The Budget Reform Agenda

1
 Annual Cash-Based Appropriations

Shifting to a one-year implementation horizon

✔Limits incurring obligations and disbursing payments, to
goods delivered and services rendered and inspected
within the fiscal year.

✔Payments of these obligations should be settled within the

fiscal year and up to the next three months of the following
year.

2
 Obligation-Based vs Cash-Based Budgeting

When can goods and services be delivered and rendered?

Obligation-based Appropriations – 24 months & beyond

In an obligation-based budget, contracts awarded before the end of the

FY can be delivered even after the FY; government has a running
balance of not-yet-due-and-demandable obligations (NYDDO)

Cash-based Appropriations – 12 months

In a cash-based budget, 12-month contracts should be fully delivered by

the end of the FY.
3
 Obligation-Based vs Cash-Based Budgeting

When can obligations be paid?

Obligation-based Appropriations – 24 months & beyond

In an obligation-based budget, inspection, verification, and payment can be

done even after the FY; government has a running balance of
due-and-demandable accounts payables (DDAP)

Cash-based Appropriations – 15 months

In a cash-based budget, payment can only be done within a 15-month

period; contracts delivered at the end of the FY can be paid during the
3-month EPP 4
 Annual Cash-Based Appropriations

✔ Greater Fiscal Discipline and Prudent Use of Budget

✔ Faster and Improved Delivery of Essential Public

Services

✔ More Open and Accountable Government

5
 Adherence to International Standards

73%
OECD countries around the world implements Cash-Based Budgeting
Cash-based budgeting is most widely-used budgeting system. The
cash-based 2019 Budget is most transparent budget so far.

6
Measures to Improve Budget
Execution

7
Eliminating Underspending

8
 Measures to Improve Budget Execution

• Requires agency to plan better, conduct early

One-year validity of procurement and obligate their funds within
Appropriations the year
• Budget no longer carry-over in succeeding
fiscal year starting 2017
• In, 2017, substantial increase in agency
obligation rates, e.g., DPWH: from 77% in
2015-16 to 92% in 2017

• Line agencies can already proceed with their

Early procurement procurement activities, short of award, as
early as fourth quarter of preceding year

9
 Measures to Improve Budget Execution

• Budget is allotment release document

Early release of • Comprehensively released allotments are
allotments and cash matched with full-year release of cash
allocations
allocations • First day crediting of quarterly cash allocations

• Validity of government-issued checks reduced

3-month validity of to 3 mos. to lessen volume of floats
government-issued • Active cash planning to aid Bureau of the
Treasury cash management
checks
10
Medium-Term Expenditure
Framework

11
 Medium-Term Expenditure Framework

A planning-budgeting framework of government which provides a

medium term three-year perspective to decision making process
during budget preparation.

• Medium-Term Fiscal Plan

• Budget Priorities Framework
• Two-Tier Budgeting

12
Medium-Term Fiscal Plan*

13
*2019 BESF Levels
 2019 Budget Priorities Framework

Lifted from the Briefer on the 2019 Budget Priorities Framework. Available at: 14
https://www.dbm.gov.ph/images/pdffiles//2019-Budget-Priorities-Framework-Final.pdf
 2019 Budget Priorities Framework

Lifted from the Briefer on the 2019 Budget Priorities Framework. Available at: 15
https://www.dbm.gov.ph/images/pdffiles//2019-Budget-Priorities-Framework-Final.pdf
 2019 Budget Priorities Framework

Lifted from the Briefer on the 2019 Budget Priorities Framework. Available at: 16
https://www.dbm.gov.ph/images/pdffiles//2019-Budget-Priorities-Framework-Final.pdf
Budget Modernization Bill

17
 The Budget Modernization Bill (BMB)

✔ It is a landmark law that modernizes public financial management

system by addressing key gaps and aligning with international
standards and best practices.
✔ It secures irreversibility of budget reforms so far established by
COA, DBM, DOF, NEDA.
✔ It supports implementation of Budget Reform Program.
✔ It supports citizens participation and access to public information.

Status: Approved in the HOR on March 20, 2018 while pending

Plenary Deliberation in Senate. 18
• For the 2019, the Development Budget Coordination Committee
(DBCC) is adjusting the deficit slightly upwards to 3.2% of GDP, from
the previous 3% target in order to accelerate investments in social
services, particularly education and social protection, as well as to
fast-track countrywide infrastructure development through the
“Build, Build, Build” Program. This tax-expenditure mix will allow us
to meet our goal of being an upper middle-income economy by 2022.

19
• For FY 2019, revenues are expected to reach PhP3,208 trillion,
equivalent to 16.5% of GDP, and are projected to reach PhP4,588
trillion in 2022, or 17.6% of GDP. The planned deficit is set at
PhP624.4 billion, or 3.2% of GDP, and projected to reach PhP774.3
billion, or 3% of GDP by 2022 to sustain the momentum of the
government’s flagship, Build, Build, and Build Program while bringing
down the government debt burden to 38.6% of GDP by 2022

20
• The Fiscal Strategy for FY 2019 of the Duterte Administration has
been updated based on the progress of the revenue reform program
and the updated macroeconomic projections. This strategy remains
to be prudent, sustainable and supportive of development
objectives, limiting the deficit-to-GDP ratio to 3% for the next four
years to sustain the decline of the government’s debt burden

21