DBM warns reenacted budget to affect economy

Published November 27, 2018, 12:00 AM

by manilabulletin_admin


By Chino Leyco

The Department of Budget and Management (DBM) said Tuesday the delayed passage of the 2019 national budget will take a toll on the country’s economy in the first semester of next year.

While the Duterte administration is keeping the 7.0 percent to 8.0 percent gross domestic product (GDP) target for next year, Diokno admitted that the economy will slightly slowdown particularly in the first three months of 2019.

DBM Secretary Benjamin Diokno  (DBM / MANILA BULLETIN)
DBM Secretary Benjamin Diokno

Diokno explained the government’s capital outlays, which include infrastructure spending, will be delayed due to the reenacted budget.

Reenacting the budget, which is a mechanism of the government to avoid disruptions in running its affairs, is resorted to when Congress fails to pass the national budget before the end of December of the current year.

On Monday, the Senate leadership already promised to pass the 2019 budget in February.

According to Diokno, even of Congress passes the budget in February the government cannot immediately implement the new appropriations.

He said the DBM could begin with the 2019 budget by March.

Aside from the reenacted budget, Diokno said the government spending will be affected by the election spending ban, which scheduled to begin on January 13 to June 12, 2019.

While having a reenacted budget does not mean the end of the world, Diokno said it has costly consequences on the economy and society.

For one, it will stall the government’s Build, Build, Build program which “at the moment is firing on all cylinders,” Diokno said.

“Next year, infrastructure and other capital outlays is huge, amounting to almost P1 trillion. But with a reenacted budget, there is real risk that a big chunk of the infrastructure budget will be stalled, exacerbated by the election ban on new construction,” he said.

Other consequences of reenacted budget is that personal services, as well as maintenance and other operating expenses, are deemed reenacted, and only based on the 2018 level.

“Salary adjustments for civilian and military personnel programmed for 2019 will have to wait,” Diokno said.

Likewise, he said capital spending proposed for 2019 will have to wait until the budget is passed and becomes effective, while all local government units will receive the Internal Revenue Allotment (IRA) shares based on the 2019 President’s Budget.

Foreign and domestic creditors will be paid on the basis of the 2019 President’s Budget proposal. Rationale, he said.