Title: The Budget Process: An Overview and Analysis Description: The budget process is a structured and comprehensive approach to managing financial resources within an organization. This report provides a detailed description and analysis of the budget process, exploring its various stages and key considerations. The report begins by introducing the concept of the budget process as a fundamental aspect of financial management. It emphasizes the significance of systematic planning, preparation, implementation, and evaluation in achieving organizational goals effectively. The first stage discussed is budget planning, where financial goals are established, priorities are set, and alignment with strategic objectives is ensured. The report highlights the importance of assessing past performance, forecasting revenue and expenditure, and conducting cost-benefit analyses during this stage. It also emphasizes the need for stakeholder engagement and consultations to ensure the budget reflects diverse perspectives and requirements. Moving on to the budget preparation stage, the report explains the detailed planning and allocation of resources. It explores the formulation of revenue estimates, identification of expenditure requirements, and the allocation of funds to different departments or programs. The report emphasizes the significance of maintaining consistency, fairness, and transparency through the establishment of budgetary guidelines and frameworks. Collaboration between finance departments and operational units is also stressed as a crucial factor in producing realistic budget estimates. The report then delves into the budget approval stage, describing the review and approval process. It highlights the different bodies involved in this stage, such as legislative assemblies or executive boards in the public sector, and senior management or board of directors in private companies. The report underlines the evaluation criteria for budget approval, including alignment with strategic objectives, feasibility, and fiscal responsibility. Finally, the report explores the budget implementation stage, where the approved budget is executed. It emphasizes the allocation of funds to various departments and programs, ensuring adherence to the approved budgetary allocations. The report highlights the importance of effective monitoring and control mechanisms during implementation to track progress, identify deviations, and make necessary adjustments. Overall, this report provides a comprehensive description of the budget process, elucidating its stages, considerations, and the significance of collaboration and evaluation at each step. It serves as a valuable resource for understanding the intricacies of budget management and its role in achieving organizational objectives.

1. Philippine
Government
Budgetary Processes
Student:
Ma. Elpha Emmylou C. Ibrado
Instructor:
Prof. Jonathan E. Lobaton

2. What is government budgeting?
Government budgeting is the critical
exercise of allocating revenues and
borrowed funds to attain the economic and
social goals of the country.
It also entails the management of
government expenditures in such a way
that will create the most economic impact
from the production and delivery of goods
and services while supporting a healthy
fiscal position.

3. Why is government budgeting
important?
Government budgeting is important
because it enables the government to plan
and manage its financial resources to support
the implementation of various programs and
projects that best promotes the development
of the country.
Through the budget, the government
can prioritize and put into action its plans,
programs and policies within the constraints
of its financial capability as dictated by
economic conditions.

4. Section 22, Article VII of the 1987 Constitution sets the tone for the
budgetary process.
 The procedure in the preparation of the national budget is regulated by law. On or
before October 20 of each year, each department secretary submits to Department
of Budget the estimated income and expenditures of the bureaus and offices under
his department for the next fiscal year.
 Upon receipt of all budget estimates of income and expenditures, the Department
of Budget and Management prepares the national budget.
 Prior to this, however, the Budget secretary can investigate, revise, examine,
assemble, coordinate, and reduce or increase the budget estimates of the different
departments, bureaus and offices of the government.
PHILIPPINE BUDGETARY PROCESS –
LEGAL BASIS

5.  After preparing the budget, the Budget secretary submits it to the President, who in
turn submits it to Congress within 30 days before the opening of the regular
session.
 The 1987 Constitution specifically provides that the President "shall submit to the
Congress within thirty days from the opening of every regular session, as the basis
of the general appropriations bill, budget of expenditures and sources of financing,
including receipts from existing and proposed revenue measures" ( Sec. 22, Art. VI).
Congress uses the budget submitted by the president as the basis for the annual
appropriation.
 According to the 1987 Philippine Constitution, Congress "may not increase the
appropriation recommended by the President for the operation of the Government
as specified in the budget" (Sec. 25(1), Art. VI).
PHILIPPINE BUDGETARY PROCESS –
LEGAL BASIS

6. How is the Government
Budget Crafted and
Approved?

8. Detailed Overview of the Budget Process

9. A. Budget Preparation

10. A.1 What is the DBCC?
The Development Budget
Coordination Council (DBCC) is
headed by the DBM Secretary with
the Department of Finance
secretary, Banko Sentral
Governor, and NEDA Director
General as members, with the
general oversight of the Office of
the President.
They determine the overall
economic targets, expenditure
levels, the revenue projection,
deficit levels and the financing
plan. The following are then
submitted to the President and the
Cabinet for approval.

11. Roles of DBCC Members
DBM NEDA and BSP DOF
The DBM
Secretary heads
the DBCC.
The NEDA provides the
over-all macro-economic
assumptions with which
budgetary levels are
determined. They involve
projected GNP real growth
rates, inflation rates, 91-day
Treasury Bill rates, London
Interbank Offered Rates
(LIBOR) rates, FOREX
rates, population growth,
and other economic
parameters.
The Department of
Finance (DOF), the
Bureau of the
Treasury, the BIR,
and the Bureau of
Customs determine
sources of financing.
They project the
revenues that will be
generated for the
budget year as well
as the borrowings
that may have to be
tapped.

12. A.2 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 targets 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.

