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Friday, May 07, 2021, 7:37:08 PM
 

           

Duterte orders adoption of Cash Budgeting System

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On September 9, 2019, President Rodrigo Roa Duterte signed Executive

Order (EO) No. 91, entitled “Adopting the Cash Budgeting System
Beginning Fiscal Year 2019, and for Other Purposes”. Said EO becomes
effective upon publication in the Official Gazette.

The Cash Budgeting System (CBS) will promote the faster implementation
of government programs by ensuring that funding requirements for priority
programs and projects are sufficient, maximized by agencies, and, even
more importantly, delivered on time.

Unlike the previous obligation-based budgeting system where the

implementation period for projects is open, this system promotes discipline,
focus, and better operational planning among agencies as it funds only the
programs and projects that can be implemented and completed within the
fiscal year, and provides for a fixed implementation and payment period
that must be strictly observed. This ensures the prudent use of resources,
prevents wastage and corruption, and ultimately improves the quality and
efficiency of public services. 
Under the CBS, all appropriations shall be made available for obligation and
disbursement only until the end of each fiscal year. Moreover, obligations
incurred by the national government within each fiscal year should be
implemented within the same fiscal year.

Payments for obligations incurred within the fiscal year may be made up to
an extended period of three months after the end of the validity of
appropriations against which they are obligated, unless otherwise
prescribed by the Department of Budget and Management (DBM) upon
consultation with the relevant agencies.

However, appropriations for financial subsidies to local government units

(LGUs) will be available for obligation and disbursement until the end of
the succeeding fiscal year, while appropriations for statutory shares of
LGUs, such as the Internal Revenue Allotment, will be available until fully
expended.

Moreover, the transitory provisions of the EO allow for extended

implementation and payment periods for certain appropriations under the
2019 General Appropriations Act (GAA) for maintenance and other
operating expenses (MOOE) and capital outlays (CO) for this first year of
implementation, though appropriations for the aforementioned items
remain valid for obligation only until the end of FY 2019. Particularly, the
completion of construction, inspection, and payment for infrastructure CO
should be made not later than the end of FY 2020, while the delivery,
inspection, and payment of items under MOOE, as well as other CO, should
be made not later than June 30, 2020.

This transition period will compensate for the time lost due to the late
approval of the 2019 GAA and the election ban.

Earlier, President Duterte, in his veto message for the FY 2019 General
Appropriations Act, stated that the government should have shifted from
the usual obligation-based budgeting system to cash-based this year. He
also announced the transition period he was affording to infrastructure
programs up to December 30, 2020. 

The FY 2020 Budget, similar to FY 2019 Budget, is prepared as cash-based

and features the same transition period. In a press briefing held last
August 27, DBM Acting Secretary Wendel E. Avisado noted that the
Department is planning to transition to the full implementation of the Cash
Budgeting System by FY 2022.