DBM: total of P1.395 trillion released, 1.075 T spent end-September

FISCAL DEFICIT RISES TO P52.99 B FROM P34.49 B IN AUGUST

Budget and Management Secretary Florencio B. Abad today said that a total of P1.395 trillion in allotments has been released as of the end of September. This is equivalent to 85 percent of the P1.645-trillion budget for 2011 and 11.9 percent more than the P1.248-trillion in allotments issued in the same period of 2010.

Notable allotment releases during the third quarter include:

The Budget Chief also announced that in the past nine months, the national government spent a total of P1.070 billion. This is equivalent to 76.7 percent of total allotments issued during the same period, and 65 percent of the 2011 GAA. This amount, he said, is P205.1 billion or 16.1 percent lower than the programmed spending of P1.275 trillion during the period; and P84.4 billion or 7.3 percent lower than the P1.155-billion spent during the same period of last year.

He however said that improvements in the disbursement performance have been seen in the third quarter, when the national government spent a total of P371.2 billion. This is P5.5 billion or 1.5 percent higher than the P365.7-billion recorded in the same quarter of last year: the first time a quarterly expansion was recorded.

While still missing the P436.6-billion target by P65.4 billion or 15 percent, this third quarter positive growth reverses the double digit contractions during the first two quarters. Underspending versus program was also lower in the third quarter, versus the average of 16.7 percent during the second semester.

“Government agencies are continuing to improve their disbursement capacities and to catch-up on their implementation of programs and projects. With increased efforts by agencies to implement their catch-up plans, as well as the P72-billion disbursements acceleration plan that President Aquino recently approved, we are optimistic that can meet our minimum targeted deficit of P260 billion this year,” he said.

Moreover, he said government disbursed P122.83 billion in September alone, or 6.9 percent higher than the P114.93-billion in August. This level has caught up with the P123.58-billion spent in September 2010, rather than declining as in the previous months prior to August.

He also said that the utilization of disbursement authorities, in the form of Notices of Cash Allocation (NCAs) during the third quarter has also improved to 96.9 percent from the average of 91.4 percent in the first two quarters of 2011 and from 96.7 percent year-on-year.

“New fund release policies that we issued in September—such as the shift from monthly to quarterly lapsing of NCAs and the automatic release of NCAs based on the monthly cash program submitted by agencies—also helped streamline processes and fast-track fund utilization,” he said.

Abad noted that the deficit as of end-September stands at P52.99 billion, increasing by 51.99 percent as compared to the P34.49-billion deficit recorded as of the end of August.

DETAILS OF Q3 DISBURSEMENTS PERFORMANCE

Abad said government spent below program in the third quarter partly due to the slow obligation performance of certain agencies in the first semester, due to, among others: the review of project cost structures as in the case of the DPWH; the large scale of requests for realignment for DPWH and other infrastructure projects; and the delay in identifying activities and projects to be funded from lump-sum appropriations.

He also highlighted that in the case of Maintenance and Other Operating Expenditures (MOOE) and Capital Outlays (CO), slower disbursements resulted from the slow obligation by departments and agencies of allotments already released to them; or the non-release of allotments due to the non-submission by departments and agencies of requests and other necessary documentary requirements. (see “Assessment of Disbursements as of September” for more details of these unobligated/unreleased programs/projects).

Expenditure performance in key expense classes during the third quarter are as follows:

– Interest Payments (IPs) decreased by P9.9 billion or 10.1 percent year-on-year, and were below target by P9.1 billion or 9.4 percent due to the continued favourable interest rate and foreign exchange rate environment.

Personal Services grew by P10.7 billion or 10.0 percent year-on-year due to the implementation of salary increases under the 3rd tranche of the Salary Standardization Law III starting June 2011, among others. However, it was P12.8 billion or 9.8 percent below program due to low claims for retirement gratuity and terminal leave benefits as well as slower releases from lump-sums for the creation of new positions.

MOOE grew by P6 billion or 14.1 percent due to increasing provisions for conditional cash transfers, indigent senior citizens’ pensions and other social protection programs. It was lower than program by P4.4 billion or 8.2 percent—albeit narrower than the P25.6-billion or 23.9-percent shortfall in the first semester—due to the slow obligation of allotments or the non-release of allotments due to the non-submission by agencies of requests and proper documents.

CO remained lower by P10.3 billion or 23.9 percent year-on-year, and P22.6 billion or 40.8 percent below target. This is due to lower payments for accounts payable specifically for DPWH projects; the delayed implementation of capital projects such as the HFEP and school buildings; as well as unreleased allotments. However, capital spending in the third quarter, which amounted to P32.9 billion, significantly improved versus the P24.5-billion and P28.8 billion in the first and second quarters. The third quarter shortfall versus program was also an improvement from the 56.1-percent shortfall recorded in the first semester.

– Transfers to Local Government Units (LGUs) increased by P4.9 billion or 7.3 percent, and the release of allotments to LGUs were on target. However, capital transfers to LGUs were below program by P2.1 billion or 12.8 percent, largely because special shares of LGUs in Tobacco Excise Taxes remained unreleased pending the submission of complete documentary requirements.

Subsidies to GOCCs increased by P2.7 billion or by 124 percent due to the additional releases for the NPC-SPUG and for Sitio Electrification. But this was below target by P2.6 billion or 34.9 percent due to the reprogramming of releases for resettlement, relocation and housing projects and for health insurance subsidy for indigents.

Assessment of Disbursements as of September
September 2011 Assessment (Table)_billions