1. For the subject: FISCAL ADMINISTRATIONMrs. Renifer Francisco, LLB,MPAReporter: Mrs. JOMELYN M. ABUAN

2. It is a financial plan to pursue priorityprograms & projects of the government inline with its economic growth & humandevelopment thrusts.It is an instrument for good governance, asgovernment agencies are accountable for thedelivery of measurable results through theirrespective budgets. 3. The financialblueprint of thecountrysdevelopment plan. 4. To ensure that public resources are managedmore efficiently and with the greatest degree ofdiscipline.Under the Aquino administration, it seeks tobring the budget closer to the people, bychanneling resources on programs thataccelerate economic growth, but moreimportantly, to re-directs funds to programs thatwould be responsive to the needs of the peopleespecially those in regions beset by poverty. 5. The 2011 Budget introducedreforms such as ZERO-BASEDBUDGETING to ensure that publicfunds were spent only for publicpurposes.These reforms were essential forrestoring a cynical publics trustin government. 6. The 2012 Budget addressedhiccups in the budgetimplementation. The mandatefor the Budget was clear toensure the delivery of theresults outlined in the AquinoSocial Contract. 7. The 2013 budget empowered theFilipino people through tighterprioritization of their needs, fasterdelivery of results, and a more openbudget process.It emphasized that the governmentexists to serve the Filipino people. 8. All Filipinos must enjoythe prosperity that comeswith sustainableeconomic development.This is the thrust of the2014 Budget. 9. The 2014 Budget builds on thesuccesses made possible by an honestand trustworthy government.It lays the foundation for inclusivedevelopment and sustains themomentum of reform.P2.268 TRILLION 10. Section 22, Article VII of the 1987 Constitution sets the tone for thebudgetary process.The procedure in the preparation of the national budget isregulated by law. On or before October 20 of each year, eachdepartment secretary submits to Department of Budget theestimated income and expenditures of the bureaus andoffices under his department for the next fiscal year.Upon receipt of all budget estimates of income andexpenditures, the Department of Budget and Managementprepares the national budget.Prior to this, however, the Budget secretary can investigate,revise, examine, assemble, coordinate, and reduce orincrease the budget estimates of the different departments,bureaus and offices of the government. 11. After preparing the budget, the Budget secretary submits it tothe President, who in turn submits it to Congress within 30days before the opening of the regular session.The 1987 Constitution specifically provides that the President"shall submit to the Congress within thirty days from theopening of every regular session, as the basis of the generalappropriations bill, budget of expenditures and sources offinancing, including receipts from existing and proposedrevenue measures" ( Sec. 22, Art. VI). Congress uses thebudget submitted by the president as the basis for the annualappropriation.According to the 1987 Philippine Constitution, Congress "maynot increase the appropriation recommended by the Presidentfor the operation of the Government as specified in thebudget" (Sec. 25(1), Art. VI). 12. There are four phases in managing the National Budget: Budget Preparation Budget Legislation Budget Execution Budget AccountabilityDuring the preparation phase, the Executive prepares theproposed National Budget. This is followed by the legislationphase where the Congress authorizes the GeneralAppropriations Act. In the execution phase, agencies utilizetheir approved budgets and during the accountability phase,the executive monitors and evaluates the use of the budget. 13. PREPARATIONLEGISLATIONEXECUTIONACCOUNTABILITY 14. DBCC setsparametersBudgetCallStakeholdersConsultationAgencyBudgetProposalsTechnicalBudgetHearingsExecutiveReviewConsolidation,Validation &ConfirmationPresentationTo President& CabinetThePresidentsBudget 15. At the beginning of the budget preparation year, theDepartment of Budget and Management (DBM) issuesthe National Budget Call to all agencies (including stateuniversities and colleges) and a separate CorporateBudget Call to all GOCCs and GFIs.The Budget Call contains budget parameters (includingmacroeconomic and fiscal targets and agency budgetceilings) as set beforehand by the Development BudgetCoordination Committee (DBCC); and policy guidelinesand procedures in the preparation and submission ofagency budget proposals. 16. A new feature in budget preparations which seeks to increasecitizen participation in the budget process, departments andagencies are tasked to partner with civil society organizations(CSOs) and other citizen-stakeholders as they prepare theiragency budget proposals.This new process, which was piloted in the preparation of the2012 National Budget, is now being expanded towardsinstitutionalization. 