Budget utilization at 94% in 7 months to July

GOVERNMENT AGENCIES raised their cash utilization rate to 94% at the end of July, from 89% posted a year earlier, the Department of Budget and Management (DBM) reported, with analysts saying that disbursements were likely facilitated by easier quarantine settings and the pre-election spending rush.

The DBM said the National Government, local governments and state-owned firms used P2.3 trillion of the P2.38 trillion in notices of cash allocation (NCAs) issued to them in the first seven months, leaving P253.41 billion unused.

An NCA is an authorization issued by the DBM to agencies informing them of the funds available for disbursement.

“The faster government cash utilization rate so far this year may have to do with the further reopening of the economy towards greater normalcy, as well as accelerated government spending on various projects earlier this year especially in preparation for the elections,” Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said.

“The government rushed various infrastructure projects earlier this year before the election ban and expedited the completion of various projects before the elections, as well as various modernization programs,” he added in a Viber message.

The ban on public works projects for the May national elections began on March 25 and ended on May 8.

In the five months to May, spending on infrastructure and capital outlays hit P334.6 billion, up 0.7% from a year earlier.

“Actual spending has increased maybe due to increased activity, execution of pledged spending in the previous months, and utilization of budgeted items due to increased demand and soaring prices due to inflation and currency depreciation,” Asian Institute of Management Economist John Paolo R. Rivera said.

The government has mobilized its Targeted Cash Transfer program through the Department of Social Welfare and Development (DSWD) to aid Filipinos affected by inflation, which averaged 4.7% in the first seven months of 2022.

The DSWD recorded a usage rate of 86%, utilizing P107.76 billion out of the P125.73 billion released to the agency.

Aside from the government’s infrastructure and social spending, Mr. Rivera also noted that debt repayments were another factor driving the increased utilization.

In the six months to June, the debt service bill amounted to P458.36 billion, with around 56.12% going towards interest payments.

Line departments used 93% or P1.57 trillion in NCAs released to them as of July.

The Civil Service Commission and the Commission on Audit recorded the highest budget usage rates at 99%, while the Department of Information and Communication Technology and the Department of Labor and Employment posted the lowest rates of 64% and 68%, respectively.

Budgetary support to government-owned companies was almost 100% taken up in the seven months, with P106.97 billion utilized out of P107.42 billion NCAs issued.

Meanwhile, allotments to local government units recorded a 97% usage rate, with P622.48 billion used from the P644.59 billion released.

The DBM released P4.7 trillion or 93.5% of this year’s P5.024-trillion spending plan as of July.

In the same period last year, the DBM had released P3.88 trillion or 86% of that year’s P4.51-trillion budget. — Diego Gabriel C. Robles