New Era University

College of Arts and Sciences

Quezon City, Philippines

A PRAGMATIC BUDGETING SYSTEM IN THE PHILIPPINES: VISIBLE

LACK RELATIONSHIP BETWEEN NATIONAL BUDGET AND ECONOMIC
PROGRAMS

In partial fulfillment of the requirements in POL SCI 113-14

Submitted by:

Maristela A. Pantaleon II

Submitted to:

Prof. Roseller Malabanan

2017
 TABLE OF CONTENTS

I. INTRODUCTION ……………………………………………………… 1

II. MAIN PART OF THE STUDY ………………………………………………. 3

i. National Budget and Economic Programs
ii. Issue

III. CONCLUSION …………………………………………………………………9

IV. RECOMMENDATION ………………………………………………………… 10

V. REFERENCES ………………………………………………………………….. 12
 1

I. INTRODUCTION

During the past years, the Philippine Department of Budget and Mangement has seen the

budget management of a government can be a potent tool for groeth and poverty reduction.

Budget Management enforces fiscal discipline, fosters macroeconomic stability, improves the

portfolio of programs by rewarding more effective and efficient programs, and builds a culture of

performance and accountability within the government bureaucracy.

Budgeting fulfills a dynamic role in modern governments. In the past, the national budget

was regarded as just an authority to spend. This view, by present- day standards, is admittedly

narrow for today, the national budget has an added mission, a much broader task to perform.

1
The concept of Philippne Natinal Budget, it is a financial plan to pursue priority programs

and projects of the governmwnt in line with its economic growth and human development

thrusts. It is an instrument for good governance, as government agencies are accountable for the

delivery of measurable results through their respective budgets.

The national budget can influence the level and direction of economic activity, including the

social and political behavior of the people. This new task of the budget has been accepted by

givernmants in both advanced and less- advanced countries. For advanced countries, the bidget

has become a tool for economic growth and an instrument with which to attain full employment

2
1
Abuan, Jomelyn. 2014
The Philippine National Budget
http:// www. Philippine-national-budget://
and stability; for less- developed countries, it has become a means for economic development,

such as to bring about an increase in the per capita real income of the people.

In the Philippines, the significance of the national budget has been accentuated by the

government’s program to accelerate the pace of economic development. This porstrays in bold

relief the importance of the budgetary process in marshalling the country’s resources.

Now that the Asian economic crisis is receding and new Government with a fresh mandate

has been installed in the Philippines, the challenge facing the country and its economic managers

is how to sustain the country’s poverty reduction achievements and revitalize economic growth

enough to make a serious dent in poverty.

This paper discuss the problems and weaknesses of visible lack of direct relationship

between national budget and the long range economic programs that the new budgeting system is

very pragmatic that’s why other economic programs unsure the development because of lack

budget preparations.

3
 II. MAIN PART OF THE STUDY

The budget is an estimate of income and expenditure for a set period of time. The budget

incorporates in one document the fiscal policies of the country, including tax, expenditure

and debt matters.

2
The national government seeks to provide the direct needs and services necessary for the

enhancement of the social and economic welfare of the people, in terms of education, health,

defense, justice and improvements. All these cannot be made available without adequate

financing. In terms of pesos, the cost od such goods and services will reach about four- and-

a-half billion pesos annually and may even reach six billion pesos before the mid-seventies.

Financing the budget comes from two major sources – Taxation and Borrowing. The proper

disposition of budgetary receipts calls for effective budgeting and contril which re exercised

by both the executive and legislative branches of the government.

As stated above, national government who provides the needs and maintaning the budget

system for the enhancement of our economic development. The the focus on this paper is the

visible lack relationship between the national budget and the economic programs that

sometimes programs already plan but we got a lack of budgets or vice versa.

Economic programs is important to our government because this is programs should

build and implement be achieve the development of our country, but sometimes our

government got

2
Reyes, Virgilio D. P.67
The Budgetary system. Nov2008
http:// www. Budgetarysystem.com://
 a lack of budget, meaning there’s no good relationship between our bugetary system and the

economic programs which should be connected to each other to fulfill a good development

for our country.

This paper focuses on the issue of lack relationship between our national budget and the

long range economic programs.

3
A pragmatic budgeting system, the Philippine Government wants to set in place a three-

year budgeting system that systematically maps the requirements of ongoing programs and

proposed new projects on a three-year basis. Under this system, programs approved by

Congress automatically carry over to the following year and became part of the baseline;

They do not start from scratch every budget preparation period. This carrying over highlights

to decision makers that the cumulative expenditure commitments of past years will have to

be considered in setting overall expenditure levels.

