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Some views in ‘Fiscal balancing act’ ill-informed

/ 12:10 AM June 23, 2016

We take exception to the Inquirer’s June 13 editorial titled “Fiscal balancing act,” which claimed that: “[W]ith bureaucratic red tape stalling meaningful private-sector participation in the public-private partnership program, the government failed to take up the spending slack” and the Department of Budget and Management (DBM) “would not, could not, and did not push the money out the other end fast enough.”

Consider the facts: In the first month of each of the past six years, the DBM was able to release nearly 86 percent of line agency budgets—a remarkable improvement from 79.8 percent in 2011 to a high of almost 92 percent in 2013. The shift to the GAARD (General Appropriations Act-as-Release Document) regime—a policy which did away with the time-consuming and graft-prone Saros (special allotment release orders) and treats the GAA as the release document—made this possible. This change not only made funds directly and immediately available to line agencies; it also enforced proper check and balance and transparency of fund releases.

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Was public spending an issue with the public-private partnership (PPP) projects and was there ever such issue involving the DBM under this administration? That’s not the case.

As of May 31 this year, 12 PPP projects have been awarded; five are expected to be completed within this administration’s term; 15 other projects are in various stages of procurement, while another 15 are under development. In comparison, during the previous three administrations, only six PPP projects were awarded. Our PPP initiatives have thus been hailed as one of the best-performing in the region, with Partnerships UK praising the administration’s PPP Center as the “Best Central/Regional Government PPP Promoter” during the 2014 Partnership Awards.

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On the other hand, allocation for infrastructure and other capital outlays as a percentage of GDP was at its highest (averaging 3 percent) in 2011-2016. The two previous administrations’ combined outlays reached 1.6 percent only. Besides, spending since 2011 showed an upward trajectory with an average growth of 11.8 percent.

The editorial also erred in claiming that the DBM “had great difficulty pushing government money out to where it was needed,” because that was exactly what the national government sought to do and accomplished by crafting a national budget that allocated more resources to priority programs that helped reduce poverty and create more jobs.

The fact is, no administration since 1986 has given as much resources to social and economic services as this administration. Social services grew by an average of 16.8 percent from 2011 to 2014, a great improvement from the 10.3 percent and 7 percent growth during the Estrada and Arroyo administrations, respectively.

The combined share of economic and social services under the Aquino administration is 60.1 percent, significantly higher than Estrada’s 56.5 percent and Arroyo’s 51.4 percent. And the average share of economic and social services in the GDP reached 4.2 percent and 5.9 percent, respectively, from 2011 to 2014, which is higher compared to the 3.9-percent and 4.9-percent average for the two sectors from 2001 to 2010.

The problem has not been with the releases of allotments, which is the responsibility of the DBM, but in the obligation of budgets, the disbursement of cash, and the timely reporting of physical and financial accomplishments, which the implementing agencies are principally tasked to do. This is where the challenge is.

The DBM has sought to address this institutional weakness by strengthening the planning capacities of the line agencies, linking plans to budgets, and introducing reforms in procurement and budget execution, such as GAARD, early procurement process, creation of full-time delivery units in agencies to monitor and troubleshoot project implementation.  As a result of these reforms, implementing agencies have generally shown marked improvements in budget obligation, execution and disbursements these past three years, particularly in the area of infrastructure spending. In the first quarter of this year, this improvement contributed significantly to the 6.9-percent GDP growth, the highest in Asia.

—LANI C. VILLANUEVA, public information unit head, Department of Budget and Management

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TAGS: bureaucracy, Department of Budget and Management, Public-private partnership, red tape
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