F.Y 2010-2011 State Budget a. Appropriation for Educational System b. Budget Negotiation History Budget Figure Reforms

2. NATIONAL BUDGET MEMORANDUM
No. 103
FOR: All Heads of Departments, Agencies,
Bureaus, Offices, Commissions, State
Universities and Colleges, other
Instrumentalities of National Government
and all Others Concerned.

3. SUBJECT: POLICY GUIDELINES
AND PROCEDURES IN THE
PREPARATION OF THE F.Y 2010
BUDGET PROPOSALS

4. PURPOSE
•To provide the overall macroeconomic
and fiscal policy framework and thrusts for
F.Y 2010-2011 , within the context of the
Medium Term Philippine Development Plan,
2004-2010 (MTPDP) and other policy
developments.

5. • To prescribe the guidelines and
procedures in the preparation of the F.Y
2010 agency budget consistent with the
MTEF and the OPIF
• To set the schedule of budget
preparation activities

6. BUDGET
FRAMEWORK

7. 1. The FY 2010 budget will reflect the Arroyo
Administration’s commitment to the strategy
of fiscal consolidation, and the completion
of its Ten-Point Agenda, key programs
stated in the various addresses on the State
of the Nation, and the Millennium
Development Goals

8. 2. Given the challenges introduced by the
global financial crisis, performance/results
orientation becomes more critical. Thus, the
sustained and aggressive implementation of
major public sector reforms shall continue to
be pursued and institutionalized in the
planning and budgeting arenas. These
include the MTEF and the OPIF

9. 3. The MTEF will be in its fourth year of
implementation (starting the 2007 budget
preparation cycle), with the Forward
Estimates (FEs), or estimates of the future
costs of existing policies, serving as the
determinant of the available budget for
new projects as well as serving as validation
instrument for assessing agency proposals.

10. 4. For the FY 2010 budget preparation cycle,
the FEs for 2009 up to 2011 based on the
2009 NEP were updated, and a new set of
FEs for 2012 has been formulated in
consultation with concerned
departments/agencies. The updating
considered changes in policy and
macroeconomic parameters.

11. 5. The preparation of the Paper on Budget
Strategy (PBS) continues to be undertaken,
relating progress in meeting development
objectives with resource allocation.
Infrastructure
Basic education
Education
Health services
Social welfare

12.  Agriculture
 Environmental Protection

13. 6. The OPIF or the Performance Based
Budgeting approach involves a review of
the agencies’ existing budgetary programs
and projects to ensure that these support its
core mandated functions.

14. 7. All Departments including their attached
agencies/ bureaus as well as the Other
Executive Offices (OEOs) which have
constructed their OPIF logframes and have
identified the applicable and appropriate
output/indicators to measure agency
performance shall adopt the OPIF in the FY
2010 budget preparation.

15. FY 2010 budget preparation shall aim for the
following.
1.Ensure that the national budget is aligned
with the overall development agenda,
consistent with the fiscal discipline and
consolidation strategy, specifically through
the MTEF.

16. 2. Enjoin agencies to focus on
performance/results pursuant to their
respective organizational goals, with the
status of Major Final Outputs (MFOs) as the
key units for determining resource
allocation, and for monitoring/evaluating
agency financial/physical performance
using agreed upon performance indicators.

17. 3. Improve efficiency and effectiveness in
government operations by incorporating
implications of the following public sector
reforms on their budget proposals:

18. MACROECONOMI
C AND FISCAL
TARGETS

19. The FY 2010 fiscal stance addresses the
challenge of keeping the momentum of the
economy growing amidst the uncertainty
resulting from the ongoing global financial
crisis.

21. For the period 2009 – 2012, the budget
aggregates are based on the following
macroeconomic assumptions, which
already take into account the latest
available information on international and
domestic developments as of April 16, 2009.

22. PARTICULARS
2008
Actual 2009* 2010* 2011* 2012*
GNP Real Growth (%)
GDP Real Growth (%)
Inflation Forecast (%)
91-day T-bill rate (%)
FOREX (P/US$)
6.1
4.6
9.3
5.4
44.47
2.8 – 3.8
3.1 – 4.1
2.5 – 4.5
5.0 – 7.0
46 – 49
4.4 – 5.4
4.3 – 5.3
3.5 – 5.5
5.0 – 7.0
46 – 49
6.4 – 7.3
5.5 – 6.4
3.0 – 5.0
4.5 – 6.5
46 – 49
7.5 – 8.3
5.9 – 6.8
3.0 – 5.0
4.5 – 6.5
46 – 49
* Approved by the Development Budget Coordination Committee on April 16,
2009. Sources: BSP, NEDA, NSCB

24. Consistent with the government’s fiscal
consolidation strategy and the aforesaid
macroeconomic prospects, the budget
deficit is targeted to contract to P173.3
billion deficit or 2.0 percent of GDP, is
contracting from the 2009 revised target of
P199.2 billion or 2.5 percent of GDP. Due to
the prolonged and deeper impact of the

25. global financial crisis, the planned
balancing of the budget has been
deferred, to allow the appropriate
magnitude of budgetary response to the
economic slowdown, with disbursements
projected to outpace revenues. While
being aggressive, the fiscal stance remains
prudent, in that the national government’s

26. outstanding debt-to-GDP ratio for 2010 of
53.4 percent still reflects a contraction from
55.7 percent in 2009, still consistent with the
fiscal consolidation strategy embodied in
the Medium Term Philippine Development
Plan (MTPDP) for FYs 2004 – 2010.