17. Departments & GOCCs mandated to conduct consultationsORIGINAL SET (Piloted in 2012) NEW SET (Starting 2013)Department of HealthDepartment of EducationDepartment of Social Welfare andDevelopmentDepartment of Public Works andHighwaysDepartment of AgricultureDepartment of Agrarian ReformNational Food AuthorityNational Housing AuthorityNational Home Mortgage andFinance Corp.Department of TourismDepartment ofTransportation andCommunicationDepartment of Interior andLocal GovernmentDepartment of JusticeDepartment of Labor andEmploymentDepartment of Environmentand Natural ResourcesLight Rail Transit AuthorityNational ElectrificationAdministrationNational IrrigationAdministrationNote: All other departments and agencies are highly encouraged to undertake the process. 18. For the first time in history, the National Budget for 2013 willbe prepared using a breakthrough bottom-up approach. Asopposed to the conventional way of allocating resources fromtop to bottom, grassroots communities will be engaged indesigning the National Budget.The Aquino government, through the Cabinet Cluster onHuman Development and Poverty Reduction, has identified300 to 400 of the poorest municipalities and will engage thesein crafting community-level poverty reduction andempowerment plans. This initial salvo of bottom-upbudgeting will focus on rural development programs and theconditional cash transfer program, and will thus involve DA,DAR, DENR, DSWD, DepEd and DoH. These agencies willthen include the community plans in their proposed budgets. 19. These are conducted after departmentsand agencies submit their Agency BudgetProposals to the DBM. Here, agenciesdefend their proposed budgets before atechnical panel of DBM, based onperformance indicators on output targetsand absorptive capacity. DBM bureausthen review the agency proposals andprepare recommendations. 20. The recommendations are presented before anExecutive Review Board which is composed of the DBMSecretary and senior officials.Deliberations here entail a careful prioritization ofprograms and corresponding support, vis--vis thepriority agenda of the national government.Implementation issues are also discussed and resolved. 21. DBM then consolidates the recommended agencybudgets and recommendations into a NationalExpenditure Program and a Budget of Expenditures andSources of Financing (BESF).As part of the consolidating process, the deliberations bythe DBCC will determine the agency and sectoralallocation of the approved total expenditure ceiling, inline with the macroeconomic and fiscal program. Headsof major departments are invited to this meeting. 22. The proposed budget is presented byDBM, together with the DBCC, to thePresident and Cabinet for furtherrefinements or reprioritization. After thePresident and Cabinet approve theproposed National Expenditure Plan, theDBM prepares and finalizes the budgetdocuments to be submitted to Congress. 23. The budget preparation phase ends withthe submission of the proposed nationalbudget the Presidents Budget toCongress.The Presidents Budget consists of thefollowing documents, which helplegislators analyze the contents of theproposed budget: 24. Presidents Budget Message (PBM)This is where the President explains the policy framework and priorities in the budget.Budget of Expenditures and Sources of Financing (BESF)Mandated by the Constitution, this contains the macroeconomic assumptions, publicsector context (including overviews of LGU and GOCC financial positions),breakdown of the expenditures and funding sources for the fiscal year and the twoprevious years.National Expenditure Program (NEP)This contains the details of spending for each department and agency by program,activity or project, and is submitted in the form of a proposed General AppropriationsAct.Details of Selected Programs and ProjectsThis contains a more detailed disaggregation of key programs, projects and activitiesin the NEP, especially those in line with the national governments development plan.Staffing SummaryThis contains a summary of the staffing complement of each department and agency,including number of positions and amounts allocated for the same. 25. Our esteemed ladies and gentlemen of the 16th Congress, as you authorize thisproposed Budget for fiscal year 2014, I invite you to commit with us in our efforts torealize this legacy. I encourage you to look at this Budget with the will to enact thesame with speed and resolve so that our people can be on the road to prosperity. Letthis Budget for Inclusive Development enable us to truly serve our people who gaveus our mandate. They are the reason why we are all here.Halinat sama-sama nating