Stronger Spending Fuels Q2 GDP Growth

Following the announcement on the Philippines’ 5.6-percent gross domestic product (GDP) growth in the second quarter, Department of Budget and Management (DBM) Secretary Florencio “Butch” Abad today noted that strong government spending helped bolster economic expansion in the same period, adding that the Aquino administration will continue to ramp up efforts to ensure faster disbursements.

“Robust government spending was a driving force in our GDP growth in the second quarter. As departments and agencies catch up on their spending programs, we find ourselves well-placed to support deeper and broader development in the country. Our challenge now is to exceed ourselves in the coming quarters. More than ever, it will be crucial for us to ramp up disbursements and clear more spending bottlenecks, so we can stimulate the economy towards further growth,” Budget and Management Secretary Florencio “Butch” Abad said.

“Given the uncertainty and volatility of the global market, the country’s strong economic performance is itself an achievement,” he added.

The Budget chief made particular note of the 20-percent growth in public infrastructure in the second quarter—as reported by the National Economic Development Authority (NEDA)—versus the 24-percent contraction in public construction in the previous quarter.

“These are clear and compelling signs that government spending is back on track. Furthermore, the progress we’ve been making in public construction will help cement the success of our development strategy. When we build more roads, sturdier highways, and better public infrastructure for our citizens, we also prepare ourselves for the expansion of key sectors that will boost our economic prospects and create more jobs for Filipinos. That includes the manufacturing, agri-fishery, and tourism industries, among others,” Abad said.

NEDA also noted that government final consumption expenditure grew 3.9 percent this quarter, registering a 2.2-percent improvement over the last quarter’s 1.7-percent growth.

“Since the beginning of 2015, DBM has implemented reforms and policies to strengthen the link between planning, budgeting, procurement, project implementation, and project monitoring and evaluation. We can’t approach public spending as a self-contained issue. If we want to improve disbursements, we must look at enhancing the entire range of the process. That’s why our budget reforms are so comprehensive in scope,” Abad emphasized.

Since 2014, the General Appropriations Act-as-Release-Document regime has made the majority of agency allotments available for spending at the very start of the year, allowing agencies to focus on execution instead of on securing Special Allotment Release Orders (SAROs). Likewise, Administrative Order No. 46, issued in March, directed agencies to implement various measures to improve spending capacity and project reporting.

In June, the DBM also released guidelines for the creation of Full-time Delivery Units in each agency, which are tasked to review project performance and act as problem solvers in the face of sluggish program implementation.

“Ultimately, more remains to be done. Transparent, accountable, and participatory governance will yield real and sustainable benefits for the people, but only if the government and its citizens will work as equal partners in the cause for reform. Our growth this quarter shows that we’re already on the right path. We must persist in this course,” Abad said.