Due to the negative impact of underspending on the country's economy, the Department of Budget and Management (DBM) has compelled inefficient government agencies to submit plans outlining how they will catch up on their spending.

In a statement, Budget Secretary Amenah F. Pangandaman said she has issued Circular Letter No. 2023-10 compelling government agencies to submit "catch-up plans" that will facilitate efficient budget execution for the remainder of Fiscal Year (FY) 2023.

Under the circular, the DBM is requesting information on the causes of underspending and the measures that government agencies will take to address these issues.

The DBM also has instructed government agencies to regularly analyze data in order to identify programs and projects that have historically experienced low disbursement rates.

They are also expected to compare their actual performance against established targets and measures.

Furthermore, the DBM wants agencies to utilize specific indicators for each program, sub-program, and project to assess the need for catch-up plans in cases of delays or underperformance.

To overcome implementation bottlenecks and delays in their programs and projects, agencies are likewise required to develop delivery and execution strategies, as specified by the DBM.

The DBM has also urged agencies to promptly submit updated financial and physical accomplishment reports, as well as status reports on major programs and projects for 2022 and 2023.

"Given the sizable FY 2023 national budget, government agencies shall execute their programs and projects as authorized in the annual budget and deliver planned results in a timely manner to help buttress robust economic growth," Pangandaman said.

The DBM has released guidelines for budget utilization after the Bureau of the Treasury's latest report revealed that the government spent 6.6 percent below the P2.582 trillion disbursement program for the first half of the year.

“As what I would always emphasize, we consider budget utilization rates in evaluating the absorptive capacity of agencies. We view low utilization rate as the agency’s limited capacity to utilize new funds,” Pangandaman said.

“However, those agencies who need to increase their utilization rates have promised to produce catch-up plans during the budget deliberations. So, we hope that their BURs will increase by then,” she added.

On Thursday, National Economic and Development Authority Secretary Arsenio M. Balisacan said that government underspending was one of the factors behind the economic slowdown in the second quarter.

From April to June of this year, state expenditure contracted by 7.1 percent.

The second-quarter gross domestic product of the country expanded by 4.3 percent, a slower growth compared to the 6.4 percent recorded in the first quarter.

Moreover, this figure represented a decline from the 7.5 percent expansion recorded in the same quarter last year.