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2013/FMP/WKSP5/012 Session: V

Treasury and Budget Reforms in the Philippines

Submitted by: Philippines

Workshop on Treasury and Budget ReformLombok, Indonesia

2-3 July 2013

Treasury and Budget ReformsRepublic of the Philippines

APEC Workshop on Treasury and Budget Reform

Lombok, Indonesia

July 2-3, 2013

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OUTLINE

I. Philippine Public Financial Management Roadmap

II. PFM R Objectives

III. Projects Under the PFM

1. Government Integrated Financial Management System

(GIFMIS)

2. Budget Reporting and Performance Standards

3. Improved Treasury Cash Management Operations

4. Accounting and Auditing Reforms

5. Liability Management

6. Capacity Building

PPFM ROADMAP

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ROADMAP TO PFM

• MAY, 2009 - discussed the diagnostic studies on the Philippines PFM system,

which was the Public Expenditure and Financial Accountability (PEFA) Report

of 2007 by the World Bank

• January 2010, signed Memorandum of Agreement on Cooperation to Foster

Development and Implementation of Government Integrated Financial

Management Information System (GIFMIS)

• February 2010, defined the reform goals and key strategies for their PFM

reform roadmap

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ROADMAP TO PFM

• October and November 2010 - reenergized the GIFMIS Committee, when

Finance Secretary Cesar V. Purisima and Budget Secretary Florencio B. Abad

formally gave their affirmation of commitment to the PFM reform initiative

• January 2011, arrived at a consensus on some key aspects of the Roadmap

with measures to liberalize and simplify data sharing, treasury accounts,

budget execution, and accounting. The operationalization of the GIFMIS

within the term of President Aquino is greatly enhanced. Hence the GIFMIS

Committee presented its PFM Reform Roadmap to the President.

• September 6, 2011, the President signed Executive Order No. 55 authorizing

the PFM Committee to oversee and coordinate the integration and

automation of government financial systems, and the implementation of the

PFM roadmap.

CURRENT FINANCIAL REPORTING SYSTEM

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OBJECTIVES OF THE PFMR

1. Real-time on-line monitoring and control of budgetary

accounts and link to cash disbursements

2. Consolidated financial management reporting

requirements using harmonized fiscal terminologies

3. Single Treasury Account

4. Streamlined allotment and cash release program

5. Regular reports on status of budget execution

6. Systematic recording and reporting of all liabilities of

government entities

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PROJECTS UNDER THE PFMR

1. Government Integrated Financial

Management System (GIFMIS)

2. Budget Reporting and Performance

Standards

3. Improved Treasury Cash Management

Operations

4. Accounting and Auditing Reforms

5. Liability Management

6. Capacity Building

Budget Reporting and Performance Management Project

• All available budget utilization reports submitted by agencies are published and made accessible to users through the COA and/or DBM website to encourage agencies to be responsible in providing the correct information in their reports;

• Common reporting requirements of oversight and spending agencies will be mapped out to eliminate duplication and overlaps;

• Harmonization of budgetary and accounting classifications and inclusion of budgetary accounts in the financial statements of agencies to enable the comparison of expenditures for programs/projects/activities with their approved appropriations; and

• Definition of fiscal terminologies will be standardized.

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Budget Reporting and Performance Management Project

• Comprehensive review and revision of the Philippine Government Chart of Accounts, the PFM Rules Manual and NGAS Manual to incorporate changes in data structures, definition of terms and inclusion of budgetary accounts in the financial statements of agencies; and

• Piloting and technical support for agencies in the application of revised accounting and reporting rules and definitions.

• Design of the GIFMIS as translator of fiscal accounts (Long term strategy)

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INTEGRATED FINANCIAL MANAGEMENT INFORMATION SYSTEM

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DEVELOPMENT OF GIFMIS

GIFMIS - Government Integrated Financial Management Information System. A set of integrated IT solution that can collect an organized financial information in a central database to support budget preparation, budget execution and financial reporting.

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Status of the GIFMISCore Elements: Progress Achieved:

1. UACS- Unified Account Code Structure

has been developedMore than 5,000 people trained

2. TSA- Treasury Single Account Inventory of existing bank accounts substantially complete;

Gap Analysis, Business Plan, and timetable for the implementation of TSA – complete

3. Performance Informed Budgeting Determined performance indicators for NGA outputs for inclusion in 2014 NEP

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Status of the GIFMISCore Elements: Progress Achieved:

4. FMIS Conceptual design Formally adopted by GoPthrough the PFM Committeein April 2013; clarified with users reached agreement on overall GIFMIS design objectives supported businessprocesses, organizational units to be covered, and the nature and extent of GIFMIS functionality and support.

