Reenacted budget to put a drag on 2019 economic growth —Budget chief

Budget Secretary Benjamin Diokno on Tuesday warned against the negative implications of operating on a reenacted budget, saying this might put a drag on economic growth in the first half of 2019.

The fact that 2019 is an election year further complicates the situation because of the 45-day ban on new construction projects in the run-up to the May 13 elections.

“No new projects can start until the 2019 General Appropriations Act (GAA) is approved, and the anticipated delay in its implementation will likely result in a five-month implementation gap for new projects,” Diokno told reporters in a press conference in Parañaque City.

The implementation gap would have an impact on the economy in the first and second quarters of 2019 as “government spending on construction contributed significantly to the country’s growth,” Diokno noted.

“Just imagine, if there‘s no construction—that will slow down growth, it will also slow down employment. No construction, means no jobs. No jobs, mean more poverty,” he said.

“So mag-slow down siya ng first and second quarter pero pwede siya mag-pickup ng third and fourth,” Diokno said.

Based on the schedule of the Senate Committee on Finance, the bicameral panel will only be able to approve the proposed P3.757-trillion budget for next year only on Jan. 29, 2019. 

Approving the 2019 budget next January instead of December 2018 would set the tone for a reenacted budget.

This means that the government cannot fund programs appropriated for next year as it will have to operate on the same general appropriations as 2018.

The 1987 Constitution states that “If, by the end of any fiscal year, the Congress shall have failed to pass the general appropriations bill for the ensuing fiscal year, the general appropriations law for the preceding fiscal year shall be deemed reenacted and shall remain in force and effect until the general appropriations bill is passed by the Congress.”

A ban on new construction projects 45 days before the mid-term election on May 13, 2019 would also affect government spending.

“We want to frontload projects at the start of the year, if possible, especially infrastructure projects. The failure of the Congress to pass the GAA before December 31 will not allow us to do that,” Diokno said.

“Add to this the election ban from March to May and you have a five-month implementation gap on our infrastructure projects,” he said.

The Budget chief, however, said that only small projects are affected by an implementation gap.

“The 2018 capital outlays cannot be reenacted because projects funded in 2018 are assured to have been obligated or done in 2018 and no new projects can be authorized to start without authority from Congress ...” Diokno noted.

“For example, large projects covered by multi-year obligation authority will not be adversely affected.”

Aside from infrastructure projects, salary adjustments for civilian and military personnel will be affected—these will have to wait until the 2019 GAA is passed.

The internal revenue allotment for local government units and debt service are automatically appropriated and will get the allocations based on the 2019 budget, Diokno said. —VDS, GMA News