MANILA, Philippines – The government continues to spend less than planned, an expert said on Monday, July 23, despite pronouncements of improved spending due to its centerpiece Build Build Build infrastructure program.

At Rappler’s coverage of the State of the Nation Address (SONA), economist JC Punongbayan said that the government has improved spending relative to the Aquino administration, but underspending remains a problem. When government underspends, delivery of services is delayed.

“Underspending remains a problem right now. It is around 3% – it means that there’s a difference between the planned spending. And that means the government disbursed fewer than it actually planned to spend,” Punongbayan said.

“That’s bad because the overarching program is Build, Build, Build. And yet, there is also underspending. So what gives?” he said.

The government underspent by P85.2 billion ($1.58 billion) or 3% of the P3.757-trillion 2017 national budget, lower than 2016’s record of 3.6%.  Budget Secretary Benjamin Diokno attributed this improvement to the Build Build Build program.

“In PNoy’s time, [underspending was] 10% or more than 10%. It abated a bit, but still, it remains,” he added.

Punongbayan: Underspending remains a problem in the Duterte admin. Follow Rappler’s live #SONA2018 coverage | https://t.co/pY0R3ei5jK pic.twitter.com/bg7G4WkwCl

— Rappler (@rapplerdotcom) July 23, 2018

Underspending has been a perennial problem in the Philippines, an issue that Diokno once described as “epic incompetence” during the Aquino administration in 2015.

Punongbayan cited the recent Commission on Audit (COA) reports which posted high underspending rates by the public works and transportation departments – the main agencies tasked with the rollout of the Build Build Build program.

For instance, state auditors said that the Deparment of Public Works and Highways (DPWH) “fell way below target” on infrastructure projects. P73.351-billion worth of infrastructure projects were either delayed, suspended, terminated, or unimplemented.

Meanwhile, COA found out that the Department of Transportation (DOTr) only spent only 25.6% of its P71.2-billion budget, leading to delay of implementation for most of its projects. 

But both departments claimed that their absorptive capacity – citing commitments in project implementation – has improved compared to the previous administration.

Punongbayan said that despite the “improvement,” the government still needs to address the underlying problems that prevent them from spending more.

“[Underspending] remains a problem unless we solve underlying problems including lack of absorptive capacity, technical and managerial people in government, infrastructure, [and] tedious procurement laws,” he said.

The Philippines narrowed its budget deficit in the 1st 4 months of the year to P115.9 billion, after it posted a budget surplus in April alone, signaling that the government has been spending less than what has been budgeted.

A budget deficit happens when expenses exceed revenues, while a surplus means revenues exceed expenses. – Rappler.com