27. PARTI CULARS 2008
Actual
2009
Program
2010
Proposed
Levels in Billion Pesos
Revenues
Disbursements
Surplus/ (Deficit)
Percent of GDP
Revenues
Disbursements
Surplus/ (Deficit)
Growth Rate
Revenues
Disbursements
Surplus/ (Deficit)
1 ,2 02 .9
1 ,2 71 .0
( 6 8 .1 )
16 .0
17 .0
( 1 .0 )
5.8
1 0 .6
4 4 7 .5
1 ,29 5 .8
1 ,49 5 .0
( 199 .2 )
1 6 .3
1 8 .8
( 2 .5 )
7 .7
17 .6
19 2 .4
1 ,4 0 3.1
1 ,5 7 6.4
( 173 .3 )
16 .2
18 .2
( 2 .0 )
8 .3
5 .4
( 1 3 .0)
GDP ( in billiion pesos)
Deficit Financing Mix (%)
Foreign
Domestic
Debt-to-GDP Ratio (%)
7,498.0
14.0
86.0
56.3
7,968.0
25.0
75.0
55.7
8,665.0
23.0
77.0
53.4
Sources: DOF, DBM

30. the DepEd is given P207 billion pesos. This is 19%
higher than the 2010’s 175 billion amount.
P12.4 billion of the budget pie is for the
construction of school buildings; P1.8B needed
to purchase 32.3 million textbooks; P1.6B for
hiring additional 10,000 teachers; P8.6b for
scholarship, training grants and student loan
programs under TESDA, CHED, DOST, and
DepEd; P21million for Every Child a Reader
Program (ECARP); P727.5M for science and
mathematics equipments

31. 1. Major intent of the allocation is to propel
implementation of Aquino’s 10 Point
Education reform which includes the
universal kindergarten to achieve the
“Education for All” commitment of the
government by 2015.

32. More than thirty-seven percent (37.50%) of
the total 2011 budget is allotted to pay the
current P4.712trillion debt of the country
(combined domestic and foreign)

33. 2. The budget for State Universities and
Colleges(SUCs) was cut by P367.2 million in
2011; DepEd school-building program was
halved in 2011; it boast of building 13,147
new classrooms for 2011 — yet the backlog
of public school classrooms is some 113,000

35. 3. Critiques suggest that Congress revisits the
General Appropriation Act (GAA), scrap the
automatic allotment for dept payment and
channel the money for social services,
instead.

36. Under the banner of ‘austerity measures’
the government embarks, through
its PhilippineDevelopment Plan (PDP) 2011-
2016, Public-Private Partnership (PPP), in
both infrastructure and social services,
and Conditional Cash Transfer (CCT) as
major strategies to achieve inclusive
growth. While PPP in infrastructure and
social services aimed at generating “high
and sustained economic growth”

37. and “equal access to development
opportunities” respectively, CCT through
its ‘Pantawid Pamilyang Pilipino
Program’ (4Ps) is thought as a “responsive
and effective social safety
nets”. Accordingly, the expected growth is
translated into reducing poverty and
increasing employment.

38. 4. He recognizes the need that government
alone is insufficient in catching up with the
decades of neglect of the sector and
DepEd alone cannot implement the
Administration’s 10-point Education
Agenda.

41. 2012 Program 2013 Proposed
NotesParticulars level
RANK
level
RANK
Php Billion Php Billion
DepEd 238.8 1 292.7 1 1, 2
DPWH 126.4 2 152.9 2 3, 4, 5
DND 108.1 3 121.6 3 1, 6
DILG 99.8 4 121.1 4 1, 6
DA 61.4 5 74.1 5 4, 5
DOH 45.8 7 56.8 6 1, 4, 5
DSWD 48.8 6 56.2 7
DOTC 34.7 8 37.1 8 1, 4, 5, 6
DOF 23.6 9 33.2 9 1, 4
DENR 17.5 10 23.7 10 1, 6
Notes:
1/ Includes allocations from the Miscellaneous Personnel Benefits Fund
2/ Gross of School Building Program transferred to DPWH
3/ Net of School Building Program transferred from DepEd
4/ Includes allocations from Budgetary Support to Government Corps.
5/ Includes allocations from Priority Social and Economic Projects Fund
6/ Includes allocations from the Pension and Gratuity Fund