tahakin ang tuwid na landas tungo sa kasaganaan nglahat.It is in this light that I ask you, the men and women of Congress, to examine andeventually approve this proposed Budget for fiscal year 2014.In the spirit of People Power,BENIGNO S. AQUINO IIIPresident of the Philippines 26. Alternatively called the Budget Authorization phase, this starts uponthe House Speakers receipt of the Presidents Budget and ends with thePresidents enactment of the General Appropriations Act.Submission ofBudgetTo CongressHOUSEDELIBERATIONS- Appropriations ofComm. Hearings- Plenary Deliberations- Approval of GABSENATEDELIBERATIONS- Finance Comm.Hearing- Plenary Deliberations- Approval of SenateGABBicameralConferenceCommitteeRatification ofHarmonizedVersion of GABVeto andEnactment ofGAAReenactment(Partial or Full) 27. The House of Representatives, in plenary, assigns the PresidentsBudget to the House Appropriations Committee. The Committee andits Sub-Committees then schedule and conduct hearings on thebudgets of the departments and agencies and scrutinize theirrespective programs and projects. It then crafts the GeneralAppropriations Bill (GAB).In plenary session, the GAB is sponsored, presented and defendedby the Appropriations Committee and Sub-Committee Chairmen. Asin all other laws, the GAB is approved on Second and Third Readingbefore transmission to the Senate. (Note: In the First Reading, thePresidents Budget is assigned to the Appropriations Committee.) 28. (see the FY 2015 presentation) - desktop 29. As in the House process, the Senate conducts its owncommittee hearings and plenary deliberations on the GAB.Budget deliberations in the Senate formally start after theHouse of Representatives transmits the GAB. Forexpediency, however, the Senate Finance Committee andSub-Committees usually start hearings on the GAB even asHouse deliberations are ongoing.The Committee submits its proposed amendments to theGAB to plenary only after it has been formally transmitted bythe House. 30. Once both Houses of Congress have finished theirdeliberations, they will each constitute a panel to theBicameral Conference Committee. This committee willthen discuss and harmonize the conflicting provisions ofthe House and Senate Versions of the GAB. AHarmonized Version of the GAB is thus produced. 31. The Harmonized or Bicam Version is then submitted toboth Houses, which will then vote to ratify the final GABfor submission to the President. Once submitted to thePresident for his approval, the GAB is consideredenrolled. 32. The President and DBM then review the GAB andprepare a Veto Message, where budget items subjectedto direct veto or conditional implementation areidentified, and where general observations are made.Under the Constitution, the GAB is the only legislativemeasure where the President can impose a line-veto (inall other cases, a law is either approved or vetoed infull). 33. When the GAA is not enacted before the fiscal year starts, theprevious years GAA is automatically reenacted. This meansthat agency budgets for programs, activities and projectsremain the same. Funding for programs or projects that havealready been terminated is realigned for other expenditures.Because reenactments are tedious and prone to abuse, theAquino Administrationwith the support of Congresshascommitted to ensure the timely enactment of a new GAAevery year. 34. This is where the peoples money is actuallyspent. As soon as the GAA is enacted, thegovernment can implement its priority programsand projects. 35. The budget execution phase begins with DBMsissuance of guidelines on the release andutilization of funds. 36. Agencies are required to submit their BEDs at the startof budget execution. These documents outline agencyplans and performance targets. These BEDs include thephysical and financial plan, monthly cash program,estimate of monthly income, and list of obligations thatare not yet due and demandable. 37. To ensure that releases fit the approved Fiscal Program, the DBMprepares an Allotment Release Program (ARP) to set a limit forallotments issued to an agency and on the aggregate.The ARP of each agency corresponds to the total amount of theagency-specific budget under the GAA, as well as AutomaticAppropriations. A Cash Release Program (CRP) is also formulatedalongside that to set a guide for disbursement levels for the yearand for every month. 38. Allotments, which authorizean agency to enter into anobligation, are either releasedby DBM to all agenciescomprehensively through theAgency Budget Matrix(ABM) and individually viaSpecial Allotment ReleaseOrders (SAROs). 