THE Department of Budget and Management (DBM) has assured the senators that the government will effectively tackle in 2025 government underspending.
During the Senate briefing on the proposed FY 2025 National Budget on Wednesday, Budget Secretary Amenah Pangandaman said that the DBM has instructed government agencies to request funds only for projects that can be implemented to avoid underspending.
Pangandaman also said there would be less risk of underspending in 2025 by making immediate release of allotments to government agencies as early as January to enable the timely and accelerated implementation of their priority programs and projects included in the FY 2025 National Budget.
Budget Secretary Amenah Pangandaman. PHOTOS BY J. GERARD SEGUIA
The budget chief highlighted the enactment of the New Government Procurement Act (NGPA) or Republic Act (RA) 12009 as a crucial step to address underspending, as it institutionalized the conduct of early procurement activities
“Agencies can already bid out their projects by the time we issue the National Expenditure Program to Congress. By the time we have our General Appropriations Act, they can already award the same,” the secretary said.
On July 20, 2024, President Ferdinand Marcos Jr. signed the NGPA into law, which Pangandaman described as a “transformative reform” that would modernize and augment public procurement processes in the Philippines by addressing existing loopholes and inefficiencies.
During the budget briefing, Pangandaman expressed confidence that the country would achieve an “A” credit rating if it used a whole-of-government approach to sustaining the high growth trajectory of the Philippine economy.
Fitch defines an “A” credit rating as “high credit quality,” which means that “the capacity for payment of financial commitments is considered strong.” In June 2024, Fitch affirmed the country’s credit rating at BBB which is above the minimum investment grade with a stable outlook.
A higher credit rating means a lower cost of borrowing externally and a greater likelihood of investments coming in. However, the country will need to sustain growth at 6 to 7 percent annually and ensure that the deficit is reduced consistently for the next four years to get a credit rating upgrade.
The Development Budget Coordination Committee (DBCC) projects the deficit to decline sustainably from 5.6 percent of GDP in 2024 to 3.7 percent of GDP in 2028. Meanwhile, the debt-to-GDP ratio will decline from 60.6 percent in 2024 to 56.0 percent in 2028, well within the internationally accepted threshold of 70 percent, as recommended by the International Monetary Fund.
Pangandaman said that through a whole-of-government approach, the DBCC’s economic targets were being met, including the “A” credit rating by 2028, an upper-middle-income economy by 2025, and a single-digit poverty level by 2028.
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