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8/10/2019 The Budget Cycle
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The Budget Cycle
These four phases of the budget cycle overlap in continuing cycles every year. Forinstance, while the Executive implements the budget for the current year, it also
prepare the budget for the next fiscal year or defends it before Congress. Meanwhile,
the execution and accountability phases are implemented simultaneously year-round.
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Budget Preparation
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Budget Preparation
This starts with the Budget Call and endswith the Presidents submissionof the proposed budget to Congress.
What is the Budget Call?
What is Early Preparation?
What is Stakeholder Engagement?
What is Bottom-Up Budgeting?
What are Technical Budget Hearings?
What is the Executive Review?
What is Consolidation, Validation, and Confirmation?
What is a Presentation to President and Cabinet?
What is the Presidents Budget?
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
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Coordination Committee (DBCC); and policy guidelines and procedures in the
preparation and submission of agency budget proposals.
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 Presidents 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).
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
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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.
Departments and GOCCs Mandated to ConductCSO Consultations
ORIGINAL SET (Piloted in 2012) NEW SET (Starting 2013)
Department of Health
Department of Education
Department of Social Welfare and
Development
Department of Public Works and
Highways
Department of AgricultureDepartment of Agrarian Reform
National Food Authority
National Housing Authority
National Home Mortgage and Finance
Corp.
Department of Tourism
Department of Transportation and
Communication
Department of Interior and Local
Government
Department of Justice
Department of Labor and EmploymentDepartment 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.
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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.
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.
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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--vis the
priority agenda of the national government. Implementation issues are also discussed
and resolved.
5. Consolidation, Validation and Confirmation
DBM then consolidates the recommended agency budgets and
recommendations into a National Expenditure Program and a Budget of Expendituresand 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.
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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.
7. The Presidents Budget
The budget preparation phase ends with the submission of the
proposed national budgetthe Presidents Budgetto Congress. The Presidents
Budget consists of the following documents, which help legislators analyze the contents
of the proposed budget:
Presidents Budget Message (PBM)
This is where the President explains the policy framework and priorities in the budget.
Budget of Expenditures and Sources of Financing (BESF)
Mandated by the Constitution, this contains the macroeconomic assumptions, public
sector context (including overviews of LGU and GOCC financial positions), breakdown
of the expenditures and funding sources for the fiscal year and the two previous years.
National Expenditure Program (NEP)
This contains the details of spending for each department and agency by program,
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activity or project, and is submitted in the form of a proposed General Appropriations
Act.
Details of Selected Programs and Projects
This contains a more detailed disaggregation of key programs, projects and activities in
the NEP, especially those in line with the national governments development plan. Staffing Summary
This contains a summary of the staffing complement of each department and agency,
including number of positions and amounts allocated for the same.
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Budget Legislation
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Budget Legislation
Alternatively called the budget authorization phase, this starts uponthe House Speakers receipt of the Presidents Budget and ends with the
Presidents enactment of the GeneralAppropriations Act.
What are House Deliberations?
What are Senate Deliberations?
What are Bicameral Deliberations?
What is Ratification and Enrollment?
What is the Veto Message?
What is Enactment?
What are Reenacted Budgets?
1. House Deliberations
The House of Representatives, in plenary, assigns the Presidents 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).
In plenary session, the GAB is sponsored, presented and defended by the
Appropriations Committee and Sub-Committee Chairmen. As in all other laws, the
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GAB is approved on Second and Third Reading before transmission to the Senate.
(Note: In the First Reading, the Presidents Budget is assigned to the Appropriations
Committee.)
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.
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.
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4. Ratification and EnrollmentThe 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.
5. The Veto MessageThe President and DBM then review the GAB and prepare a Veto Message, wherebudget 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).
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6. Enactment
When the GAA is not enacted before the fiscal year starts, the previous years GAA is
automatically reenacted. This means that agency budgets for programs, activitiesand 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 Administrationwith the support of
Congresshas committed to ensure the timely enactment of a new GAA every year.
Reenacted Budgets
When the GAA is not enacted before the fiscal year starts, the previous years 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 Administrationwith the support of Congresshas committed to
ensure the timely enactment of a new GAA every year.
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Budget Execution
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Budget Execution
This is where the peoples money is actually spent. As soon as the GAA is
enacted, the government can implement its priority programs and
projects.
What are the Release Guidelines and Program?
What are Budget Execution Documents?
What is Allotment and Cash Release Programming?
What is Allotment Release?
What are Incurring Obligations?
What does the GAA as Allotment Release mean?
What are Cash Allocations?
What is Disbursement?
1. Release Guildelines and Program
Thebudget execution phase begins with DBMs issuance of guidelines on the release
and utilization of funds.
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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.
3. Allotment and Cash Release Programming
To ensure that releases fit the approved Fiscal Program, the DBMprepares 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.
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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).
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 aSpecial Budget Request to the DBM with supporting documents. Once approved, a
SARO is issued.
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5. Incurring Obligations
In implementing programs, activities and projects, agencies incur liabilities on
behalf of the government. Obligations are liabilities legally incurred, which thegovernment 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.
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.
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 CashDisbursement Ceiling (CDC).
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 agencys submission of
its Monthly Cash Program and other required documents.
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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.
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 thePhilippines.
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.
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Budget Accountability
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Budget Accountability
This phase happens alongside theBudget Executionphase. ThroughBudget Accountability, the DBM monitors the efficiency of fund
utilization, assesses agency performance and provides a vital basis for
reforms and new policies.
What are Performance Targets and Outcomes?
What are Budget Accountability Reports (BARs)?
What does No Report, No Release mean?
What does Review of Agency Performance mean?
What is an Audit?
What is the Performance-Based Incentive System?
1. Performance and Target Outcomes
Agencies are held accountable not only for how these use public
funds ethically, but also on how these attain performance targets and outcomesusing available resources. These performance measures are set alongside the
preparation of the National Budget; and these are indicated in the OPIF Book of
Outputs (See previous section on Public Expenditure Management). Prior to the
execution of the enacted National Budget, these performance targets are firmed up
during the preparation of BEDs.
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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.
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 theSalary 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.
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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 BudgetPerformance Assessment Review (BPAR) is conducted to determine each agencys
accomplishments and performance by the year-end. The DBM regularly reports
results to the President.
4. Audit
Auditing is not within the DBMs 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 COAsaudit reports in confirming agency performance, determining budgetary levels for
agencies and addressing issues in fund usage.
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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 governmentemployees to help improve the efficiency of service delivery across all government
institutions.
You may view the infographic and download a printer-friendly versionhere.
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Performance-Based Bonus
Posted byContent Manageron November 27, 2012 inInfographics|0 comments
The Performance-Based Bonus (PBB) system is a merit-based incentive program
that recognizes and rewards exemplary performance in government. Launched by
the Aquino administration in 2012, the PBB ultimately aims to improve the delivery
of goods and services to all Filipinos, as well as institute a culture of excellence and
public service across the bureaucracy.
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