1. West Visayas State University
La Paz, Iloilo City
Master in Public Governance
506: Public Fiscal Administration
2. C. Government Budgeting and
Expenditure
1. Philippine Government
Budgetary Processes
Student:
Christine Liz V. Jimenea
Instructor:
Prof. Jasmin L. Vargas
3. Objective:
At the end of the presentation, the class will be
able to:
I. Understand important concepts involved in the
Philippine Budgeting Process which will be guided
by the ff. questions:
A. What is government budgeting?
B. Why is government budgeting important?
C. What are the major processes involved in
national government budgeting?*
D. How is the annual national budget prepared?
4. E. How does the budget become a law?
F. What is the General Appropiations Act?
G. How is the budget implemented?
H. Why are adjustments made on the budget
Program?
I. What mechanism ensure that funds have been
properly allocated and spent?
J. Is the role of the DBM in the budgeting
process limited to national government
agencies?
II. A closer look on the Philippine Government
National Budget
III. OECD – Budgeting in the Philippines
6. 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.
8. 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.
9. C. What are the major processes
involved in national government
budgeting?
10. Budgeting for the national government involves
four (4) distinct processes or phases :
1. budget preparation
2. budget authorization or budget legislation
3. budget execution and control
4. accountability
While distinctly separate, these processes overlap
in the implementation during a budget year.
11. Budget preparation for the next budget year
proceeds while government agencies are
executing the budget for the current year and at
the same time engaged in budget accountability
and review of the past year's budget.
12. Who really holds the “power of the
purse?”
)
No. 2009-08 (December 2009
13.
14.
15. D. How is the annual national
budget prepared?
16. Budget Preparation
This starts with the Budget Call and ends
with the President’s submission of the
proposed budget to Congress.
17. 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 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.
18. Early Preparation
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).
19. 2. Stakeholder Engagement
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.
20. Departments and GOCCs Mandated to Conduct
CSO Consultations 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 Electrification Administration
National Irrigation Administration
Note: All other departments and agencies are highly encouraged to undertake
the process.
21. “Bottom-Up” Budgeting
For the first time in history, the National Budget for 2013 will
be 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.
The Aquino government, through the Cabinet Cluster on
Human Development and Poverty Reduction, has identified
300 to 400 of the poorest municipalities and will engage these
in crafting community-level poverty reduction and
empowerment plans. This initial salvo of “bottom-up”
budgeting will focus on rural development programs and the
conditional cash transfer program, and will thus involve DA,
DAR, DENR, DSWD, DepEd and DoH. These agencies will
then include the community plans in their proposed budgets.
22. 3. 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.
23. 4. 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.
24. 5. Consolidation, Validation and
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.
25. 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 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.
26. 7. 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
28. Budget Legislation*
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.
29. 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).
30. 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.)
31. 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
32. .
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.
33. .
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.
34. .
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).
35. .
6. Enactment
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.
37. 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 ofvarious programs/projects and
activities of all departments, bureaus and
offices of the government for a given year.
39. 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.
40. .
1. Release Guildelines and Program
The budget execution phase begins with DBM’s
issuance of guidelines on the release and
utilization of funds.
41. .
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..
42. .
3. Allotment and 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 and quarter..
43. .
4. 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).
.
44. .
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.
SARO. 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.
45. .
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.
46. The GAA as Allotment Release
The Aquino Administration plans to design the
annual General Appropriations Act as the
comprehensive allotment release document itself.
This is being pursued in order to significantly
speed-up the process of releasing the Budget and
implementing the programs and projects that it
funds.The 2013 National Budget, currently being
prepared, is being designed in such way. This
entails the disaggregation of all budget items into
full detail, as well as the elimination of all lump-
sum funds, save for a few exceptions such as the
Calamity Fund. In other words, this reform
significantly reduces the need for SAROs.
47. .
6. 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).
48. .
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.Others
Disbursement Authorities. In contrast to NCAs,
NCAAs are issued to authorize non-cash
disbursements. CDCs are meanwhile issued to
departments with overseas operations, allowing
them to use income collected by their foreign posts
for their operating requirements.
49. .
7. 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
socio-economic goals.
50. H. Why are adjustments made
on the budget program?
51. .
Adjustments are made on the budget even during
implementation primarily because of the following:
• Enactment of new laws
• Adjustments in macroeconomic parameters
• Change in resources availabilities
52. I. What mechanism ensure that
funds have been properly
allocated and spent?
53. 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
54. .
1. Performance and Target Outcomes
Agencies are held accountable not only for how
they use public funds ethically, but also on how
they 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.
55. .
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.
56. 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.
57. .
3. 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.
58. .
4. 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.
59. .
5. Performance-Based Incentive System
The 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
60. J. Is the role of the DBM in the budgeting
process limited to national government
agencies?
61. .
No, the role of the DBM in the budgeting
process is not limited to national
government agencies. It coordinates all
three levels of government:
-national government department/agency
-government owned and controlled
corporations(GOCCs)
-local government unit (LGU)
in the preparation, execution and control
of expenditures of their corresponding
component entities
62. .
The DBM reviews the corporate operating budgets
of GOCCs and ensures the proper allocation of
cash. The DBM likewise formulates and
recommends the budget policy covering the
allowable deficit and the criteria for the
determination of the appropriate subsidy and
equity of GOCCs.
For LGUs, the DBM reviews the annual and
supplemental budgets of provinces, and highly
urbanized cities and manages the proper
allocation and release of the Internal Revenue
Allotment (IRA) of LGUs and their share in the
utilization of national wealth.
63. A Closer Look on the Philippine
Government National Budget
64. How much is the national budget from 2011 to
2015?
70. Who really holds the “power of the
purse?”
the executive holds the power of the “sword”
and the judiciary the “pen” while the
legislature has the power of the “purse.”
budget preparation is the domain of the
Executive
budget legislation belongs to
Congress where the House of Representatives
then the Senate and, finally, the two chambers in a bicameral
committee review the proposed budget, make their own
adjustments, and pass the GAA.
72. Budgeting in the Philippines
Meeting of OECD Asian Senior Budget Officials
Bangkok, 4-5 February 2010
Jón Ragnar Blöndal
Deputy Head
Budgeting and Public Expenditures
A review....
