The 2011 and 2012 fiscal program appears to score high in terms of contributing to the speed of fiscal consolidation despite limited gains in revenue generation. This came about largely because of fairly serious under-spending authority has been attributed to the diligence that many government agencies have directed on the contracting/ procurement process given the new administration’s focus on anti-corruption and good governance.
However, it cannot be denied that such under-spending necessarily contributed to the lower than target rate of economic growth. The proposed expenditure program for 2012 is PhP 171 billion higher than the PhP 1.6 trillion expenditure program for 2011. Close to two thirds of the increment in the proposed expenditure program net of debt service is captured by the social service sectors and the economic service sectors combined.
In a sense, the bias towards the social service sectors that was very much evident in the national government expenditure program in 2011 has been replaced by a more balanced distribution between the social services sectors and the economic services sectors. Despite the higher allocation that is provided, the economic services sectors under the 2012 National Expenditure program, the level of national government spending on the infrastructure sector compares unfavorably with the amount of resources needed to achieve high, sustained and inclusive growth.
On the other hand, 2012 spending levels on education, health, and social welfare services will continue to lag behind those of other countries in the region. Moreover, programmed national government spending on basic education is estimated to fall short of the amount required to achieve the MDG target for education.
Given the evidence that significant levels of unmet needs are not being addressed, this paper echoes previous calls for government to recognize that national government revenues has to expand at a faster rate than has been demonstrated by the collection agencies so far.
Although there is evidence that some gains have been made in BIR tax effort since the Aquino II administration came into power, the improvement in tax effort to date pales in comparison with the amount needs to achieve sustained and inclusive growth with fiscal consolidation.
Results of the study show the following:
the 2011 and 2012 fiscal program appears to score high in terms of contributing to the speed of fiscal consolidation despite limited gains in revenue generation
the slow utilization of spending authority has been attributed to the diligence that many government agencies have directed on the contracting/procurement process given the new administrations focus on anti-corruption and good governance