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FUNCTIONAL OVERVIEW OF GIFMIS

Budget Preparation

Budget Management

Accounting & Fiscal Reporting

Debt Management(ROSS, ADAPS & DMFAS)

HR Management(GMIS/GHRIS)

Payroll Management

(NPS)

Payments Management

Receipts Management

TSA Operations at Central Bank

(IT systems at Central Bank)

Government Servicing

Banks

(IT Systems for recording tax/revenue collections)

Audit Mgmt(IRRBAS)

Fiscal Simulation (Macroeconomic

Forecasting)

Revenue Collections (IT Systems at

BIR/BOC/NGAs)

Budget Execution

GIFMIS

Commitment Management

Asset Management

Public Procurement(PhilGEPS)

Cash Management

Commercial Banks

(IT Systems for recording tax/revenue collections)

Government Executive Information Management

(GEIS)

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NEXT STEPS - GIFMIS

Unified Account Code Structure

July-Dec. 2013- Modify current budget execution system to accommodate UACS readiness for 2014; Utilize UACS for 2014 budget

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Purpose of the UACS

•Harmonizes DBM budgetary classifications and COA chart of accounts;

•Enables reporting of actual revenues and actual expenditures compared to budget projections;

•Provides more relevant, timely and accurate financial information

•Enables Economic Statistics to accord with IMF Government Finance Statistics

•Accords with International Public Sector Accounting StandardsIn 2014, Philippines will adapt IPSAS

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NEXT STEPS - GIFMIS

July 2013 - Bidding and selection(procurement) process

Feb 2014 - Signing of contract with systems integrator

Aug 2014 - Finalize business process review and other requirements

April 2015 - System development, configuration and customization

June-Oct 2015- UAT, User training, Go- live for pilot Agencies

January 2016onwards - Roll out GIFMIS to all NGAs

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Treasury Single Account (TSA)

Reasons Why

1. Cost of existing fragmented cash positions is high:

Idle cash balances in bank accounts often fail to earn market related remunerations

Government incurs unnecessary borrowing costs on raising funds to cover perceived cash shortage

Idle government cash balances in the public banking sector are used to extend credit to the public sector, or to buy bonds

Draining this extra liquidity is costly for the Government

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TSA Main Features

• Custody: TSA should be housed at central bank

• Coverage: The TSA should cover treasury, donor accounts, government agencies, off-budget accounts

• Structure: decentralized architecture using government servicing banks at least in the short term

• Transaction processing: decentralized model due to legal and technical constraints

• Revenue Collection: the collection float to be replaced by transaction fees

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Purpose of TSA

•Ensure comprehensive control over cash balances

•Facilitate efficient cash management

•Substantially reduce transaction costs

•Facilitate reconciliation between banking and accounting data

•Assist public debt management and budget management

•Transparency in public financial management

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Phased Implementation Plan

•First phase (Jan to Dec 2013) to consolidate the Treasury’s accounts

•Second phase (Feb 2013 to Jun 2014) to cover national government agencies’ accounts and implementation of TSA

•Third phase (Jan 2013 to Jun 2014) devoted to the TSA environment (i.e. capacity building, reorganization of BTr, repo market, legislative and regulatory considerations)

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NEXT STEPSTSAOct. –Dec 2013 - I.T organization /Technical

Environment for TSAQ1 2014 - Consolidation of Bank accounts

Gen. funds (BTr), ODAsQ2 2014 - Consolidation of Bank accounts

National AgenciesQ4 2014 - Consolidation of Bank Accounts

Off-Budget Accounts

PERFORMANCE INFORMED BUDGETINGApr-Dec 2014 - Determine NGA outcome and

performance indicators for 2015 budget

NEXT STEPS

TSAJuly-Dec, 2013- Agreement with banks and Central

Bank on :- Switching from float to fees in

remunerating banks;- Custody of TSA will be at Central

Bank;- Fees for the use of RTGS;- Interest on TSA balance with

Central Bank;

untries

END OF PRESENTATION

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