By Joann Santiago
MANILA, (PNA) — The need to ensure continued growth of the domestic economy while addressing loopholes in government spending paved the way for the implementation of the disbursement acceleration program (DAP).
But why is this program being questioned now when its targeted results are materializing?
The Philippine economy’s 7.6 percent growth, as measured by gross domestic product (GPD) in 2010, was hailed by all sectors.
But this did not last long after the following year’s turn-out contracted to 3.9 percent.
The modest growth that year is already a feat, given the negative external environment but it could have been better had the government meet its expenditure program.
In 2011, expenditures rose by a mere 2.32 percent to P1.56 trillion from year-ago’s P1.52 trillion on back of moves to limit wastage of funds and instead channel these to more projects that would benefit more people.
Spending in the whole of 2011 was short of the P1.71 trillion programmed for the year.
Thus, the following year, the government implemented an infrastructure stimulus program to ensure that necessary infrastructure are put in place to ensure not immediate economic boost but one that is long-term.
In October 2011, President Benigno Aquino III approved the initial DAP funding of P72.11 billion and these were allocated to finance activities for peace process, irrigation projects for Mindanao among others, various infrastructure projects of the Dept. of Public Works and Highways and the local government units, and the acquisition of new cars for the Metro Rail Transit.
The Dept. of Transportation and Communication is now acquiring new coaches not second hand cars as previously planned, for the MRT 3, which plies most of the 17-kilometer EDSA and traverses several cities in the National Capital Region.
In December that year, the President approved the allocation of P13.4 billion for the upgrade of several infrastructure programs around the country, additional budget for regional offices and stations of the Philippine National Police, and augmentation of budget of state colleges and universities.
Last year, about P29 billion were allocated for more infrastructure projects like roads, the rehabilitation of the Lines 1 and 2 of the Light Railway Transit, premium payment of the public school teachers to the Government Service Insurance System, and the government’s electrification program.
For one, the issue of unpaid GSIS premiums of public school teachers is the major factor why there are teachers who were not able to avail of their benefits from estate pension fund in the past.
With infrastructure projects finally getting the needed boost, the domestic economy was able to recover from a lackluster growth.
From a modest domestic expansion in 2011, the economy trail-blazed in Asia with a 6.4 percent growth in 2012 due to resilient service sector and notable increase in government spending particularly on infrastructure.
This year, the Philippines continue to show its fangs after growing at the same rate as the world’s second’s largest economy – China.
In the first half of 2013, the domestic economy surpassed all expectations after growing by 7.6 percent, higher than year-ago’s 6.4 percent.
This performance along with the improvement in both the monetary and fiscal side since the Arroyo administration enabled the country to get the thumbs up of major credit rating agencies.
Since the latter part of 2010, the Philippines received 17 positive rating actions primarily from Fitch Ratings, Standard & Poor’s (S&P) and Moody’s Investors Service.
It received its first investment grade rating from Fitch last March followed by another one from S&P in May and the latest, just this week, from Moody’s.
Debt watchers and analysts alike are one in saying that the domestic economy will continue to show solid improvements even when its counterparts in the region are doing otherwise.
Investments going to the country remains small compared to its neighbours but this is expected to improve now that the Philippines has been certified by the major debt watchers as a good investment destination.
Budget and Management Secretary Florencio Abad on Thursday said DAP funds will continue to decrease as the government is able to meet its spending requirements and put the funds in necessary programs unlike before when needs are not met.
He reiterated that DAP is not illegal, was not used as “bribe” or “incentives” to lawmakers, and was not introduced out of whim.
“DAP is the expression of the President’s exercise of his power to utilize savings and augment funds,” he said.
For the last quarter of this year, the government still has to provide funding, from DAP, for the rehabilitation of Compostela Valley, Davao Oriental and Zamboanga City as well as give the central bank’s remaining legislated capital requirement of P10 billion from the national government.
Abad said DAP funds are not illegally sourced since these came from dividends remitted by government-owned and controlled corporations and unused allocations of agencies among others.
He pointed out that “because of the policies that we’ve adopted the savings are getting smaller but only because the spending is now almost matched with what we really have to spend on.”
“That’s the benefit of tightening the budget and focusing on priorities,” he added.