Government agencies’ cash usage slows in Q1

The government agencies’ usage of cash allocations slowed in the first quarter of 2021. — PHILIPPINE STAR/ MICHAEL VARCAS

THE rate at which government agencies use their cash allocations slipped in the first quarter, which an expert said may reflect the slow rollout of coronavirus vaccines and pandemic relief measures.

Latest data from the Department of Budget and Management (DBM) showed state offices, local government units and government-run firms used P788.8 billion out of the P810.7 billion in notice of cash allocations (NCAs) released to them between January and March. This left P21.8 billion worth of unused NCAs.

This resulted in a lower cash utilization rate of 97% in the first quarter, compared with the 99% in the first three months of 2020.

NCA refers to the disbursement authority issued by the DBM to state agencies that allows the latter to withdraw funds from the Treasury to cover expenditures for their programs and projects.

Line departments used 97% or P522.7 billion of the P536.2-billion NCAs issued to them in the first quarter.

“We need to understand that lower or declining NCA utilization rate indicates a slow pace of line agencies to disburse in a timely manner their allocated funds to implement their initiatives, programs, and projects. These disbursements are noted up to the last working day of the period covered,” Asian Institute of Management economist John Paolo R. Rivera said on Saturday.

“In the context of our pandemic situation, potential but may not be ultimate, reason for this, in my opinion, is the relatively slower disbursement of funds towards pandemic response such as vaccine acquisition and release of succeeding rounds of social amelioration,” he added.

Mr. Rivera said the government should work to ramp up spending. He noted slower state spending and subsequent delay in rollout of projects could have an impact on the first-quarter gross domestic product (GDP).

“Partial response does not maximize the accelerator effect on the economy. Hence, the economy may not also reap the benefits of programs in a timely manner. Timeliness is very crucial especially as we are racing towards economic recovery,” he said.

Government spending is one of the major growth drivers of the Philippine economy, accounting for around 25% of the overall economic output.

Official data on first-quarter GDP will be released on May 10.

Economic managers are currently reviewing the 6.5-7.5% growth target for the year, after the reimposition of strict lockdown measures in the capital region and adjacent provinces is expected to dent the full-year print by 0.8 percentage point.

The DBM has released 78% or P3.5 trillion of this year’s P4.5-trillion spending plan as of end-March. — Beatrice M. Laforga