May 3rd, 2023
House Ways and Means Chair Joey Sarte Salceda (Albay, 2nd district) took the Department of Budget and Management, the Department of Finance, and the Bureau of Treasury to task for “slow national government disbursements” which the tax chair considers as “resulting in a three-bladed contractionary policy – spending is slower than last year, we are shrinking money supply, and the external environment is cloudy.”
Salceda said that the government is not spending cash fast enough, despite good collection performance by the tax collection agencies, which he congratulated in today’s tax panel committee hearing.
“The Bureau of Internal Revenue expects to collect a record P300.9 billion in April alone or 25 percent from P239.6 billion last year. I also want to congratulate the Bureau of Customs for once again exceeding its revenue collection targets for the month of April 2023. The BOC collected P68.274 billion last month, exceeding its target of P68.199 billion by 0.11%,” Salceda added.
“This suggests that, despite uncertain global conditions, our tax collection agencies are exceeding expectations and are working hard to earn the lifeblood of Philippine government.”
There are slight rumblings in the global economy, which indicates at least a cloudy global economic climate ahead, Salceda added.
“So, we need to do two things: insulate our financial system through easy-to-pass reforms such as the FIST Act extension, rural bank consolidation, and streamlined procedures for financial rehabilitation for small and medium enterprises.”
“The second, and far more important step, is to ensure that we invest in programs and projects that expand our productivity. That means we also need to expedite national government disbursements especially for asset creating projects such as infrastructure.”
“Triple contraction”
“Unfortunately, despite growth in collections, we are actually implementing contractionary fiscal policy, with disbursements being 1.05% down, despite expectations of around 6% real GDP growth this year. Together with the Fed’s continued commitment to increase hikes further by at least 25 bps this week, and the contractionary monetary policy that these actions force our BSP to take, we cannot expect resilient growth with these economic policies,” Salceda said.
Salceda adds that if the government doesn’t spend fast enough, while the BSP is cutting rates and the Fed continues its hikes, the country will rely solely on private investment, which could mean it misses its growth targets.
“The Department of Budget and Management already has the authority to release allotment orders from President Marcos. It must use the authority in consonance with our growth targets. Otherwise, we are not putting our money where our mouths are,” Salceda added.
“And crucial agencies for economic and social services, such as DPWH, DOLE, and DBM, must Be more aggressive in implementing programs to expand productivity. Otherwise, growth will come solely from the private sector – and we are very likely to fall short of our targets.”
“And as one of my mentors, Former Secretary Winnie Monsod once chided me about, when we miss growth targets, the sick die and families go hungry.”