By Bianca Cuaresma
THE country’s inability to spend the budget quickly enough has and should again undermine its ability to continue to expand at potential, unless the matter is addressed soon, economists said.
However, economic managers lauded the improvements in the disbursement of public funds in recent months, saying the “slow but sure” spending ultimately should prove beneficial for the economy in the long run.
In a recent review of the country’s economic dynamics, HSBC economist Joseph Incalcaterra said government spending—particularly infrastructure spending—will prove “the bedrock of the Philippines’s growth outlook over the next decade.” Fixing the many bottlenecks of fund disbursement is critical in ensuring the sustainability of the growth momentum.
A while earlier, the Department of Finance (DOF) said the national government incurred yet another budget surplus last November, which only means fiscal authorities have yet to resolve the gridlock in disbursement.
The DOF said the national government budget balance in November 2015 stood as a surplus of P6.1 billion that reversed the deficit of P27 billion the previous month.
This brought the budget balance in the first 11 months last year to a more narrow deficit of only P46.5 billion. The January-to-November deficit was actually 81 percent, or some P200 billion, lower than targeted for the January-to-November period.
In a recent public engagement, Finance Secretary Cesar V. Purisima shrugged off criticisms coming in the wake of the budget surplus in November.
“It is crucial that we reduce the infrastructure gap between the Philippines and our neighboring countries so we may be connected to the global economy. This wasn’t an easy task. In the early stages of the Aquino administration, people were already getting impatient with the progress of our infrastructure program…. But today, I have no regrets with taking the slow but sure way of delivering our infrastructure projects,” Purisima said, adding quickly they had to reevaluate the infrastructure backlog to minimize mistakes.
Incalcaterra also said the low level of investments in the Philippines was partly to blame for the country’s low growth narrative.
“The low level of investment in the Philippines remains a concern, even if infrastructure spending has increased as of late. While the private-public partnership initiative has proven to work, it has been sluggish at best,” Incalcaterra said.
“Moreover, one recent project was canceled by the operator due to delays on the part of the government. Across the country, key shortages, such as electricity and transport, remain unaddressed,” he added.
This development, according to the economist, will help diminish the competitiveness of the economy, as well as crimp its output potential.
Bank of the Philippine Islands research officer Nicholas Antonio Mapa called on the government to release quickly funds for infrastructure development in the country.
“Nobody said doing things right would take so long. Other nations can certainly carry this out. For some reason, we didn’t,” Mapa said.
“As we speak, the low-interest-rate environment is fading and the opportunity to make use of the immense political capital will be gone in a short six months,” he added.