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DBM to review agencies’ budget use

August 8, 2023By BusinessWorld

The Department of Budget and Management (DBM) is planning to review the budget execution of government agencies amid the low utilization of funds.

Budget Secretary Amenah F. Pangandaman said that as part of the review, the department is now planning to release all Special Allotment Release Orders (SARO) by the first quarter.

“For next year, we are going to have a review on the budget execution (of agencies),” she said at a briefing in Manila on Monday.

The review will likely be finished by the end of the year, DBM Chief of Staff Leo Angelo M. Larcia said.

“We will be forming a technical working group to review the budget execution process so basically we want to expedite the releases of funds, but at the same time we want the releases to be aligned with our Philippine Development Plan so we will have until the end of the year to review the process,” he said.

Ms. Pangandaman said the DBM wants to release agencies’ budgets earlier to allow them to implement projects faster.

“There are some budget items that still have SARO, especially those that are introduced by Congress. It is our plan that by next year, we will release SAROs by the first quarter. For Notices of Cash Allocation (NCA), that’s where it will be strict. Agencies only need cash once they implement their projects,” she said.

While the study is ongoing, Ms. Pangandaman said the DBM wants “everything listed under the General Appropriations Act  to be released so agencies can bid and start preparations, then all that’s left to be released is the cash.”

A SARO is a specific authority issued to agencies to incur obligations not exceeding a given amount during a specified period for the purpose indicated. Meanwhile, an NCA is a cash authority issued to cover the cash requirements of agencies.

“Some agencies say they can’t bid because they don’t have SARO, they can’t start without it. So, we’ll give them and then hopefully they’ll be able to finish planning,” Ms. Pangandaman added.

The low utilization rate is one of the reasons why the DBM trimmed the allocations for several departments and agencies under the 2024 National Expenditure Program, she said.

“For other agencies, we lowered their budget because that is part of our budget framework. At the same time, we are asking them for their spending catch-up plan for the coming months,” Ms. Pangandaman said.

For instance, next year’s budget for the Department of Information and Communications Technology (DICT) was reduced by PHP 1 billion to PHP 8.7 billion.

“The DICT had a low budget utilization rate, so we took that into consideration for our budget,” Ms. Pangandaman said, noting the DICT’s budget utilization was 7% as of June this year.

“If you compare it to other agencies, it’s really low. But (the DICT) promised to have a catch-up plan and increase their utilization rates before the start of budget deliberations. Maybe Congress will increase their budget to the same level as this year,” she added.

As of end-June, the DICT’s NCA utilization rate stood at 80% — the third slowest among agencies, along with the Office of the Vice-President and the Department of Social Welfare and Development.

Finance Secretary Benjamin E. Diokno earlier flagged underspending by government agencies in the first half of the year.

The National Government’s budget deficit narrowed by 18% to PHP 551.7 billion as of end-June amid slow spending. State spending inched up by 0.42% year on year to PHP 2.41 trillion in the first half but missed its PHP 2.58-trillion expenditure program by 6.6%.

Data from the DBM showed that the cash utilization rate of government agencies hit 98% as of end-June, slightly slower than the year-earlier pace of 99%.

The National Government, local governments and state-owned companies used PHP 2.01 trillion out of the PHP 2.06 trillion worth of NCAs issued as of the end of June. This left PHP 46.44 billion in unused allocations.

To address the low budget utilization, Ms. Pangandaman said the DBM is also working on the reform of government procurement laws.

“If you noticed, during the State of the Nation Address of the President, he mentioned procurement reforms. We will present procurement reforms to our President in two weeks, and then after we will release amendments for procurement,” she said.

Ms. Pangandaman said that the reform of the government’s current procurement law will help accelerate agencies’ capacities to implement projects. — Luisa Maria Jacinta C. Jocson

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