Philippine Budget System Efportillo

7/27/2019 Philippine Budget System Efportillo

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1Ena Josel F. Portillo

[email protected]


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What is Budget?

A budget is a detailed financial program inwhich anticipated expenditures and

anticipated revenues, including receiptsfrom borrowings, are itemized and exactly

balanced.

- P.A.: The Business of GovernmentJose P. Leveriza

The budget ing systemincludes allcomprehensive process as well as thelaws, rules and practices observed by

government in planning and carrying out2


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assisting in planning expenditure to meet

policy requirements

policy implementation and control measuring and monitoring performance

to determine the total expenditure of the

organization and ensure that it is consistentwith total revenues

provide the basis for authorizing

expenditure and collection of fees and 3


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The Concepts of National

Budgeting System In The Country

Concept of Balance

Concept of Fiscal Control

Concept of Obligation Concept of Appropriation

Approaches to Budgeting1. The traditional budgeting approach

2. The new management/managerial

budgeting approach 4


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Top down

budgeting

Bottom up

budgeting

Line-item

budgeting 5


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Zero-based budgeting

(ZBB) Program based

budgeting

Priority-based

budgeting

Performance-based 6


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Understanding The

Budget Process(its four stages)

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CSO DBM Congress

COAOffice of the

President


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This starts with the Budget Call

and ends with the Presidentssubmission of the proposed

budget to Congress.

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1. The Budget CallAt the beginning of the budget

preparation year, the

Department of Budget and

Management (DBM) issues the

National Budget Call to all

agencies (including stateuniversities and colleges) and a

separate Corporate Budget Call

to all GOCCs and GFIs.

The Budget Call containsbudget parameters (including

macroeconomic and fiscal

targets and agency budget

ceilings) as set beforehand by 9


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Early Preparation

Under the Aquino Administration, theDBM has established a new tradition of

beginning the Budget Preparation phase

earlier, to ensure that the National Budget

is enacted on time. Under the new Budget

Preparation Calendar, the Budget Call is

issued in December (versus around April

in the past); and the submission of thePresidents budget a day after the State of

the Nation Address (in contrast to earlier

practice where it is submitted during the10


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2. StakeholderEngagement

A new feature in budget

preparations which seeks toincrease citizen participation inthe budget process,departments and agencies are

tasked to partner with civilsociety organizations (CSOs)and other citizen-stakeholdersas they prepare their agencybudget proposals. This new 11


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ORIGINAL SET (Piloted in2012)

Department of Health Department of Education Department of Social Welfare

and Development

Department of Public Works andHighways

Department of Agriculture Department of Agrarian Reform National Food Authority National Housing Authority

National Home Mortgage andFinance Corp.

NEW SET (Starting 2013) Department of Tourism Department of Transportation

and Communication Department of Interior and Local

Government

Department of Justice Department of Labor and

Employment Department of Environment and

Natural Resources Light Rail Transit Authority

National ElectrificationAdministration National Irrigation

Administration

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Note: All other departments and agencies arehighly encouraged to undertake the process.


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Bottom-Up Budgeting. For thefirst time in history, the National Budget for

2013 will be prepared using a breakthrough

bottom-up approach. As opposed to theconventional way of allocating resources

from top to bottom, grassroots communities

will be engaged in designing the National

Budget.

The Aquino government, through the

Cabinet Cluster on Human Development

and Poverty Reduction, has identified 300 to400 of the poorest municipalities and will

engage these in crafting community-level

poverty reduction and empowerment plans.

This initial salvo of bottom-up budgeting 13


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3. Technical Budget

HearingsThese are conducted after

departments and agencies

submit their Agency Budget

Proposals to the DBM. Here,

agencies defend their proposed

budgets before a technical panelof DBM, based on performance

indicators on output targets and

absorptive capacity. DBM 14


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4. Executive Review

The recommendations arepresented before an Executive

Review Board which is

composed of the DBM

Secretary and senior officials.

Deliberations here entail a

careful prioritization of

programs and correspondingsupport, vis--vis the priority

agenda of the national

government. Implementation 15


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5. Consolidation,

Validation, and

Confirmation

DBM then consolidates the

recommended agency budgetsand recommendations into a

National Expenditure Program and

a Budget of Expenditures and

Sources of Financing (BESF).

