Diokno pushes revival of 'use it or lose it' budget policy to meet year-end growth goal

Metro Manila (CNN Philippines, August 21) — A catch-up plan compelling government agencies to spend their annual budgets at the last minute should bring the economy back on track to hitting this year's growth goal, according to Finance Secretary Ben Diokno.

The country's gross domestic product (GDP) grew to a disappointing 4.3% year-on-year in the second quarter, dragged by persistent high consumer prices, the lagged impact of the central bank's interest rate hikes, and a contraction in government spending.

As GDP growth averaged 5.3% in the January to June period, the economic team has to prop up the economy at a pace of at least 6.6% in the second half to meet their target growth rate of 6-7% for 2023.

"I don't see why we can't catch up," Diokno told reporters late Friday.

"We found out that there's some 100 plus billion pesos issued checks pero hindi na-release. Baka yan yung nag-issue check kahera, pero hindi nabibigay sa supplier. There's some 100 plus billion," Diokno said. "That's one of the reasons for the underspending. So you have to check with finance officers. Dapat nabayaran na suppliers and contractors."

[Translation: We found out that there's some 100 plus billion pesos checks issued but not released. Maybe they issued the check to the cashier but didn't give it to the supplier. There's some 100 plus billion. That's one of the reasons for the underspending. So you have to check with finance officers. Suppliers and contractors must be paid.]

Government spending, or public consumption, accounts for 20-21% of GDP, the Finance chief said.

Diokno pointed out that his "use it or lose it" policy, which he implemented during his time as Budget secretary, compelled state agencies to effectively employ their allotted funds, subsequently promoting economic growth.

'You'll get fired'

The Finance chief noted that lawmakers who are deliberating budget proposals for 2024 should keep an eye on agencies that underspend.

"Palagay ko unfair na babawasan ang budget ng departments. Kasi mag-slowdown lalo. Sabi ko, ang mag lo-lose it, yung heads of department, you'll get fired. If you don't perform, sorry na lang but don't cut the budget of departments," Diokno proposed.

[Translation: I think it is unfair that the budget of the departments will be reduced. Because it's going to slow down even more. I say, the ones who lose it, the heads of department, you'll get fired.]

Asked about the firing of heads of agencies that undespend, Diokno said it is President Ferdinand Marcos Jr. who will still call the shots.