39. Agency Budget Matrix (ABM) This document disaggregatesall programmed appropriationsfor each agency into two mainexpenditure categories: notneeding clearance andneeding clearance. The ABM is the comprehensiveallotment release document forappropriations which do notneed clearance, or those whichhave already been itemizedand fleshed out in the GAA. 40. Allotment ReleaseOrders (SAROs) Items identified as needingclearance are those whichrequire the approval of theDBM or the President, as thecase may be (for instance,lump sum funds andconfidential and intelligencefunds). For such items, an agencyneeds to submit a SpecialBudget Request to the DBMwith supporting documents.Once approved, a SARO isissued. 41. In implementing programs, activitiesand projects, agencies incurliabilities on behalf of thegovernment. Obligations areliabilities legally incurred, whichthe government will pay for.There are various ways that anagency obligates: for example,when it hires staff (an obligation topay salaries), receives billings forthe use of utilities, or enters into acontract with an entity for the supplyof goods or services. 42. The Aquino Administration plans to design the annual GeneralAppropriations Act as the comprehensive allotment releasedocument itself. This is being pursued in order to significantlyspeed-up the process of releasing the Budget andimplementing the programs and projects that it funds.The 2013 National Budget, is designed in such way. Thisentails the disaggregation of all budget items into full detail,as well as the elimination of all lump-sum funds, save for afew exceptions such as the Calamity Fund. In other words,this reform significantly reduces the need for SAROs. 43. To authorize an agency to paythe obligations it incurs, DBMissues a disbursementauthority.Most of the time, it takes theform of a Notice of CashAllocation (NCA); and inspecial cases, the Non-CashAvailment Authority (NCAA)and Cash DisbursementCeiling (CDC). 44. Notice of Cash Allocation (NCA) This is a cash authority issuedperiodically by the DBM to the operatingunits of agencies to cover their cashrequirements. The NCA specifies the maximumamount of cash that can be withdrawnfrom a government servicing bank forthe period indicated. The release of NCAs by DBM is basedon an agencys submission of itsMonthly Cash Program and otherrequired documents. 45. Others Disbursement Authorities. In contrast to NCAs, Non-CashAvailment Authority (NCAA) areissued to authorize non-cashdisbursements. Cash Disbursement Ceiling (CDC)are meanwhile issued to departmentswith overseas operations, allowingthem to use income collected by theirforeign posts for their operatingrequirements. 46. This is the final step of the budget execution phase, wheregovernment monies are actually spent. The ModifiedDisbursement Scheme is mostly used, wheredisbursements of national government agencieschargeable against the Treasury are made throughgovernment servicing banks, such as the Land Bank ofthe Philippines.The budget process, of course, does not end whengovernment agencies spend public funds: each and everypeso must be accounted for to ensure that is usedproperly, contributing to the achievement of socio-economicgoals. 47. This phase happens alongside the BudgetExecution phase.Through Budget Accountability, the DBMmonitors the efficiency of fund utilization,assesses agency performance and provides avital basis for reforms and new policies. 48. Agencies are held accountable not only forhow these use public funds ethically, butalso on how these attain performancetargets and outcomes using availableresources.These performance measures are setalongside the preparation of the NationalBudget; and these are indicated in theOPIF Book of Outputs.Prior to the execution of the enactedNational Budget, these performancetargets are firmed up during thepreparation of BEDs. 49. Submitted by agencies on amonthly and quarterly basis, BARsare required reports that show howagencies used their funds andidentify their corresponding physicalaccomplishments.These include quarterly physicaland financial reports of operations;quarterly income reports, a monthlystatement of allotments, obligationsand balances; and monthly report ofdisbursements. 50. Starting 2012, the DBM will be withholding certain fundreleases to agencies if these fail to submit their BudgetAccountability Reports. In particular, these will be funds fromthe Miscellaneous Personnel Benefits Fund (MPBF) forcompensation adjustments under the Salary StandardizationLaw, provisions for unfilled positions and employee clothingallowances. These funds to be withheld are only limited to agenciesMPBF allotments so that only the agencies are penalized andthat the implementation of critical programs and projects willnot be disrupted. Errant and compliant agencies will also beposted online for public scrutiny. 