Gov’t cash usage in first two months behind year-earlier pace

Department of Budget and Management (DBM)

THE government’s cash utilization rate in January and February fell behind the pace set a year earlier, the Department of Budget and Management (DBM) reported.

The DBM said the National Government used P448.7 billion worth of notices of cash allocation (NCAs) in the first two months, or 85% of the P528.48 billion released during the period. This left P79.78 billion of NCAs left unused for the period.

The usage rate was lower than the 87% in the same period of 2020.

The Energy department posted the top cash usage rate at 98%, followed by the DBM with 98%, and the Commission on Human Rights with 97%.

The Department of Foreign Affairs was bottom of the table with an NCA utilization rate of only 26%.

The government aims to ramp up spending this year to drive economic growth and recover from the record 9.5% contraction in 2020.

The government budget in 2021 is P4.5 trillion, with a cap on the budget deficit of 8.9% of gross domestic product (GDP), signaling plans to borrow more to plug the funding gap.

The Department of Finance (DoF) said over the weekend that the government’s debt stock remained mid-tier among selected Asian economies like Indonesia, Malaysia, China, South Korea, India and Vietnam.

The government’s outstanding debt-to-GDP rose to a 14-year high of 54.5% in 2020 from 39.6% in 2019, exceeding the 51.5% average for the ASEAN-5.

Domestic debt as a percentage of the overall economy rose to 37.24% last year from 26.27% in 2019, with the foreign debt stock equivalent to 17.25% of GDP, from 13.34%, previously.

The ratio of interest payments to GDP, rose to 2.12% from 1.85% in 2019. Interest paid on existing debt relative to total revenue rose to 13.32% from 11.5%, while the ratio of interest against overall spending fell to 9% from 9.5% due to low interest rates during the public health crisis.

“Unlike in previous high deficit episodes when the government had to face both sky-high interest rates and a weakening peso, the government emerged from the 2020 episode with lower debt service, low interest rates and a stronger peso,” the DoF said in an economic bulletin.

It attributed the strong performance to confidence in the economy, supported by “coordinated fiscal and monetary policymaking.”

“As long as debt is managed prudently, the risks from debt exposure are minimized and additional resources continue to be obtained for projects that contribute favorably to development,” it added. — Beatrice M. Laforga