Underspending blamed for GDP contraction

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    Senate president pro tempore Ralph Recto yesterday called the attention of the government for underspending at a time when the economy needs the much needed pump-priming due to the new coronavirus disease 2019 (COVID-19).

    At yesterday’s budget deliberations, Recto said only P3.022 trillion of the P4.1-trillion national budget this year has been released as of September.

    Recto said underspending contributed to the 11.5 percent contraction of the economy in the third quarter.

    “Government is underspending. Funds must be released like waters in dams… We have to flood areas with help, not trickle down aid that is good enough for bags of groceries but appropriated funds for targeted expenditures as a way of helping the victims and the economy,” Recto said.

    Recto made the call as the government’s underspending was revealed during his interpellation on the proposed 2021 national budget.

    “But most of the releases are for overhead, like salaries. Only a small portion was appropriated for economic pump-priming,” Recto added.

    He said even the much-vaunted P386.1 billion released for the COVID-19 responses authorized by the first Bayanihan Law “were realigned funds, not new money, carved out of the 2020 budget, so whether pandemic or not, these are already committed funds.”

    He said the same “timid and tepid” releasing of funds is also evident in the utilization of the second Bayanihan Law.

    Finance and budget officials in attendance at yesterday’s budget deliberations confirmed that of the P140 billion in programmed appropriations and P25 billion in unprogrammed appropriations under Bayanihan 2, only P82.4 billion has so far been released.

    Recto said “this below-program underspending could be one of the reasons why our economy contracted 11.5 percent in the third quarter.”

    “Budget should be a stimulus. In areas where the virus has caused an economic free-fall, government spending on social aid and capital outlays are expected to be the saviors,” he said.

    Recto said “a last quarter storm” in spending is needed, especially on typhoon-hit areas as these are in economically robust regions in Luzon which are also agricultural powerhouses.

    “And the definition of good spending is not just releasing funds to the agencies, but the agencies releasing them to the people, or finally disbursing them for what they have been intended for,” Recto said.

    In the course of Recto’s questioning on the economic underpinnings of the 2021 budget, it was revealed that the pandemic has caused P1.8 trillion in economic losses to date, “without the typhoons factored in.”

    “ The losses due to the typhoons have not been factored in. So far, the damage due to the typhoons have reached P82 billion. And this will increase in the days ahead,” he added.

    He said “disaster accounting” can only compute the price of an infrastructure damaged.

    “It is easy for us to say that this one-kilometer road damaged due to landslide costs this much. But we wouldn’t actually determine the cost of the damage if we compute the other losses such as the delays in transporting goods and produce,” he said.