51. The DBM regularly reviews the financial andphysical performance of agencies. Actualutilization of funds and physicalaccomplishments, as indicated in theagencies BARs, are evaluated against theirtargets as identified via OPIF and in theagencies BEDs. Agency PerformanceReviews (APRs) are conducted quarterly orevery semester, as the case may be.An annual Budget Performance AssessmentReview (BPAR) is conducted to determineeach agencys accomplishments andperformance by the year-end. The DBMregularly reports results to the President. 52. Auditing is not within the DBMsjurisdiction, and is instead lodgedunder the Commission on Audit(COA). Nonetheless, auditing is criticalin ensuring agency accountability inthe use of public funds.The DBM uses COAs audit reports inconfirming agency performance,determining budgetary levels foragencies and addressing issues infund usage. 53. BUDGET BY SECTORSOCIAL SERVICESECONOMIC SERVICESGeneral PublicServicesDEBT BurdenDEFENSESOCIAL SERVICE37.2% - P842.8B4.1%=P92.9B26.0% = P590.2B 54. 2014Capital OutlayCOEP1,732.4B 55. MOOEPSLGUsP375.3BP689.4BP273.2BTax Expenditure FundP26.9BInterest PaymentsP352.7BNet LendingP25.0B 56. DedEd = P336.9BDPWH = P213.5BDILG = P135.4BDND=123.1BDOH =P87.1BDA = P80.7BDSWD = 79.0BDOTC = 48.7BDENR = 23.9BDAR = 20.4B 57. I = P55.7B2 = P48.1BCAR = P32.2B3 = P94.9B4-A = P102.9B4-B = P43.0BNCR = P275.9B5 = P73.3B6 = P85.3B7 = P71.6B8 = P67.8B9 = P50.3B10 = P59.7B11 = P53.1B12 = P50.8BARMM = P44.6B13 = 42.6B 58. The 2014 Budget is a budget forinclusive development. Itrecognizes that the gains ofeconomic growth should beshared by all Filipinos. Its goal isto continue accelerating economicexpansion, while at the same timealleviating chronic poverty.- Florencio B. AbadDBM - Secretary 59. Now, let us turn to the budget. The Executive Branch proposes projects, which areapproved by Congress. However, we have had to suspend a number of projects tomake certain that we remain in accordance with the Supreme Courts decision onthe Disbursement Acceleration Program, or DAP. I know that those of you in thishall are one with me in believing that we must not deprive our countrymen ofbenefits, and that these should reach them in the soonest possible time.This is why: We are proposing the passage of a supplemental budget for 2014, sothat the implementation of our programs and projects need not be compromised.[Applause]Together with this, we are calling on the cooperation of Congress for the passage ofa Joint Resolution that will bring clarity to the definitions and ideas still beingdebated upon, and to the other issues that only you in the legislatureas theauthors of our lawscan shed light on. [Applause]On the first working day after the SONA, we will submit to Congress the proposed2.606 trillion peso National Budget of 2015. As always, this budget was createdtogether with our countrymen, using strategies that will ensure that funds are onlyallocated to projects and programs that will truly benefit the public. We are countingon the cooperation of our lawmakers to strengthen our Budget, as the primaryinstrument in creating opportunities for the Filipino people. 60. Inclusive growth means, first of all, growth that israpid enough to matter, given the countrys largepopulation, geographical differences, and socialcomplexity. It is sustained growth that createsjobs, draws the majority into the economic andsocial mainstream, and continuously reduces masspoverty. This is an ideal which the country hasperennially fallen short of, and this failure has hadthe most far-reaching consequences, from massmisery and marginalization, to an overseas exodusof skill and talent, to political disaffection andalienation, leading finally to threats to theconstitution of the state itself. 61. Growing output and employment are the preconditions forprogress in almost all social and economic aspects ofdevelopment. Productive employment and rising incomesfor the vast majority over a long period can do more tocombat poverty decisively than any direct assistancegovernment can ever provide.It is private actors from the smallest self-employedentrepreneurs to the largest conglomerates that createproductive jobs and incomes. Governments responsibilityhowever through fiscal and monetary policies is tocreate an environment for vigorous economic activity, aswell as to ensure that enough gains from growth are setaside for larger social purposes or channelled into socialinvestments that facilitate future growth. These objectivesare achieved by government decisions regarding the sizeand direction of public spending and taxation (fiscalpolicy) and by decisions regarding the control of thenations money supply (monetary policy). 62. Business competitiveness will be enhanced byimproving governance, strengthening economiczones, and strengthening national brandidentity/awareness. To increase productivity andefficiency, government shall focus interventionson key priority areas, provide firm level supportto MSMEs, increase market access, expandindustry cluster development and intensify theculture of competitiveness. Proactive measures toempower consumers, promote competition andenforce trade regulations shall also be pursued. 