The new budgeting system is very pragmatic. With the approval of new projects and the

expansion of programs one year at a time, the budgeting system recognizes the uncertain

nature of fiscal resources and economic development. It ensures that next year’s budget with

an accounting for decisions made during the previous year.

The problem with Philippines’ is no mechanism for the Government to control its budget

and expenditure . It provides no systematic way of projecting or managing the expenditure

3
Medinaceli, Louie. 2013
Government budgeting and expenditures issues and problems. P20
http:// www. Government-budgeting-issues
requirements of ongoing and new economic programs and new programs of government

agencies. In fact, the government often approves the funding of new projects, which start from

very modest beginnings, only to find that these projects require huge outlays in subsequent years.

4
Predominantly, a very significant weakness of Philippine budgeting is the visible lack of

direct relationship between the national budet and the long-range economic programs. The

widening gap between planning and budgeting. As a result the budget as prepared has often at

variance with, or does not adequately refelct, the economic program. The formulation and

execution of the budget within the context of the economic program, particularly with respect to

the allocation of the limited fiscal resources for high-priority development projects and activities,

should be given top consideration in budget decison-making.

Anothr major problem is the need to relate basic legislation to the budget and the

economic progrms. Budgeting has always been distinguised from policy-making. Congress

determines policy in basic legislationthrough its different legislatve committees and the financial

policy found in the budget is little more than the reflection of policies already arrived at by

congress either expressly or impliedly in the various enabling legislations.

As distressing little as the moves to relate basic legislation to the entire budget are steps

to relate congressional action on revenues to its action on appropriations. The expenditure and

revenue aspects of the budget have been considered largely in isolation from each other. If at all

4
Angel Q. Yoingco and Loretta M. Sicat
“Congressional Control of the Public Purse”
Economic Research Jornal, Vol. 5, No.3
December 2012, p. 356
taken up together, it is through the informal relationships existing between the committtees,

which relationships are frequently not strong enough to prevent independent and incnsistent

actions.

Almost always, the practice of visible lack of national budget and economic progras has

brought about either of two resuly, both undesirable. Appropriations are spread out too thinly,

such as specific public works projects not being authorized on a full-funding basis. It has also

given rise to social unrest in the form of mass demonstrations staged by groups interested in the

programs, projects and activities of certain agencies whose appropriation are not released

because of lack of funds. This, in a way, affects established government plans and disrupts

government operations.

Conservative estimates of revenue are sometimes made so that actual collections at a later

date will look impressive. This problem has clearly describe as, 5“There is one phase of the

present budget commission operations that should be changed. This is the requirement that the

budget commission accept the revenue estimates of the Department of Finance. Without any

reflectiion upon that agency, it should be noted that finance or revenue collecting agencies are

notoriously poor at revenue estimating. Their principal concern is – or should be – revenue

collection. As a rule, they tend to set their estimates of revenue on the conservative side so that

their actual collection will appear as good as possible. It is suggested, therefore, that the Budget

Commissioner be permitted- in fact be required – to prepare the official revenue estimates”

By the same strategy or token, the practice of padding budget requests has no place in a

soundly-administered budgetary system. Padding has been resorted to with the idea that, if the

5
Frank Landers “How can we improve government financial administration” in Lecture No.10
Current Problems in Philippine fiscal Administration, p.7
 7

budget commission dos make cuts, the agency or programs needs can still be met. Budget

priorities, at any rate, should be established to guide the proper authorities as to where to make

cuts in the event that fiscal restraint becomes exigent.

The visible lack between the relationship of national budget and economic programs

really affects our country. Sometimes the economic program is settled and already planned while

the budget for the program got a lack of fund. How this country will get a fully develop country?

Having these kind of issue in our budgetary syatem, its really hard to attain a good services, the

government need to improve or let say reform our budgetary system to make it perform well.

And let’s focus on the improvement of public financial management to achieve the development

goal.

Recently, from Budget Secretary Benjamin Diokno called on local government units

(LGUs) to correct the “unfavorable balance” in their spending patterns, saying they are not

spending enough on social services. In a recent forum, Diokno said expenditures on social

services accounted for only 25% while general public services took uo 55% of LGU.

According to Diokno, the ration is an “unfavorable balance”, as spending on social

services should increase as the country’s rises. Bulk of funds are spent on local administrative

functions instead of education, health and nutrition, population control, labor and employment,

housing and community development, social welfare and so forth.

