Drilon: Gov’t underspending could undermine Aquino admin economic gains

MANILA-Even as the country continues to register a laudable economic expansion in the second quarter of 2014, a sharp drop in government spending – if not addressed immediately – could pull down overall growth and make the full-year 6.5% to 7% growth unattainable, Senate President Franklin M. Drilon today said.

Drilon said that the current data shows clear sign of underspending by the government. The government consumption for the Q2 of 2014 is only P221.73 billion, which registered a zero growth when compared to its level of consumption of P221.68 billion in the same period last year.

"Government consumption" refers to government spending on public projects or programs made through disbursement of funds allocated to agencies. 

“That zero percent growth is a far cry from the 17 percent growth rate we saw between the Q2 2013 and 2012 when DAP was in effect and fast-tracked public expenditures,” he emphasized.

“If the current level of spending continues for the rest of the months, it will affect many aspects of our economy. For one, unemployment would continue to rise if the government does not accelerate spending because government programs, particularly infrastructure projects, pave the way for job creation,” Drilon pointed out.

He added that the slowdown in public spending could undermine the economic gains in the past years of the Aquino administration.

Drilon noted that the Department of Budget and Management (DBM) partly attributed the slower spending to "administrative bottlenecks," which pulled down growth in public construction and other economically-important government programs

Drilon however said that the drag in government spending might be the “chilling effect” of the Supreme Court’s decision on the Disbursement Acceleration Program (DAP).

“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 had a chilling effect on the government expenditure program," the Senate leader said earlier.

He reiterated that the challenge now for the country’s economic managers is to find ways to ramp up public spending in the remaining months of the year, without resorting to DAP-like mechanism which the Supreme Court ruled out as unconstitutional.