement measures “to ensure the prompt execution of the National Government budget.”

Former Budget Secretary Benjamin Diokno said Mr. Aquino, going into his final year in office, “has yet to get the hang of spending the national budget efficiently, effectively and on the right programs and projects.”

Diokno lamented that the Aquino administration continues to underspend, “despite the constitutionally infirm Disbursement Acceleration Program (DAP).”

Not surprisingly, the citizens’ complaints on the deteriorating state of public infrastructure have reached intolerable crescendo, he said.

The signs that all is not well with the existing public infrastructure are overwhelming, exem-plified by the urban-transit system, the mass-rail transit (MRT) system, which is breaking down increasingly, Diokno noted.

“The Philippine National Railways operations have been stopped indefinitely. Traffic congestion is getting worse not only in Metro Manila but in almost all urban centers in the archipelago,” he added.

The country’s international airports remain one of the worst in the world.

“The seaports are decrepit and unreliable. Power is in short supply and the solution appears to be beyond the present administration,” Diokno said.

The Aquino administration continues to trumpet its meager achievement—gross domestic product (GDP) growth averaging 6 percent (3.9 percent in 2011, 6.8 percent in 2012, 7.2 percent in 2013 and 6.1 percent in 2014) and low interest-rate regime.

He added that Mr. Aquino should stop grabbing credit for the achievements of his predecessor, former President Gloria Arroyo

“Mr. Aquino should cease claiming credit for the above-normal GDP growth in 2010. That is creditable to his predecessor, not his. Public policy works with a lag (sometimes 12 to 18 months) and what happened in 2010 cannot be attributed to what Mr. Aquino has done during the second half of 2010,” he said.

The strong growth rate in 2010 can hardly be attributed to the Aquino administration, Diokno said.

He added GDP grew by 7.6 percent in 2010 mainly due to base effects owing to poor economic growth in 2009 as a result of the global economic recession, election spending as a result of the 2010 national and local elections; and massive catch-up spending by Arroyo as she completed her nine-and-a-half year reign.

“It has nothing to do with Mr. Aquino’s daang matuwid,” Diokno said.

And in an area where government can make a big difference like government spending, Mr. Aquino failed miserably, Diokno said.

During the past four years, the Aquino administration can be characterized one with a lot of missed opportunities, Diokno said.

“Expenditure programs which it prepared, and which Congress authorized with very little amendments, have not been implemented fully. Why go through the motion of preparing a budget when it won’t be implemented fully? Sadly, the degree of non-implementation has grown with disturbing consequences,” he said.