Budget Cycle in the Philippines- Public Fiscal Administration

Budgeting Process

1. Budget cycle

2. Acronyms and Meanings SPFs – Special Purpose Fund are budgetary allocations in the General Appropriations Act (GAA) allocated for specific purposes . These are usually lump sum in nature, as the recipient departments or agencies and/or the specific programs and projects have not yet been identified during budget preparation and legislation. DPWH- Department of Public Works and Highways the executive department of the Philippine government solely vested with the Mandate to “be the State's engineering and construction arm.

3. GAA – General Appropriations Act covers the annual operating requirements of agencies of government. The GAA is the most comprehensive source of appropriation cover for the budget of the government. BEDs – Budget Execution Documents annual documents required at the onset of the budget execution phase, which contain the agencies' targets and plans. DBM – Department of Budget and Management It is responsible for the sound and efficient use of government resources for national development and also as an instrument for the meeting of national socio-economic and political development goals.

4. SAROs – Special Allotment Release Orders A specific authority issued to identified agencies to incur obligations not exceeding a given amount during a specified period for the purpose indicated. NCA – Notice of Cash Allocation Cash authority issued by the DBM to central, regional and provincial offices and operating units through the authorized government servicing banks of the MDS, to cover the cash requirements of the agencies. DOF – Department of Finance is responsible for the sound and efficient management of the financial resources of the government by formulating, institutionalizing, and administering fiscal policies in coordination with other agencies of the government; generating and managing the financial resources of government.

5. BTr – Bureau of Treasury is committed in making every effort to fully observe existing laws and regulations relating to data privacy. TSA - Treasury Single Account is a unified structure of government bank accounts that aims to consolidate and optimize the use of Government cash resources. BPA – Budget Partnership Agreements are legal instruments that define a mechanism for CSOs' formal engagement in budget preparation and execution at the agency level .

6. BUB – Bottom- Up Budgeting an approach to preparing the budget proposal of agencies, taking into consideration the development needs of poor cities/municipalities as identified in their respective local poverty reduction action plans that shall be formulated with strong participation of basic sector organizations. CSO – Civil Society Organizations Non-State, not-for-profit, voluntary entities formed by people in the social sphere that are separate from the State and the market. CSOs represent a wide range of interests and ties. They can include community-based organizations as well as non-governmental organizations (NGOs). In the context of the UN Guiding Principles Reporting Framework, CSOs do not include business or for-profit associations

7. COA- Commission on Audit is an independent constitutional commission established by the Constitution of the Philippines. It has the primary function to examine, audit and settle all accounts and expenditures of the funds and properties of the Philippine government. URS – Unified Reporting System provides a facility for online data entry and submission of the various reports required. ZBB- Zero – Based Budgeting a budgeting technique in which all expenses must be justified for a new period or year starting from zero, versus starting with the previous budget and adjusting it as needed.

8. DBCC – Development Budget Coordination Committee reviewed the government's medium-term macroeconomic assumptions, fiscal program, and growth targets for FY 2022 to 2028 to take into account the administration's priorities and fiscal strategy, latest domestic developments, and external pressures.

9. C. BUDGET EXECUTION

10. What is budget execution? It is at the budget execution stage that the expenditure program is implemented. Allotments are issued, chargeable against the regular agency budgets. It is also at this stage where agencies may submit requests for availment from SPFs. Agencies are often required to submit additional reports and documents to support their requests .

11. 1. Early Procurement Activities October to December of Prior FY Agencies are required to prepare their Annual Procurement Plans and other bid documents before the new fiscal year starts. Moreover, the government adopted a policy of allowing agencies—such as the DPWH and others which implement infrastructure projects—to bid their projects before the GAA is enacted. Early bidding allows agencies to award their approved projects as soon as the new GAA takes effect.

12. October to December of Prior FY Agencies submit Budget Execution Documents (BEDs) to outline their financial plans and performance targets for the year. The DBM consolidates these plans into the budget program, which breaks down the allotment and cash releases for each month of the year. 2. Budget Program 12

13. 3. Allotment Release January (Comprehensive) and Throughout FY The DBM issues allotments to agencies to authorize the latter to incur obligations. With the GAA-as-Release Document, the enacted Budget itself serves as the allotment release for all budget items except those contained in a negative list that are issued the Special Allotment Release Orders (SAROs) after agencies comply with the documentary requirements.

