Wednesday, November 24, 2010

Underspending will not compromise growth - Budget Secretary Florencio Abad

MANILA, Nov. 23 (PNA) -– Budget and Management Secretary Florencio Abad on Tuesday said the economy’s growth will not be affected by the Aquino administration’s decision to limit expenses.

In the first 10 months of this year, expenditures totaled to P1.26 trillion, a six percent jump over the P1.19 trillion year-on-year.

This is, however, 5.3 percent or P70.1 billion lower than the P1.33 trillion program for the 10-month period, Abad said.

For October alone, disbursement totaled to 109 billion, a 12.7 percent drop compared to the P124.9 billion program for the month due to the lower operating and interest payments.

Abad attributed the lower-than-programmed disbursement to, among others, the lower funding requirement after the front-loading in the first half of the year, lower maintenance and other operating expenditures (MOOE) of the various agencies, lower personnel service releases, and under-spending in net lending among government-owned and controlled corporations (GOCCs).

He said that amid the drop in disbursement capacity of national government agencies, their utilization rate got better at 99.3 percent last October from the previous month’s 97 percent.

“We have consistently spent below target in the past four months, and that is way better than the leakage-laden overspending regime that we have had in the past,” he said.

And, because spending is kept under control compared to the over-spending in the first half of the year, Abad is confident that the budget deficit this year would remain within the P325 billion ceiling.

“We are also in a better position to manage our debt and deficit in the medium term,” he said.

Growth of the domestic economy is now assured and would further be solidified by the administration’s public-private partnership (PPP) initiative, he said, citing investors’ optimism on the administration’s ability to “achieve fiscal targets through good governance.”

On the other hand, Abad cited that spending for subsidies of GOCCs was higher-than-programmed by P2.7 billion or 20.1 percent because of the full release of the P8 billion for National Food Authority’s (NFA) price stabilization and food security program.

He said that of the P1.5406 trillion obligation program for this year, some P1.308 trillion of allotment authorities has been issued as of last October while the P232.5 billion or 15.1 percent of the total is still available for the last two months of this year.

He said some P100.4 billion of appropriations for MOOE and capital outlay can be utilized for November and December this year.

“This amount could be fully or partially utilized, considering our continued use of the zero-based budgeting approach to make budget execution more efficient. Clearly, we have enough room to maneuver in managing our year-end deficit,” he added.

As of last October, budget gap was lower than the P292.8 billion program at P270.3 billion. This year’s budget deficit ceiling is P325 billion.

The growth target for this year is between five to six percent while actual growth, as measured by gross domestic product (GDP), in the first half of the year, stood at 7.9 percent. (PNA)

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