Bulk of funds are in unfavorable balance, that’s why we got a lack of funds in other

programs and in other agencies. Budget should be in favorable balance to attain a good economic
programs. The National Budget and the long range economic programs should be connected to

each other to make our country’s develop in terms of fundings.

The reality for this issue in visible lack relationship between our national budget and

economic programs is increasing year by year. As a result for having an increasingly lack of

budgets, budgets and finance professionals are being pressured to improve accuracy, efficiency,

better controls, and auditability and to provide greater visibility into costs, resources,

performance and new programs.

6
The government budgeting principally needs to tie-up with the economic development

programs. For advanced countries, the budget has become a tool for economic growth and an

instrument with which to attain full employment and stability; for developing countries, it has

become the means for economic development

The National Budget and Economic Programs should be in balance and when it comes to

a new programs that need to implement the budget should be prepare for all the consequences in

our government. The National budget is our key to to be a fully develop country, to improve our

programs and other resources in the Philippines, having an unfavorable balance can affect our

economy and it can lead to increase poverty in the Philippines.

6
Stene, Edwin O. And Odell Waldby in “Budget and Financial Control”
Public Administration in the Philippines, Institute of Public Administration
U. P. March, 1995
 9

III. CONCLUSION

This paper entitled the budgetary system in the Philippines which focuses on the issue in

visible lack of relationship between national budget and long range economic programs.

Problems that government can’t solve immediately.

This paper conclude that out of those problems and issues in budgetary system, we need

to improve our budget process. Despite pressures to improve the budgeting process, the

adoption of more sophisticated budgeting models and approaches has been exlusive for many

public sector organization. Having a good and better or if the budget process take an action to

reform, our goal in economic development will achieve like in Agriculture and Natural

resources, Commerce and industry, Transportation and communication and other economic

development.

Having a reform in budget process, our ecnomy will surely grow and full develop, if the

program or plan is already exist, the budget should’t lack of funds for being able to achieve

and decrease the poverty or other issue in our economic sector.

As this paper discuss the lack relationship between national budget and long range

economic programs, this paper conclude that having a unfavorable balance may affect our

economic growth and development. Yes, reforms are already exist by 1970, but the policies,

procedures , planning, programs is still not effective.

 10

IV. RECOMMENDATION

On this paper regarding the pragmatic budget system in the Philippines and discuss the issues

that having a visible lack relationship between national budget and economic programs. This

paper recommend the reform oor let’s say establish a new fiscal policy to resolve the existing

conflict between plans, programs and budgets.

Predominantly, this paper recommend appropriate tax or other revenue measures. And

conduct a periodic review and general examination of costs, accomplishments and performance

standards applied in undertaking developmental projects. The system should regulate the budgets

of government instrumentalities.

One of the important recommendation for this paper is limit the power to transfer

appropriated funds. Specially, if the government need to create a new program.

In order to achieve budget balance based on the current budget standing of the Philippines,

we can increase the tax rate of all employees by one percent in order to oncrease government

budget. Increasing the tax rates of the employees income will result to an increase in budget

because there would be higher tas remittances that the government will receive. We need to

increse much on taxes if we are also going to decrease government spending. If implemented,

increasing tax while decreasing government spending will surely lessen the lack of relationship

between national budget and economic programs and will help attain budget balance.
 11

This also recommend that the government must only spend based on their allocated budget in

order not to incur deficits. In order to find out if a certain sector spends more than what is

allocated we must audit every expense incurred by the government. It is not easy task but by

simply keeping every receipt of costs and expenses incurred by each sector, and by submitting

the tally every year quarter, we can ensure that the budget goes to where it is supposed to be

allocated to.

.
 12

V. REFERENCES

Abuan, Jomelyn. 2014

The Philippine National Budget

Reyes, Virgilio D. P.67

The Budgetary system. Nov2008

Medinaceli, Louie. 2013

Government budgeting and expenditures issues and problems. P20

Angel Q. Yoingco and Loretta M. Sicat

“Congressional Control of the Public Purse”
Economic Research Jornal, Vol. 5, No.3
December 2012, p. 356

Frank Landers
“How can we improve government financial administration” in Lecture No.10
Current Problems in Philippine fiscal Administration, p.7

Stene, Edwin O. And Odell Waldby in “Budget and Financial Control”

Public Administration in the Philippines, Institute of Public Administration
U. P. March, 1995

http:// www. Budgetarysystem.com://

http:// www. Philippine-national-budget://

http:// www. Government-budgeting-issues