AQUINO GOVT TO OPTIMIZE PUBLIC SPENDING, PURSUE OTHER INTERVENTIONS
[PHOTO - Aqino and his Budget Chief Forencio Abad]
MANILA, SEPTEMBER 2, 2011 (MALAYA BUSINESS INSIGHTS) Have we not heard this before?
Budget Secretary Florencio B. Abad yesterday said the Aquino government will optimize public spending and pursue other interventions during the second half of 2011 in response to the global economic slowdown.
Abadís statement was issued on the same day the National Statistical Coordination Board announced that growth for the second quarter slowed down to 3.4 percent against a projected 4.5 percent to 5.5 percent.
The slowdown has been blamed on the downturn in the global economy and slow government spending.
Abad said the Department of Budget and Management and line agencies are preparing a proposal to President Aquino to jumpstart certain programs and projects that have high economic multipliers and whose identified target beneficiaries are poor sectors or localities.
Furthermore, DBM is looking at the release of allotments that lead to quick disbursements.
"We are also looking at frontloading projects that are due for implementation next year not only to increase disbursements this year but also to give agencies momentum in implementing these projects as we enter into 2012," he said.
"Our catch-up plans seem to be working, if one notes the disbursements recorded in July which were the highest so far this year. We intend to further increase spending not only by accelerating existing projects but also by spending on additional projects allowed by the available fiscal space brought about by significant savings we have attained," Abad said.
Abad said the government expected that slower disbursements would have added to the external factors that mainly dampened economic growth in the first two quarters.
He noted that the disasters that struck Japan, the slow recovery of the US and European economies, as well as the unrest in the Middle East and North Africa resulted in higher fuel and transport prices, lower demand for exports and reduced incomes of overseas Filipino workers.
The budget chief said the additional projects being considered for the remainder of 2011 include the hiring of nurses and healthcare workers; rural electrification projects; infrastructure for agrarian reform; aquaculture support; on-site housing and resettlement; local roads connecting to national roads; farm-to-market roads and additional national roads and bridges.
To further enhance the job-generating capacity of the economy, the government is also looking at additional funding for the development of human resources needed by priority industries. For instance, the government is already in talks with the business process outsourcing industry in forging a partnership for a joint human resource development endeavor.
Abad said aside from speeding up public spending, the government will focus on containing the inflation rate within 3-5 percent; further improving business confidence that rose to 34.1 percent in the third quarter from 31.8 percent in the second quarter; building on the agriculture sectorís remarkable growth; and diversifying domestic and external trade, including taking advantage of opportunities with fast-growing economies in Southeast Asia.
Planning Secretary Cayetano Paderanga said public construction and government services are likely to pick up due to the accelerated spending plan of government implementing agencies and the DBM for the rest of the year.
"We want to optimize fiscal spendingís contribution to growth. As such, the accelerated spending program aims to fast-track government disbursements in the second half of the year, in order to shore up the level of economic activity," Paderanga added.
He said the government expenditure for July 2011 was the highest in seven months, and the DBM sees that interventions to speed up spending and implementation of programs and projects are already taking effect.
Government spending may most likely reach as high as P240.3 billion, including the internal revenue allotment requirement for the months of September to December, cash grants for Pantawid Pamilyang Pilipino Program, financial assistance to LGUs, health services, housing projects and GOCC needs.
Tempted to say we told you so MALAYA EDITORIAL
ĎWe can only hope to ride out the turbulence and hope it would not last long.í
THE slowdown in growth to 3.4 percent during the second quarter comes as a shocker. It is a slightly over a full percentage point below the lower range of the 4.5 percent to 5.5 percent growth projected by government.
With the first quarter growth of 4.6 percent, the semesterís average stands at 4 percent. It will take a 5 percent growth in the second semester to raise the full-year growth to 4.5 percent and a miraculous 10 percent to come near the governmentís "aspirational" goal of 7 percent and 8 percent.
The slowdown becomes even more disappointing considering that agriculture, the traditional laggard, posted a strong growth of 7.1 percent. There was also a modest expansion in services, but the improvements in the two sectors were not enough to offset the sluggishness in manufacturing.
Actually, there had been voices warning of a likely slowdown for the second quarter because of the economic woes of the developed economies. Exports were on the downtrend simply because of slipping demand in the countryís major trading partners. The vagaries of the market, however, were beyond our control. We can only hope to ride out the turbulence and hope it would not last long.
But the most worrisome drag to growth from the view of most analysts was the inability of the government to implement the programs and projects spelled out in the 2011 budget.
The administrationís explanation for the under-spending was that it was reviewing the programmed projects, most of which were inherited from the graft-ridden Arroyo administration, for possible corruption. It was an acceptable explanation, made more palatable by official pronouncements that line agencies would make up for the slippage in spending in days ahead.
Alas, the agencies again failed to deliver in the second quarter.
In time with the release of the GDP figures yesterday, the Budget Secretary Florencio B. Abad issued a statement saying "the Aquino government will optimize public spending and pursue other interventions during the second half of 2011 in order to respond to the global economic slowdown."
He said the DBM and line agencies are preparing a proposal to President Aquino to jumpstart certain programs and projects that have high economic multipliers and whose identified target beneficiaries are poor sectors or localities.
We are tempted to dismiss Abadís assurance. He has been singing the same old tune for sometime now. But we wonít. We are on the same boat and we certainly do not wish to see it founder.
So letís cut some more slack for the economic managers. We do hope, nonetheless, that they have the delicadeza to offer their resignations if they again fail to deliver in the remaining months of the year.
* Business Insight * Editorial
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