Sequencing Public Financial Management Reforms in the Philippines

December 15-16, 2016

12th OECD-ASIAN SENIOR BUDGET OFFICIALS ANNUAL MEETING

The Oriental Hotel, Bangkok, Thailand

Presentation Outline

• Similarities in PFM Experiences (Philippines and Timor-Leste)

• Sequence of PFM Reforms in the Philippines

• Measuring PFM Performance

• Philippine PFM Reform Roadmap

• 2016 Philippine PEFA Asssessment

Similarities with Timor-Leste

• Dependence on input-based budgeting until 2000

• The Philippine Development Plan (PDP) is the country’s 6-year economic

development plan to guide budgeting, investment programming, agency plans.

A long-term plan for 2040 has been formulated.

• Before 2014, Ministries proposed programs and projects that were listed in the

budget book according to output (MFOs), and broken down expenditures by

allotment class

• Implementation of a performance management instituted across the civil

service

Sequence of Budget Reforms 1997

• Public Expenditure Management (PEM) reform

• 3 Outcomes of PEM

• Aggregate fiscal discipline – “Spending within means”

• Allocative efficiency – “Spending on the right priorities”

• Operational efficiency – “Spending with value-for-money”

• Medium-Term Expenditure Framework (MTEF)

• 6-year Fiscal Plan of projected revenues and deficit targets

• 3-year forward estimates of ongoing programs during the

budget preparation process

• 3-year estimate of available fiscal space for new and

expanded programs and new projects

=> Fiscal Responsibility underlie budget formulation

Sequence of Budget Reforms 2007- 2013

• Organizational Performance Indicator Framework (OPIF)

• OPIF piloted in 20 agencies

• Publication of the OPIF Book of Outputs

• Government-wide implementation of OPIF (2008)

Since 2000, many years of handholding agencies in

formulation and measurement of performance indicators

2012

• Results Based Performance Mgt System

• Gave OPIF a big push by tying up agency and employee

bonuses to accomplishment of OPIF based PIs

2014

• Performance-Informed Budgeting (PIB)

• Publication of performance information (financial and non-

financial) in the budget documents submitted to Congress

• Inclusion of enhanced organizational outcomes

Sequence of Budget Reforms 2018

• Program Expenditure Classification (PREXC)

• Restructuring of agency budgets along programs/outcomes

and identifying output and outcome performance indicators for

each program/sub-program

=> Next phase of PIB to improve accountability and agency

management

2011

• Transparency and Open Government

• Publication of data of interest to citizens (eg FOI, transparency

seals, procurement data)

• Improve public service, integrity and effectiveness by inviting

the participation of CSOs in budget formulation and monitoring

Measuring PFM Performance

2007

• PFM performance was measured during the Public Expenditure

and Financial Accountability (PEFA) framework

2011-2016

• Philippine PFM Reform Roadmap : partnership of DBM, DOF,

COA

• Key findings in the PEFA assessment were included in the

roadmap

• Formalized through Executive Order No. 55, s. 2011

2016

• 2nd PEFA Assessment undertaken by WB and DFAT

PFM Reform Roadmap (2011-2015)

Master plan for modernizing the financial

management system of the government

Improve efficiency, accountability and

transparency of public fund use

Contribute to good governance and fiscal discipline as a strategy for inclusive growth and poverty reduction

Jointly formulated and approved by fiscal oversight agencies (COA, DBM, DOF-BTr) from 2009 to 2011

For 2014 to 2016, updated roadmap design to move its focus from policy to implementation

Rolling-Out Key PFM Reforms

Performance

Informed

Budgeting

Unified

Reporting

System

Treasury Single

Account Integrated

Financial

Management

System

GAA as

Release

Document

In

2014:

Unified Account

Code Structure

Towards:

Broader & Deeper Citizen’s

Engagement

Accounting and

Auditing

Standards

10

Satisfactory

performance

2016 PH – PEFA Assessment

Budgetary Outcome Concerns

• Fiscal discipline: Reconciliation failings, budget execution and

accounting systems inadequate to monitor and facilitate budget

delivery

• Resource allocation: FMIS still in development, procurement lacks

independent complaints mechanism, increasing allocations with

limited absorptive capacity

• Service delivery: Internal control inadequacies, financial reporting

and oversight insufficient to provide assurance on budget policy

delivery

2016 PH – PEFA Assessment

Future Major Steps

• An integrated management information system is evidently

required for accounting processes to support timely decision-

making, monitoring and internal controls

• A review and revision/augmentation of the legal framework for

PFM to ensure clarity, control and comprehensiveness

• Legislative scrutiny arrangements for PFM need to be completed

or substituted through strong oversight from independent

mechanisms in the executive

Thank you!

Sequencing Public Financial Management Reforms in the Philippines