As part of the consolidating

process, the deliberations by the

DBCC will determine the agency 16


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6. Presentation to

President andCabinet

The proposed budget is

presented by DBM, togetherwith the DBCC, to the

President and Cabinet for

further refinements orreprioritization. After the

President and Cabinet

approve the proposed17


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7. The Presidents Budget

The budget preparation

phase ends with thesubmission of the proposednational budgetthePresidents BudgettoCongress. The PresidentsBudget consists of thefollowing documents, which

help legislators analyze thecontents of the proposedbudget:

Presidents Budget 18


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Budget of Expend i tures and Sources

of Financing (BESF)

Mandated by the Constitution, this

contains the macroeconomic

assumptions, public sector context

(including overviews of LGU and GOCC

financial positions), breakdown of theexpenditures and funding sources for the

fiscal year and the two previous years.

National Expend iture Prog ram (NEP)

This contains the details of spending for

each department and agency by program,19


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Detai ls o f Selec ted Programs and

Projects

This contains a more detailed

disaggregation of key programs,

projects and activities in the NEP,

especially those in line with the

national governments development

plan.

Staf fing Summary

This contains a summary of the 20


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Alternatively called the budget

authorization phase, this starts

upon the House Speakers

receipt of the Presidents

Budget and ends with thePresidents enactment of the

General Appropriations Act.

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1. House DeliberationsThe House of Representatives, in plenary,assigns the Presidents Budget to the

House Appropriations Committee. TheCommittee and its Sub-Committees thenschedule and conduct hearings on thebudgets of the departments and agencies

and scrutinize their respective programsand projects. It then crafts the General

Appropriations Bill (GAB).

In plenary session, the GAB is sponsored,

presented and defended by the Appropriations-

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2. Senate Deliberations

As in the House process, the Senate conductsits own committee hearings and plenarydeliberations on the GAB. Budget deliberationsin the Senate formally start after the House ofRepresentatives transmits the GAB. For

expediency, however, the Senate FinanceCommittee and Sub-Committees usually starthearings on the GAB even as Housedeliberations are ongoing.

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3 Bi l D lib ti


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3. Bicameral DeliberationsOnce both Houses of Congress have finishedtheir deliberations, they will each constitute a

panel to the Bicameral Conference Committee.This committee will then discuss and harmonizethe conflicting provisions of the House andSenate Versions of the GAB. A HarmonizedVersion of the GAB is thus produced.

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4. Ratification and

EnrollmentThe Harmonized or Bicam

Version is then submitted toboth Houses, which will then

vote to ratify the final GAB for

submission to the President.

Once submitted to the

President for his approval, the25

5 Th V t M


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5. The Veto MessageThe President and DBM then review the GAB

and prepare a Veto Message, where budgetitems subjected to direct veto or conditional

implementation are identified, and where

general observations are made. Under the

Constitution, the GAB is the only legislativemeasure where the President can impose a

line-veto (in all other cases, a law is either

approved or vetoed in full).

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6 E t t


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6. Enactment

When the GAA is not enacted before the fiscal

year starts, the previous years GAA is

automatically reenacted. This means thatagency budgets for programs, activities and

projects remain the same. Funding for

programs or projects that have already been

terminated is realigned for other expenditures.

Because reenactments are tedious and prone

to abuse, the Aquino Administrationwith the

support of Congresshas committed to ensurethe timely enactment of a new GAA every year.

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This is where the peoples

money is actually spent. As

soon as the GAA is enacted,

the government can implement

its priority programs andprojects.

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1. Release Guidelines and Program

The budget execution phase begins

with DBMs issuance of guidelines on

the release and utilization of funds.

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2. Budget Execution Documents

(BEDs)

Agencies are required to submit their BEDsat the start of budget execution. These

documents outline agency plans and

performance targets. These BEDs include

the physical and financial plan, monthly cashprogram, estimate of monthly income, and

list of obligations that are not yet due and

demandable.

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3 All t t d C h R l


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3. Allotment and Cash ReleaseProgrammingTo ensure that releases fit the approved

Fiscal Program, the DBM prepares anAllotment Release Program (ARP) to seta limit for allotments issued to an agencyand on the aggregate. The ARP of each

agency corresponds to the total amount ofthe agency-specific budget under theGAA, as well as Automatic Appropriations.

A Cash Release Program (CRP) is also

formulated alongside that to set a guidefor disbursement levels for the year andfor every month and quarter.

