Business World, 16 May 2012


If you think the Aquino administration has learned its lesson from its serious underspending in 2011 and is now spending and implementing projects much faster, think again. The Department of Budget and Management (DBM) boasted that it “was off to a good start in the first quarter, recording a P45.6 billion or 13.1% growth year on year from P349.3 billion in 2011.” Really?

The numbers appear impressive. But it is only because it is compared to a dismal, rock-bottom performance last year.

Compared to the budget program, an indicator of what the government plans and should be able to do, serious underspending continues. By DBM’s own admission: “disbursements fall short of the P440.6-billion program by P45.7 billion or 10.4% for the first quarter.”

But even than is an understatement. The budget totals mask the serious underspending in infrastructure and other capital outlays, the public sector spending aggregate that could spell a difference in the economy’s long-run growth. The plan was to spend P54.6 billion for infrastructure. But only P38.9 billion was actually disbursed; some P15.7 billion remain unspent or about 28.8%.

In brief, for every P100 planned budget for public infrastructure, some P29 have yet to be disbursed. That’s not comforting for a government that is striving to catch up on prior year’s underspending.


Apparently, a big chunk of the capital outlays budget has yet to be released as of March 2012 pending the submission or approval of special budget requests and additional documentation from the agencies concerned.

These include big ticket items such as: (a) public-private partnership (PPP) program for various departments, P15.6 billion; (b) Department of Education’s Basic Educational Facilities, P8.7 billion; (c) Department of Health’s Health Facilities Enhancement Program, P5.0 billion; (d) Armed Forces of the Philippines Modernization Program, P5 billion; (e)Department of Agriculture’s farm-to-market road projects, P4.0 billion; (f) foreign assisted projects of the Department of Agriculture and the Department of Transportation and Communications, P4.7 billion; and (g) the capital outlays component under the Priority Development Assistance Fund (PDAF), P17.2 billion.

The PDAF with a total appropriation of P24.9 billion, is the funding source of priority development projects of congressmen and senators. The Fund was placed under conditional implementation in the President’s veto message, which states: “In the interest of ensuring sound financial programming and prudent spending of PDAF, I hereby direct the DBM to issue guidelines for the implementation of PDAF.”

I wonder if such guidelines have been issued. If so, and in the interest of transparency, has the issuance been published and in what form(s)? I suspect that the lack of a clear policy on PDAF budget releases is a major cause of delay in project implementation. Are releases of appropriations contingent on whether the legislator is a friend or a foe of the administration?


Despite the early approval of the 2012 budget and early budget allotment releases by DBM, priority projects of the government did not move as fast. In most cases, the delays were clearly the fault of line departments.

Following are some of the more important programs whose implementations were stalled.

* Department of Social Welfare and Development’s (DSWD) Conditional Cash Transfer (CCT) Program: P39.4 billion allotment was released by DBM, of which P5.7 billion has been obligated [not even disbursed] as of March 31. It is reasonable to compare P5.7 billion with P9.85 billion [one quarter requirement of the program]. Clearly, DSWD is very much behind in reaching the beneficiaries of the program. Does this partly explain the growing number of poor and hungry Filipinos, according to the Social Weather Stations survey results?

* Department of Agriculture’s Banner Programs for Rice, Corn, High-Value Commercial Crops, Livestock and Fisheries: The P11.9-billion appropriation has been fully released by DBM. But only P800 million or 7.1% has been obligated [not even spent] as of March 31. Does this partly explain near flat agricultural output (1.08% growth rate) in the first quarter of 2012?

* Department of Health’s Family Health including Family Planning Program: DBM has released P2.3-billion allotment, but less than P1 million has been obligated as of March 31. This state of fund utilization does not encourage confidence in the government’s ability to implement an aggressive family planning program, if and when the Reproductive Health bill is finally approved.

Here’s an important lesson in budget implementation: the release of budget allotment is a necessary but not sufficient condition for speedy program and project implementation. One still needs managerial ability, adequate manpower and administrative capacity on the part of the agency concerned.

After almost two years after Mr. Aquino has taken over the helm of government, this culture of underperforming remains widespread throughout the bureaucracy. Only one PPP project, and a modest one at that, has taken off the ground; the rest of the PPP projects remain in the planning board.

For two years in a row, no new school buildings have been built. There are no marked improvements in airports and seaports all over the archipelago. Roads continue to crumble, although there are visible attempts to reconstruct old (but sometimes still usable) roads in strategic places. Improvements in agriculture infrastructure remain spotty. Power supply continues to dwindle and has become more unreliable.

For a people who’s been deprived of much-needed public infrastructure, social services, and public goods during the last 10 years, every day of delay is an eternity.

For two years in a row, DBM will present to the President the results of the study on bottlenecks and catch up plans to be put in place to speed up program and project implementation. But when will studies and policy reviews stop and speedy and sustained actions begin? Stop talking, start working.