Sep 092016

MANILA, Philippines – Despite less budget being released to agencies by August, state offices fast tracked their spending, recovering from a slump the previous month.

A total of P1.27 trillion in notices of cash allocations (NCA) were converted into checks and disbursed during the first eight months, data from the Department of Budget and Management (DBM) showed.

The figure accounted for 92 percent of existing allocations worth P1.38 trillion during the same period, up from 91 percent last year and 77.9 percent in July.

NCA is the last document agencies need to secure to get checks from the Bureau of the Treasury to pay for their obligations. Once checks are received and encashed, they are deemed spent.

“I think this is still part of calibration which means they are spending what they already have in their hands,” said Alvin Ang, economist at Ateneo de Manila University.

“If this becomes the norm, then that is good since this means more budget getting spent,” he said in a phone interview.

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The previous administration had been criticized for its persistent underspending that slowed down growth, which it blamed on agencies being slow in disbursing funds.

Allotment means funds may now be used to enter into contracts to purchase goods and services. Once agencies do so, they become obligated and then secure an NCA from DBM.

But Emilio Neri Jr., lead economist at Bank of the Philippine Islands, said it is likely that agencies had a lot of NCAs left unencashed during the previous months.

“They might have played catch up from the first month of the new administration” in July, Neri said in a separate phone interview.

He explained agencies may have held back from spending what they have, pending the approval of new fiscal program that widened the budget deficit target to 2.7 percent this year.

“The budget is actually not the problem. It has been its utilization so it’s good to see this,” Ang said.

Broken down, P1.25 trillion of notices of cash allocation were actually disbursed, while P18.39 billion remained as checks as of August, data showed. In DBM metrics, checks are considered NCA utilization.

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