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Ibarreta report 203, BUdgetary System
1.
2. THE BUDGET CYCLE
Four Phases in Managing the National Budget:
Budget Preparation
Budget Legislation
Budget Execution
Budget Accountability
During the preparation phase, the Executive prepares the proposed National Budget. This is followed by the
legislation phase where the Congress authorize the General Appropriations Act. In the execution phase, agencies
utilize their approved budgets and during the accountability phase the executive phase, agencies utilize their
approved, the executive monitor and evaluate the use of the budget.
4. 1. BUDGET PREPARATION
THIS STARTS WITH THE BUDGET CALL AND ENDS WITH THE PRESIDENT’S
SUBMISSION OF THE PROPOSED BUDGET TO CONGRESS.
5. BUDGET PREPARATION
1. The Budget Call
At the beginning of the budget preparation year, the Department of Budget and Management (DBM) issues the National
Budget Call to all agencies (including state universities and colleges) and a separate Corporate Budget Call to all GOCCs and
GFIs.
The budget Call contains budget parameters (including macroeconomic and fiscal and agency budget ceilings) as set
beforehand by the Development Budget Coordination Committee (DBCC); and policy guidelines and procedures in the
preparation and submission of agency budget proposals.
2. Stakeholder Engagement
A new feature in budget preparation which seeks to increase citizen participation in the budget process, departments
and agencies are tasked to partner with civil society organizations (CSOs) and other citizen-stakeholders as they prepare their
agency budget proposals.
6. BUDGET PREPARATION
This new process, which was piloted in the preparations of the 2012 National Budget, is now being
expanded towards institutionalizations.
Department and GOCCs Mandated to Conduct CSO Consultation
7. BUDGET PREPARATION
“Bottom-Up” Budgeting
The Bottom-up Budgeting program was set-up in 2013 to help the Philippines to help the Philippines attain its Millennium
Development Goals of inclusive growth and poverty reduction.
Now, two years later, the Department of Budget and Management is holding a two-day summit to show how far the project
has come.
The Aquino government, through the Cabinet Cluster on Human Development and Poverty Reduction.
Two years after Bottom-up Budgeting (BuB) was first implemented in the 2013 National Budget, the Aquino
Administration plans to extend the program’s reach and ensure the sustainability of BuB-enabled gains, beginning with a
twoday summit to assess and reaffirm the program’s progress. Under the 2015 budget, BuB covers 1,590 municipalities and
cities across the country, and is amply supported with a budget of P20.9 billion. For 2016, the Administration is proposing a
budget of P24.7 billion to support the implementation of more than 14,300 BuB projects nationwide.
8. BUDGET PREPARATION
““The BuB is meant to empower our grassroots communities and their respective local governments. That’s why we’ve made
improvements to the program by allowing LGUs to directly implement projects instead of coursing them through the agencies.
This also strengthens the link of accountability between our LGUs and their constituents,” the budget chief said.
The BuB approach was set up to help the Philippines attain its Millennium Development Goals of inclusive growth and
poverty reduction, all while promoting good governance at the local level. This is done by increasing citizens’ access to local
service delivery via a demand-driven budget planning process.
9. BUDGET PREPARATION
Program Expenditure Classification (PREXC):
This approached is adopt by President Duterte Administration.
a reform that restructures the current Budget by grouping activities and projects under major programs or key strategies.
Through this innovation, the government will be able to assign performance targets—both outputs and outcomes—at the level
of programs. This way, the direct link between strategies, budgets and intended results will be clearer and program monitoring
and evaluation can provide
evidence-based assessments
PREXC was implemented in the proposed Budget for 2018.
10. BUDGET PREPARATION
3. Technical Budget Hearing
These are conducted after departments and agencies submit their Agency Budget Proposal to the DBM. Here, agencies
defend their proposal budget before a technical panel of DBM, based on performance indicators on output targets and
absorptive capacity. DBM bureaus then review the agency proposals and prepare recommendations.
4. Executive Review
The recommendations are presented before an Executive Review Board which is composed of the DBM Secretary and
senior officials.
Deliberations here entails a careful prioritization of programs and corresponding support, vis-a vis the priority agenda of
the national government.
Implementation issues are also discussed and resolved.
11. BUDGET PREPARATION
5. Consolidation, Validation and Confirmation
DBM then consolidate the recommended agency budgets and 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 determine the agency and sectoral allocation of the
approved total expenditure ceiling, in line with the macroeconomic and fiscal program. Heads of major departments are invited
to this meeting.
6. Presentation to President and Cabinet
The proposed budget is presented by DBM, together with the DBCC, to the President and Cabinet for further
refinements of prioritization. After the President and Cabinet approve the proposed National Expenditure Plan, the DBM
prepares and finalizes the budget documents to be submitted to Congress.
12. BUDGET PREPARATION
7. The President’s Budget
The budget preparations phase ends with the submission of the proposed national budget –the “President’s Budget” - to
Congress.
