The Department of Budget and Management has asked government agencies to improve their budget use and avoid underspending if they want to get their proposed budgets for next year.
“If they are not prepared to fully use the funds allotted to them, their budget proposals for next year will be affected,” Budget Secretary Wendel E. Avisado told a virtual news briefing on Friday in mixed English and Filipino. “We look at their budget utilization rate and absorptive capacity in evaluating their budget proposals.”
The Budget department is working on the proposed P5.024-trillion budget for 2022, which will be sent to Congress 30 days after President Rodrigo R. Duterte’s final state of the nation address on July 26.
Mr. Avisado said agencies should use the funds allotted to them within a year, except for infrastructure projects whose funds are valid for two years.
To encourage agencies to fully use their budgets, the government is adopting a cash-based budgeting system where it only releases the funds that will be used for the year. Unspent funds will automatically go back to the Treasury bureau.
The Budget department released P3.833 trillion to state agencies in the first half, or 85% of the P4.5-trillion spending program for the entire year.
State offices have reported a 97% budget use rate as of June after using P1.871 trillion of the P1.936-trillion notices of cash allocations issued to them, according to data from the agency. This was better than the 93% use rate a year earlier.
For the second quarter, their cash use rate went up to 96% from 90% a year earlier.
“We have the funds and we have released them,” Mr. Avisado said. “It’s just a matter of improving the system.”
Underspending by state agencies delay projects aimed at spurring economic growth. Agencies spent only 69% or 141.45 billion of the P205-billion fund from a second stimulus law five days before it expired on June 30. — Beatrice M. Laforga