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4 All t t R l


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4. Allotment ReleaseAllotments, which authorize an agency to enterinto an obligation, are either released by DBM to

all agencies comprehensively through the AgencyBudget Matrix (ABM) and individually via Special

Allotment Release Orders (SAROs).

This document disaggregates all programmed

appropriations for each agency into two mainexpenditure categories: not needing clearance andneeding clearance.

ABM. The ABM is the comprehensive allotment

release document for appropriations which do notneed clearance, or those which have already beenitemized and fleshed out in the GAA.

SARO.Items identified as needing clearance arethose which require the approval of the DBM or thePresident, as the case may be (for instance, lump32


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5. Incurring Obligations

In implementing programs, activities

and projects, agencies incur liabilities

on behalf of the government.

Obligations are liabilities legally

incurred, which the government will

pay for. There are various ways that

an agency obligates: for example,

when it hires staff (an obligation to

pay salaries), receives billings for the

use of utilities, or enters into a 34


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6. Cash

AllocationTo authorize an

agency to pay the

obligations it incurs,

DBM issues adisbursement

authority. Most of the

time, it takes the formof a Notice of Cash

Allocation (NCA); and

in special cases, the

Non-Cash Availment35


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NCA.This is a cash authority issuedperiodically by the DBM to the operating

units of agencies to cover their cashrequirements. The NCA specifies themaximum amount of cash that can bewithdrawn from a government servicing

bank for the period indicated. The releaseof NCAs by DBM is based on an agencyssubmission of its Monthly Cash Programand other required documents.

Others DisbursementAuthorities. In contrast to NCAs,NCAAs are issued to authorize non-cashdisbursements. CDCs are meanwhile 36

7 Di b t


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7. Disbursement

This is the final step of the budget execution

phase, where government monies areactually spent. The Modified Disbursement

Scheme is mostly used, where

disbursements of national government

agencies chargeable against the Treasury

are made through government servicing

banks, such as the Land Bank of the

Philippines.

The budget process, of course, does not

end when government agencies spend

public funds: each and every peso must be37


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This phase happens alongside theBudget Execution phase. Through

Budget Accountability, the DBMmonitors the efficiency of fund

utilization, assesses agency

performance and provides a vitalbasis for reforms and new

policies.38
http://budgetngbayan.com/budget-101/budget-execution/http://budgetngbayan.com/budget-101/budget-execution/


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1. Performance and

Target Outcomes

Agencies are heldaccountable not only

for how these use

public funds ethically,

but also on how these

attain performance

targets and outcomes

using available

resources.39


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2. Budget

Accountability

Reports (BARs)Submitted by agencies on a

monthly and quarterly basis,

BARs are required reportsthat show how agencies

used their funds and identify

their corresponding physical

accomplishments. Theseinclude quarterly physical

and financial reports of

operations; quarterly income 40


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3 R i f A


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3. Review of AgencyPerformanceThe DBM regularly reviews

the financial and physicalperformance of agencies.Actual utilization of fundsand physical

accomplishments, asindicated in the agenciesBARs, are evaluated againsttheir targets. AgencyPerformance Reviews(APRs) are conductedquarterly or every semester,as the case may be. Anannual Budget Performance

Assessment Review (BPAR) 42


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4. AuditAuditing is not within

the DBMs jurisdiction,and is instead lodgedunder the Commission

on Audit (COA).Nonetheless, auditingis critical in ensuringagency accountability

in the use of publicfunds. The DBM usesCOAs audit reports inconfirming agency

erformance 43


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5. Performance-Based Incentive

SystemThe DBM is also in the process of

establishing a performance-based

incentive system which willrecognize and reward good

performance among government

employees to help improve theefficiency of service delivery across

all government institutions.44


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The Philippine budget is considered the most

complicated in the world, incorporating multipleapproaches in one single budget system: line-item

(budget execution), performance (budget

accountability), and bottom-up (budget preparation).

The Department of Budget and Managementprepares the National Expenditure Program and

forwards it to the Committee on Appropriations of the

House of Representative to come up with a General

Appropriations Bill (GAB). The GAB will go throughbudget deliberations and voting; the same process

occurs when the GAB is transmitted to the Philippine

Senate.

After both houses of Congress approves the GAB,45


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http://www.budgetngbayan.com

http://www.reports.dbm.gov.ph

http://www.termpaperwarehouse.com Leveriza, Jose P.,PA:The Business of

Government, 2nd Edition. National

Bookstore, Mandaluyong, City;1990.

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