Drilon cites drop in gov’t spending due to DAP ruling

MANILA, Philippines - Senate President Franklin Drilon yesterday expressed concern over the drop in government spending in 2014, which could be a result of the “chilling effect” of the Supreme Court’s declaration of the Disbursement Acceleration Program (DAP) as partly unconstitutional.

Drilon pointed to signs of looming underspending of the government during the Senate’s hearing on the proposed P2.606-trillion national budget for 2015.

“For the first quarter of 2014, the gross domestic product is only 5.7 percent, which is lower than the 7.7-percent growth rate we achieved in the same period in 2013,” Drilon noted.

“The underspending is also visible in the decline in government consumption for the first quarter this year, which only reached two percent, way below the 10-percent level during the same period last year,” he added.

But Budget Secretary Florencio Abad seemed not to agree with Drilon when asked if there was basis for fear of economic slowdown due to alleged underspending in the first half of the year.

“I don’t think so, because we will have a good five months left. If you recall in 2011, the last quarter was a big boost to the economy as a result of DAP,” Abad said.

“I think it is also possible to accelerate spending still in the remaining five months…What we want to do is we continue to accelerate both the rehabilitation and reconstruction as well as the implementation of the regular program because we want to see more impact on the economy because we are looking at 6.5-to 7.5-percent growth for this year,” he added.

Abad cited the Department of Public Works and Highways, which has been allowed to start bidding out pending projects as part of measures to speed up spending.

There is also a need to speed up infrastructure projects such as farm-to-market roads, connecting them to post-harvest facilities and ports.

Abad also expressed belief that the SC ruling on the DAP had no effect on the alleged under-spending.

“We observe that many of the DAP expenditures happened in 2011 and 2012 so by that time, most of the DAP has been expended. What is left is the latter part of 2012 and 2013,” he pointed out.

He cited that in June, spending went up by 44 percent after the administration paid the P33.5 billion required by PhilHealth to pay for bills.

However, the implementation of the conditional cash transfer program was delayed a bit due to the need for concerned agencies to verify the list of beneficiaries after many were displaced by Typhoon Yolanda and other disasters that hit the country.

“It’s the impact of Yolanda because there is a need to redirect funds because many of the regular programs funded under the 2013 budget can no longer be implemented in the first quarter in those areas,” Abad explained.

Still, Drilon posed a challenge to the country’s economic managers.

“The challenge now is how to accelerate spending in the remaining months of the year while still complying with the Supreme Court decision on the DAP,” Drilon said.

“The members of the bureaucracy now have apprehension against taking initiatives, because they might face charges stemming from the DAP decision. Whether you like it or not, the SC decision on the DAP has had a chilling effect on the government expenditure program,” he added.

He said the Office of the President and the Department of Budget and Management should closely monitor the line agencies to ensure they would implement their programs in a timely manner. – With Jess Diaz