14. 4. Obligation Throughout FY 14 Agencies incur liabilities that the national government will pay for, as they implement programs, activities, and projects. Agencies incur obligations when they hire new staff or enter into a contract with suppliers of goods and services that are subject to a transparent and competitive procurement process.

15. 5. Cash Allocation 15 January (Comprehensive) and Throughout FY The DBM issues disbursement authorities, such as the Notice of Cash Allocation (NCA), to authorize an agency to pay the obligations it incurs. To ease budget execution, the DBM issues comprehensive NCAs to cover the cash requirements of agencies for the first semester .

16. 6. Disbursement Throughout FY Monies are paid out from the Treasury to settle obligations that government incurred for the delivery of services to citizens. To ease the payments process, the DBM introduced checkless and cashless disbursement schemes. The DoF-BTr also implemented the TSA to improve the management of the government’s cash resources. 16

17. D. BUDGET ACCOUNTABILITY 17

18. What is budget accountability? 18 The accountability phase is the final phase of the budget process. This is when the agencies report their actual physical and financial performance .

19. 1. Performance Targets 19 January of FY Budget accountability starts with the setting of targets that agencies are to be held accountable for. With the Performance-Informed Budget, the GAA now contains the targeted outcomes, outputs and performance indicators of each agency. These targets are also reflected in agencies’ BEDs (see “Budget Program” under Budget Execution), which effectively serve as the agencies’ plans for the year.

20. 2. Citizen Engagement 20 Throughout FY To empower citizens during Budget Accountability, the government ensures transparency--agencies disclose their budgets, reports, and other relevant information through the Transparency Seal; and make available data in open format. In addition, the government also publishes the People’s Budget along with other technical documents and reports. Citizens participate formally in the monitoring of programs and projects through BPAs, BUB, and other mechanisms. In addition, CSOs participate in the audit process through the COA’s Citizens ’ Participatory Audit.

21. 3. Monitoring and Evaluation 21 Throughout FY Agencies must set-up and implement monitoring and evaluation mechanisms to ascertain the effectiveness of the programs and projects on which they spend. Agencies must have internal control mechanisms to ensure that public funds are spent and accounted for properly.

22. 4 . Agencies’ Accountability Reports 22 Monthly and Quarterly Agencies submit Financial Accountability Reports on a monthly or quarterly basis, as required by the DBM and the COA. These reports are submitted online through the Unified Reporting System.

23. 5. Performance Review 23 Throughout FY The DBM reviews the financial and physical performance of agencies against their targets. Review mechanisms include: the ZBB, to evaluate the efficiency and effectiveness of programs; and the FTDUs, to closely monitor agencies’ performance and address bottlenecks proactively.

24. 6. In -Year Reports 24 Monthly and Quarterly The DoF and the DBM regularly publish snapshots of the government’s fiscal performance, revenue collections, debt, and expenditures.

25. 7 . DBCC Mid-Year Report By September of FY The DBCC publishes a comprehensive report on macroeconomic developments, the fiscal situation of the national government, and the performance of key programs and projects. The Mid-Year Report also discusses any adjustments that the DBCC makes to the government’s economic projections and fiscal targets for the rest of the year.

26. 8. DBCC Year-End Report Within the Following FY The DBCC publishes another comprehensive report covering the full year. Compared to the Mid-Year Report, the Year-End Report provides more discussions and details about actual revenue and expenditure outturns against program, and the financial and physical performance of priority programs.

27. 9. Audit Within the Following FY The COA reviews the accounts of each agency to ascertain if public funds are used properly, according to the law and standards, and with value-for-money. The COA produces audit reports for each agency; a whole-of-government Annual Financial Report; as well as Special Audit Reports. The DBM uses COA’s Audit Reports in confirming agency performance, determining budgetary levels for agencies, and addressing issues in fund usage.

28. eSource: https://www.dbm.gov.ph/wp-content/uploads/Executive%20Summary/2016/Budget%20Cycle.pdf