63. The agriculture and fisheries sector providesfood and vital raw materials for the rest of theeconomy. It is itself a significant market for theproducts and services of the nonagriculturaleconomy. As the sector grows and modernizes,it releases surplus labor to the industry andservices sectors. Rising productivity andefficiency in the sector are critical inmaintaining the affordability of food andpurchasing power, especially among the poor.The sectors development is therefore vital inachieving inclusive growth and povertyreduction as well as attaining the targets underthe MDGs. 64. The Plans infrastructure developmentprogram aims to contribute to inclusivegrowth and poverty reduction. It will supportthe performance of the countrys economicsectors and ensure equitable access toinfrastructure services, especially as theseaffect the peoples health, education, andhousing. Toward these ends, the governmentwill accelerate the provision of safe, efficient,reliable, costeffective, and sustainableinfrastructure 65. The financial sector intermediates claims betweensavings and investors. The credibility and stability offinancial institutions and the relative attractiveness ofvarious financial instruments to borrowers andlenders alike determine how much saving willmobilized, how much it stays in the country to beinvested, and how this is to be allocated among thevarious firms and industries. Together with the stateof confidence and long-term expectation, therefore,the stability and performance of financial institutionssuch as banks, equity and bonds markets, insurancecompanies, and other financial entities have anindirect but vital bearing on investment and thegrowth of output and employment in the country. 66. Good governance sets the normativestandards of development. It fostersparticipation, ensures transparency, demandsaccountability, promotes efficiency, andupholds the rule of law in economic, politicaland administrative institutions and processes.It is a hallmark of political maturity but also arequisite for growth and poverty reduction,for there are irreducible minimum levels ofgovernance needed for large-scaleinvestment to occur and for social programsto be supported 67. Social development has improved the access ofFilipinos to quality basic social service delivery ineducation, training and culture; health andnutrition; population and development; housing;social protection; and asset reform. The countryis on track in pursuing the MillenniumDevelopment Goals (MDGs) on poverty, genderand equality, child health, disease control andsanitation. However, the country lags in achievinguniversal primary education, improving maternalhealth, and combating HIV/AIDS. Moreover, largediscrepancies across regions need to beaddressed by the social development sector inthe next six years. 68. Peace and security shall be achieved in supportto national development. The government shallexert all efforts to win peace and ensure nationalsecurity. The peace process shall center on thepursuit of negotiated political settlement of allarmed conflicts and the implementation ofcomplementary development tracks to addressits causes. This shall be anchored on conflictprevention and peace building in conflict-affectedareas. On the other hand, nationalsecurity shall involve the whole-of-nationapproach, focusing on internal stability,upholding the sovereignty and territorial integrityof the state, capability and preparedness againstnatural calamities and disasters, and reform andmodernization of the security sector. 69. For the medium-term, an environment that ishealthy, ecologically balanced, sustainablyproductive, climate change resilient, and one thatprovides for present and future generations ofFilipinos is envisioned. This vision will be pursuedthrough an integrated and community-basedecosystems approach to environment and naturalresources management, precautionary approach toenvironment and natural resources, soundenvironmental impact assessment (EIA) and cost-benefitanalysis (CBA). These, then, are all anchoredon the principles of shared responsibility, goodgovernance, participation, social and environmentaljustice, intergenerational space and gender equity,with people at the core of conservation, protectionand rehabilitation, and developmental initiatives. 70. 1.Eradicate extreme poverty and hunger2. Reduce Child Mortality3. COMBAT HIV / AIDS, MALARIA AND OTHERDISEASES4. ENSURE ENVIRONMENTAL SUSTAINABILITY5. ACHIEVE UNIVERSAL PRIMARY EDUCATION6. PROMOTE GENDER EQUALITY ANDEMPOWER WOMEN.7. IMPROVE MATERNAL HEALTH8. ACCESS TO REPRODUCTIVE HEALTHSERVICES