The President’s Budget consist of the following documents, which help legislators analyze the contents of the proposed
budget:
President’s Budget Message (PBM)
This is 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, public sector context (including overviews
of LGU and GOCC financial positions), breakdown of the expenditures and funding sources for fiscal year and the two
previous year.
13. BUDGET PREPARATION
National Expenditure Program (NEP)
This contain the details of spending for each department and agency by program, activity or project and is submitted in
the form of a proposed General Appropriations Act.
Details of Selected 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 government’s development plan.
Staffing Summary
This contains a summary of the staffing complement of each department and agency, including number of positions and
amounts allocated for the same.
14. 2. BUDGET LEGISLATION
- also called the “ Budget Authorization phase,” this starts upon the House speaker’s Receipt of the President’s Budget and
ends with the President’s enactment of the General Appropriations Act (GAA).
15. BUDGET LEGISLATION
The House of Representative, in plenary, assigns the President’s Budget to the House Appropriations Committee. The
Committee and its Sub-Committee then schedule and conduct hearing on the budgets of the departments and agencies and
scrutinize their respective programs and projects. It then crafts the General Appropriations Bill (GAB).
In plenary session, the GAB is sponsored, presented and defended by the Appropriations Committee and Sub
Committee Chairmen. As in all other laws, the GAB is approved on Second and Third Reading before transmission to the
Senate. (Note: In the First Reading, the President’s Budget is assigned to the Appropriations Committee).
1. House Deliberations
As in the House process, the Senate conducts its own committee hearing and plenary deliberations on the GAB. Budget
deliberations in the Senate formally start after the House of Representatives transmits the GAB. For expediency, however, the
Senate Financing Committee and Sub-Committees usually start hearings on the GAB even House deliberations are ongoing.
The Committee submits its proposed amendments to the GAB to plenary only after it has been formally transmitted by
the House.
16. BUDGET LEGISLATION
2. Senate Deliberations
As in the House process, the Senate conducts its own committee hearing and plenary deliberations on the GAB. Budget
deliberations in the Senate formally start after the House of Representatives transmits the GAB. For expediency, however, the
Senate Finance Committee and usually start hearings on the GAB even as House deliberations are ongoing.
The Committee submits its proposed amendments to the GAB to plenary only after it has been formally transmitted by
the House.
3. Bicameral Deliberations
Once both House of Congress have finished their deliberations, they will each constitute a panel to the Bicameral
Conference Committee. This committee will then discuss and harmonize the conflicting provisions of the House and Senate
Versions of the GAB. A Harmonized Version of the GAB is thus produced.
17. BUDGET LEGISLATION
4. Ratification and Enrollment
The Harmonized or “Bicam” Version is then submitted to both Houses, which will the vote to ratify the final GAB for
submission to the President. Once submitted to the President for his approval, the GAB is considered enrolled.
5. The Veto Message
The President and DBM then review the GAB and prepare a Veto Message, where budget items subjected to direct veto
or conditional implementation are identified, and where general observations are made. Under the Constitution, the GAB is
the only legislative measure where the President can impose a line-veto (in all other cases, a law is either approved or vetoed
in full).
18. BUDGET LEGISLATION
6. Reenactment
When the GAA is not enacted before fiscal year starts, the previous years’s GAA is automatically reenacted. This means
that agency 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
19. 3. BUDGET EXECUTION
This is where the people’s money is actually spent. As soon as the GAA is enacted, the government can implement its
priority programs and projects.
1. RELEASE GUIDELINES & PROGRAM
The budget execution phase begins with DBM’s issuance of guidelines on the release and utilization of funds.
2. BUDGET EXECUTION DOCUMENTS (BEDs)
Agencies are required to submit their BEDs at the start of budget execution. These documents outline agency plans
and performance targets. These BEDs include the physical and financial plan, monthly cash program, estimate of monthly
income, and list of obligations that are not yet due and demandable.
20. BUDGET EXECUTION
3. ALLOTMENT & CASH RELEASE PROGRAMMING
To ensure that releases fit the approved Fiscal Program, the DBM prepares an Allotment Release Program (ARP) to
set a limit for allotments issued to an agency and on the aggregate.
The ARP of each agency corresponds to the total amount of the agency-specific budget under the GAA, as well as
Automatic Appropriations. A Cash Release Program (CRP) is also formulated alongside that to set a guide for disbursement
levels for the year and for every month.
4. a. ALLOTMENT RELEASE
Allotments, which authorize an agency to enter into an obligation, are either released by DBM to all agencies
comprehensively through the Agency Budget Matrix (ABM) and individually via Special Allotment Release Orders
(SAROs).
21. BUDGET EXECUTION
4. b. ALLOTMENT RELEASE
Agency Budget Matrix (ABM)
This document disaggregates all programmed appropriations for each agency into two main expenditure categories:
“not needing clearance” and “needing clearance.”
The ABM is the comprehensive allotment release document for appropriations which do not need clearance, or those
which have already been itemized and fleshed out in the GAA.
22. BUDGET EXECUTION
4. c. ALLOTMENT RELEASE
Allotment Release Orders (SAROs)
Items identified as “needing clearance” are those which require the approval of the DBM or the President, as the
case may be (for instance, lump sum funds and confidential and intelligence funds).
