The Budget Department plans to submit to Congress a record P4.1-trillion national government budget for 2020 on the same day President Rodrigo Duterte delivers his fourth State-of-the-Nation Address in July this year, acting Budget Secretary Janet Abuel said over the weekend.
Abuel said in a briefing following the Economic Development Cluster’s meeting at the Finance Department’s headquarters in Manila her agency was “on schedule to submit the 2020 budget on the same day as President Duterte’s SONA or one day after.”
The proposed 2020 budget would be more than P300 billion higher than the P3.757-trillion expenditure plan for 2019, which Congress passed and Duterte signed into law in April.
Abuel said the DBM was also studying if cash-based budgeting could be fully implemented next year.
“We are pushing cash budgeting but we are studying the transition. Let us see what will happen for 2019. Then let’s see if there’s a need for a slower pace in trying to adopt it fully,” Abuel said.
A cash-based budgeting system limits contractual obligations and disbursing payments to goods delivered and services rendered within the fiscal year. The DBM earlier said the system would promote fiscal discipline and better planning among agencies in spending or using their resources.
Under the system, an extended payment period of three months after the fiscal year would be provided to give more time for government agencies to make their payments.
The State-of-the-Nation Address is usually delivered by the sitting president to a joint session of Congress every fourth Monday of July. The SONA serves as a means to inform the nation about its present economic, political and social condition.
It is also a vehicle for the president to summarize the accomplishments and plans of his/her program of government both for a particular year and until the end of their term of office.
The government operated on a reenacted budget in the first quarter, as it was only in April that the president finally affixed his signature on the 2010 national budget after a long impasse between the two houses of Congress.
Finance Secretary Carlos Dominguez III said the government needed to increase its expenditures in the months ahead to achieve economic growth of more than 6 percent this year.
National government disbursements are targeted to reach P3.774 trillion in 2019, equivalent to 19.6 percent of gross domestic product. This is 10.7-percent higher than the actual disbursements in 2018.
“For us to achieve this year’s disbursement target, the government must spend a total of around P2.996 trillion from the second to fourth quarters of the year,” Dominguez said.
He said infrastructure spending accounts for almost a third of disbursements programmed for the said quarters. Actual infrastructure disbursements in the first quarter amounted to P207.2 billion.
“To reach our total infrastructure disbursement target of P1 trillion for the entire year, the government must disburse around P792.97 billion for infrastructure from the second to fourth quarters of the year,” he said.
The delay in the approval of the national budget weighed on economic growth in the January-to-March period. GDP in the first quarter grew at a four-year low of 5.6 percent, slower than the 6.5-percent expansion a year ago and 6.3 percent in the fourth quarter of 2018.
Dominguez said the 5.6-percent growth in the first quarter was nonetheless a “decent expansion” that kept the Philippines among the region’s fastest-growing economies.
“The budget impasse in the Congress during the year’s first three months had set off a spending cutback, which, in turn, stifled economic activity,” Dominguez said in a statement.
He said if not the Senate-House deadlock over the 2019 General Appropriations Bill which forced the government to operate on a reenacted 2018 budget in the first quarter, the economy could have received a tremendous boost from what should have been much higher state spending on infrastructure modernization and human capital formation at the onset of 2019.
Finance Undersecretary Gil Beltran said the economy should have grown by 7.2 percent in the first quarter. He said in an economic bulletin that the underspending of P69.5 billion in the first quarter reduced GDP growth by 1.6 percentage points.