13. Under the Aquino Administration,
the DBM 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 the
President’s budget a day after the State of
the Nation Address (in contrast to earlier
practice where it is submitted during the
late in the 30-day window that the
Constitution prescribes).
Early Preparation

14. A.3 Stakeholders Consultation
A new feature in budget
preparations 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.
This new process, which was
piloted in the preparation of the 2012
National Budget, is now being
expanded towards institutionalization.

16. A.4 Agency Budget Proposals
The National Budget for 2013
was prepared using a breakthrough
“bottom-up” approach. As opposed
to the conventional way of allocating
resources from top to bottom,
grassroots communities will be
engaged in designing the National
Budget.

17. “Bottom-Up” Budgeting
The Bottom-up Budgeting (BUB)
process is one of the major reform
initiatives of the Aquino administration,
making government’s budgeting process
more responsive to local needs.
It has also opened avenue for
people’s participation in local planning and
budgeting through the engagement of Civil
Society Organizations (CSOs) and basic
sectors of the communities as part of the
local governance reform; it provides LGUs
incentives for good local governance.

18. A.5 Technical Budget Hearings
These are conducted after
departments and agencies submit
their Agency Budget Proposals to the
DBM. Here, agencies defend their
proposed budgets 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.

19. A.6 Executive Review
The recommendations are
presented before an Executive
Review Board which is
composed of the DBM Secretary
and senior officials.
Deliberations here entail a
careful prioritization of
programs and corresponding
support, vis-à-vis the priority
agenda of the national
government.
Implementation issues are
also discussed and resolved.

20. A.7 Consolidation, Validation &
Confirmation
DBM then consolidates 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 will 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.

21. A.8 Presentation to the President
and Cabinet
The proposed budget is
presented by DBM, together with the
DBCC, to the President and Cabinet
for further refinements or
reprioritization. After the President
and Cabinet approve the proposed
National Expenditure Plan, the DBM
prepares and finalizes the budget
documents to be submitted to
Congress.

22. A.9 The President’s Budget
The budget preparation phase ends
with the submission of the proposed national
budget—the “President’s Budget”—to
Congress.
The President’s Budget consists of the
following documents, which help legislators
analyze the contents of the proposed budget:
 President’s Budget Message (PBM)
 Budget of Expenditures and Sources of
Financing (BESF)
 National Expenditure Program (NEP)
 Details of Selected Programs and Projects
 Staffing Summary

23. B. Budget Legislation

24. B.1 House Deliberations
The House of Representatives, in plenary,
assigns the President’s Budget to the House
Appropriations Committee. The Committee and its
Sub-Committees then schedule and conduct hearings
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.)

25. B.2 Senate Deliberations
As in the House process, the Senate
conducts its own committee hearings 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 Sub-Committees
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.

26. B.3 Bicameral Deliberations
Once both Houses 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.

27. B.4 Ratification and Enrollment
The Harmonized or “Bicam”
Version is then submitted to both
Houses, which will then vote to ratify
the final GAB for submission to the
President. Once submitted to the
President for his approval, the GAB is
considered enrolled.

28. B.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).

29. B.6 Reenactment
When the GAA is not enacted before the fiscal
year starts, the previous year’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, the Aquino Administration—with the
support of Congress—has committed to ensure
the timely enactment of a new GAA every year.

30. What is the General Appropriations Act (GAA)?
The General Appropriations Act (GAA) is the
legislative authorization that contains the new
appropriations in terms of specific amounts for
salaries, wages and other personnel benefits;
maintenance and other operating expenses; and
capital outlays authorized to be spent for the
implementation of various programs/projects and
activities of all departments, bureaus and offices of
the government for a given year.
This is the law setting the operating
budget of the republic of the
Philippines for a particular year.

31. C. Budget Execution and Control
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.

32. Budget Execution and Control

33. C.1 Release Guidelines &
Program
The budget execution phase
begins with DBM’s issuance of
guidelines on the release and
utilization of funds.

34. C.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.

35. C.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.

36. C.4.1 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).

37. C.4.2 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.

38. C.4.3 Allotment Release
Special 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.

39. C.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
contract with an entity for the
supply of goods or services.

40. C.6 The GAA as Allotment Release
President Rodrigo R. Duterte signed into
law the 5.024 trillion FY 2022 GAA. The budget
was equivalent to 22.8% of the country’s GDP and
higher by 11.5% than last year’s National Budget.
Anchored in the theme “Sustaining the
Legacy of Real Change for the Future
Generations, the FY 2022 National Budget is set
to inspire actions that focus on building
resilience and continuing the legacy of
infrastructure development.

41. C.7.1 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).

42. C.7.2 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.

43. Other 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.
C.7.3 Cash Allocation

44. C.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. 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.

45. D. 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.

46. Accountability

47. D.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

48. D.2 Budget Accountability Report (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.

49. D.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.
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.

50. D.4 Review of Agency Performance
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.
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.

51. D.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.

52. Budget Process Recap
(Video)

53. References:
 dbm.gov.ph/images/pdffiles/2022-Peoples-Proposed-Budget.pdf
 The 1987 Consitution of the Republic of the Philippines – Article VI
and VII
 http://region5.dilg.gov.ph/press-release-poverty-reduction-through-
bottom-up-budgeting-bub/
 dbm.gov.ph/index.php/dbcc-matters/about-the-dbcc
 https://www.dbm.gov.ph/wp-
content/uploads/Issuances/2022/National-Budget-
Memorandum/NATIONAL-BUDGET-MEMORANDUM-NO-142-
DATED-JANUARY-12-2022.pdf

54. Thank
You!