Underspending on food programs worries Chiz

By Luis Leoncio

One of President Aquino’s closest allies has called attention to the chronic government underspending that critics of the administration said has become a “policy.”

Sen. Francis “Chiz” Escudero, chairman of the Senate Committee on Finance, said the Aquino administration should spare the Department of Agriculture’s (DA) food-related projects from its underspending practice, as this could threaten the country’s food security.

“Two heads are better than one, or make that two carabaos pulling one plow are better than one, so I can’t imagine why there can be slackening in the implementation of our farm programs, “ Escudero said, obviously referring to Agriculture Secretary Proceso Alcala and Presidential Assistant for Food Security and Agruculture Modernization Francis Pangilinan whose position is Cabinet rank.

Agriculture has the seventh biggest allocation of P89.1 billion in the budget this year, up by 11.4 percent from 2014

For 2015, the agriculture offices under Alcala have a budget of P51.7 billion, while the four agencies in Pangilinan’s turf—the National Food Authority (NFA), Philippine Coconut Authority (PCA), National Irrigation Authority (NIA) and Fertilizer and Pesticide Authority (FPA)—have a combined allocation of P37.3 billion.

With the country‘s food import now climbing to almost P300 billion a year and with 36 percent of families considering themselves as “food poor,” funding to boost food production must be released without delay, Escudero said.

Among the major programs this year are the P22.3-billion irrigation projects covering 54,954 hectares; P15.2 billion for various farm-to-market roads; P1.3 billion in assorted fishery infrastructure; P4.2 billion for farm mechanization; P7 billion in support activities to boost rice production; and P4.1 billion to increase coconut production Completing these projects plus the important aim of raising farming household income by up to 4 percent this year, is contingent on the quick and timely release of funds, Escudero said.

Escudero described the agriculture budget “as something of a good conditional cash transfer” to the sector which, despite making up 12 percent of the GDP, hosts the most number of poor.

According to official statistics, poverty incidence among fishermen is the highest among nine surveyed sectors at 41.4 percent, followed by farmers at 36.7 percent.

One in three employed Filipinos are in the agriculture, or about 12 million as of latest count. Escudero said he will soon ask his counterparts in the House of Representatives to convene the Joint Congressional Oversight Committee on Public Expenditures to look into the spending trends of agriculture agencies.

The senator also said that based on the government’s own mid-year review, the national government spent P78 billion short of its P582.2-billion spending program in the first quarter.

“Last year underspending reached P303 billion, or 13 percent of the total appropriations for 2104,” he said. He added in 2011, the expenditure program was set at P1.711 trillion, but actual spending was P1.557 billion, or an underspending of P154 billion.

It was learned that last May, the government posted a record-high budget surplus in a month of P67.3 billion. But it was not a reason for for celebration because the “surplus” was mostly the result of chronic government underspending that had been pinpointed as the cause of the anemic 5.2-percent growth in the first quarter.

The fiscal surplus in the first three months was a 472-percent increase from the P11.8-billion surplus a year ago, pointing to a further weakening of the econom  the rest of the year.

The Department of Finance (DoF) said that the fiscal figures in May included proceeds of the sale of the government’s share in San Miguel Corp. (SMC) earlier bought with money from the coco levy fund that earned P60 billion in revenues for the month.

In September 2012 the Supreme Court ruled that the government owns a 31-percent share in SMC. The huge fiscal surplus came in amid criticisms from Vice President Jejomar Binay that the Aquino administration has adopted as policy the underspending of the budget to amass savings that would allow huge disbursements during months prior to national elections.

Few were impressed with the fiscal data despite gain from the sale of the SMC shares as government spending rose a mere 9 percent more in May compared to last year since it missed its P237.1-billion spending program for the month.

According to Escudero, underspending tapered down in 2012 to P62 billion based on actual disbursements of P1.778 trillion against a budget of P1.84 trillion. But he said underspending increased again in 2013, as out of the P1.984-trillion budget in 2013, only P1.88 trillion was utilized, resulting in an underspending of P104 billion.

Expenditures last May rose to P175.2 billion from a year-ago’s P160.5 billion in spending but missed the government target by about P62 billion. In the first five months of the year, expenditures rose by 6 percent to P835.7 billion from P786.6 billion in the same period last year.

“For growth, it means we will need to see June kicking in at a stronger pace, otherwise we will continue to be disappointed with the output number owing to mobilization of resources still moving at timid pace,” Bank of the Philippines Islands (BPI) economist Emilio Neri said.

The budget for the year until May remained at a P86.4-billion surplus up by 91 percent against the P8.5-billion surplus during the same period last year.

Revenue agencies continue to struggle in collecting taxes despite the 41-percent growth in collections in May.

Revenues totalled P242.5 billion, higher compared to the P172.2 billion in May last year but came as a result of the performance of the Bureau of Treasury (BTr), which posted a 167-percent increase in revenues to P11 billion from P4.1 billion in May last year.

BTr revenues come from the issuing, servicing and redeeming of government securities.

The Bureau of Internal Revenue’s (BIR) contribution is almost flat while that of the Bureau of Customs (BOC) fell seven percent.

The BIR collections for the month came in at P128.5 billion, little changed from the P128.3 billion during the same period last year.

On the other hand, revenues from the BOC dropped to P26.7 billion from yearago’s P28.8 billion.

Also, the Other Offices’ share rose by 592 percent to P76.4 billion from P11 billion during the same period last year due to the P60.1-billion coco levy fund (CLF) remittance as a result of the issuance of Executive Order No. 180, which directs, among other things, the disposition of non-cash assets of the coco levy fund.

“The administration has been promising speedier implementation of infrastructure projects, but the fruition of such a promise remains to be a big dud,” former Budget Secretary Benjamin Diokno said.

Given all these, even the lower end of the official GDP forecast, 7.0 percent growth, now seems unreachable.

Budget Secretary Florencio Abad attributed the chronic underspending of the budget to “growing pains” despite the Aquino administration being five years in office.

“This is a problem of growing,” Abad told the joint congressional oversight committee on public expenditures at the House of Representatives.

Finance Secretary Cesar Purisima said the whole procurement process also needed to be revisited.

“It’s really intended to slow down procurement. The fastest it can take is six months. But if you look at the private sector, once they have a plan, they can have it on the ground in a month or so,” he said.

“Rather than focus on the fact that we have excess budget that is not being implemented, we have to look at bottlenecks that’s slowing down the capacity of agencies to spend their budgets,” Purisima said.