For such items, an agency needs to submit a Special Budget Request to the DBM with supporting documents. Once
approved, a SARO is issued.
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.
23. BUDGET EXECUTION
6. The GAA as Allotment Release
The FY 2017 budget aims to facilitate the achievement of meaningful national development goals as emphasized by
the Duterte Administration. The implementation of real change is anchored on the timely and appropriate execution
of this budget. In particular, the policy of using the General Appropriations Act as an Allotment Order (GAAAO) shall
continue to be adopted to ensure the immediate implementation of programs, projects and activities. In so doing, resource
unpredictability and delays in project/program implementation are reduced. Likewise, credibility and transparency in the
budget process is expected to be further enhanced.
7. a. CASH ALLOCATION
To authorize an agency to pay the obligations it incurs, DBM issues a disbursement authority. Most of the time, it takes
the form of a Notice of Cash Allocation (NCA); and in special cases, the Non-Cash Availment Authority (NCAA) and
Cash Disbursement Ceiling (CDC).
- Source: http://www.dbm.gov.ph/wp-content/uploads/Issuances/2017/National%20Budget%20Circular/NBC-567.pdf
24. BUDGET EXECUTION
7. b. CASH ALLOCATION
Notice of Cash Allocation (NCA)
This is a cash authority issued periodically by the DBM to the operating units of agencies to cover their cash
requirements.
The NCA specifies the maximum amount of cash that can be withdrawn from a government servicing bank for the
period indicated.
The release of NCAs by DBM is based on an agency’s submission of its Monthly Cash Program and other required
documents.
25. BUDGET EXECUTION
7. c. CASH ALLOCATION
Others Disbursement Authorities.
In contrast to NCAs, Non-Cash Availment Authority (NCAA) are issued to authorize non-cash disbursements.
Cash Disbursement Ceiling (CDC) are meanwhile issued to departments with overseas operations, allowing them to use
income collected by their foreign posts for their operating requirements.
8. DISBURSEMENT
This is the final step of the budget execution phase, where government monies are actually 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.
26. BUDGET EXECUTION
The budget process, of course, does not end when government agencies spend public funds: each and every peso must be
accounted for to ensure that is used properly, contributing to the achievement of socioeconomic goals.
27. 4. BUDGET ACCOUNTABILITY
This phase happens alongside the Budget Execution phase.
Through Budget Accountability, the DBM monitors the efficiency of fund utilization, assesses agency performance and
provides a vital basis for reforms and new policies.
1. PERFORMANCE & TARGET OUTCOMES
Agencies are held accountable not only for how these use public funds ethically, but also on how these attain
performance targets and outcomes using available resources.
These performance measures are set alongside the preparation of the National Budget; and these are indicated in
the OPIF Book of Outputs.
Prior to the execution of the enacted National Budget, these performance targets are firmed up during the preparation of
BEDs.
28. BUDGET ACCOUNTABILITY
2. BUDGET ACCOUNTABILITY REPORTS (BARs)
Submitted by agencies on a monthly and quarterly basis, BARs are required reports that show how agencies used
their funds and identify their corresponding physical accomplishments.
These include quarterly physical and financial reports of operations; quarterly income reports, a monthly statement of
allotments, obligations and balances; and monthly report of disbursements.
3. NO REPORT , NO RELEASE
Starting 2012, the DBM will be withholding certain fund releases to agencies if these fail to submit their Budget
Accountability Reports. In particular, these will be funds from the Miscellaneous Personnel Benefits Fund (MPBF) for
compensation adjustments under the Salary Standardization Law, provisions for unfilled positions and employee clothing
allowances.
29. BUDGET ACCOUNTABILITY
These funds to be withheld are only limited to agencies’ MPBF allotments so that only the agencies are penalized and
that the implementation of critical programs and projects will not be disrupted. Errant and compliant agencies will also be
posted online for public scrutiny.
4. REVIEW OF AGENCY PERFORMANCE
The DBM regularly reviews the financial and physical performance of agencies. Actual utilization of funds and
physical accomplishments, as indicated in the agencies’ BARs, are evaluated against their targets as identified via OPIF and
in the agencies’ BEDs. Agency Performance Reviews (APRs) are conducted quarterly or every semester, as the case may
be.
An annual Budget Performance Assessment Review (BPAR) is conducted to determine each agency’s
accomplishments and performance by the year-end. The DBM regularly reports results to the President
30. BUDGET ACCOUNTABILITY
5. AUDIT
Auditing is not within the DBM’s jurisdiction, and is instead lodged under the Commission on Audit (COA).
Nonetheless, auditing is critical in ensuring agency accountability in the use of public funds.
The DBM uses COA’s audit reports in confirming agency performance, determining budgetary levels for agencies and
addressing issues in fund usage.
6. Performance-Based Incentive System
The Department of Budget and Management (DBM) is also in the process of establishing a performance based
incentive system- which will recognize and reward good performance among government employees- to help improve the
efficiency of service delivery across all government institutions.
