Issues and Problems in Budgeting Principles

Budgeting and
Accounting of Financial
resources : Issues and
Problems
Presented by Angelica B. Catembung
 Anti-poor, pro-rich  Fostering abuses
 Less ayuda  Regressive revenues
 Less social services  Debilitating debt
 Infrastructure hype
 Producer Neglect
 Environment Neglect
“Budget is the major financial and
economic statement. The national budget is
the main instrument through which
governments collect resources from the
economy, in a sufficient and appropriate
manner; and allocate and use those
resources responsively, efficiently and
effectively.”
ISSUES AND PROBLEMS IN PHILIPPINE
NATIONAL BUDGETING
1. THE PORK BARREL
PRIORITY DEVELOPMENT ASSISTANCE FUND (PDAF)

• Php 200 M for each senator (50% for hard projects, 50% for soft projects)
• Php 70 M for each member of the HOR (Php 40 M for hard projects,
Php 30 M for soft projects)
NATIONAL BUDGETING
2. SLOW IMPLEMENTATION OF PROGRAMS AND PROJECTS
• Low absorptive capacity of departments and agencies.

• Long and meticulous procurement process.
• Results in underspending.
NATIONAL BUDGETING
3. SUBSTANDARD INFRASTRACTURE PROBLEMS
• Due to lack of funds and very possibly corruption.

• Result in wastage as these infrastructures deteriorate almost
immediately (especially due to calamities).
NATIONAL BUDGETING
4. LACK ON MEDIUM-TERM BUDGET FRAMEWORK (MTBF)
• There is no detailed breakdown by program, or agency beyond the

budget year. Moreover, the DBM prepares forward estimates
(project commitments under current policy) which are sent to the
departments and agencies at the beginning of the budget process
and serve as their indicative budget ceilings.
MEDIUM-TERM BUDGET FRAMEWORK (MTBF)
• Under an MTBF, each government ministry prepares a medium term (for specificity, let’s assume three years)
rolling budget. For example, in FY2023, it would prepare a budget for each of three years — from FY2024 to
FY2026. Actual budgets are prepared for FY 2024 (the first year) and budget estimates are prepared for FY
2025 (the second year) and FY2026 (the third year). FY2025 and FY2026 are referred to as the outer years
of the three-year period and the budget estimates for these years are technically called forward estimates.
MEDIUM-TERM BUDGET FRAMEWORK (MTBF)
NATIONAL BUDGETING
5. BUDGET DOCUMENTATION PROVIDES INFORMATION

REGARDING THE OBJECTIVES AND RESULTS ACHIEVED .
BUT, GOVERNMENT AGENCIES ARE MORE CONCERNED
WITH DOCUMENTING RESULTS.
PERFORMANCE INFORMATION
• Performance information was introduced into the structure of the budget
document.
• The new GAA presents for each NGA:

 Strategic Objectives
 Levels of appropriations classified according to both MFOs and a new
program classification.
 Output performance targets for the coming fiscal year.
PERFORMANCE INFORMATION
• Incorporating such information into budget

documentation is an important step which should be
consolidated by integrating it further into the budget
process and encouraging budget officials to use it.
NATIONAL BUDGETING
6. BUDGET CREDIBILITY IS UNDERMINED BY COMPLEXITY AND

LARGE FLEXIBILITY OF THE ANNUAL BUDGET FRAMEWORK
WHICH RESULTED IN THE NON-RATING OF THE PRINCIPLE ON
THE SUPPLEMENTARY BUDGET.
• The Philippines has a complex budget structure with considerable earn marking,
special purpose funds, and automatic appropriations permanently authorized by
other laws and the government’s substantial leeway to shape the allocation and
composition od spending during budget execution.

• As a result, budget outturns generally deviate from the initial budget law in a
way that makes comparisons difficult, although all detailed data are regularly
published.
• The Philippines budget system has an unusually large amount of complexity and
flexibility built into it. To some extent, this reflects the specific challenges the
country faces such as the frequency of natural disasters that require quick
responses.
NATIONAL BUDGETING
7. THE INSTITUTIONAL FRAMEWORK IS FRAGMENTED.
• Several agencies are involved in the implementation and

oversight PFM systems and in some cases, they have overlapping
mandates. This fragmentation demands close coordination
among these agencies and requires a strong system of check and
balance.
• Policies are ensured through Development Coordinating Committee (DBCC)
which includes the :
 Department of Budget and Management (DBM)
 National Economic and Development Authority (NEDA)
 Bangko Sentral ng Pilipinas (BSP)
 Office of the President (OP)
• However, some constitutional and autonomous bodies like Commission on

Audit (COA) and the Civil Service Commission (CSC) function
independently on matters relating to policies under their jurisdiction. This
requires multiple levels of accountability.
NATIONAL BUDGETING
8. THE POLITICAL ECONOMY
• Political engagement in the budget process occurs through a

review and approval process that involves both chambers of
Congress, the Executive and the President.
• Under the constitution, the President can also exercise a high degree of
discretion to re-allocate portions of budget across the executive branch during
execution.
• The government has continued to disaggregate lump sum funds and flesh
out program and project details. For 2016, only three lump sum funds
remain, the Contingent Fund, the Calamity or the National Disaster Risk
Reduction and Management Fund and the Allocations to LGUs.
• In short, it is not possible to foresee the specific utilization of these funds

prior to agency requests.
NATIONAL BUDGETING
9. BUDGET EXECUTION IS A PARTICULAR CONCERN, TOGETHER WITH

UNDERSPENDING AND SLOWER DISBURSEMENT
• Utilizing a cashless and checkless disbursement scheme, around

80% payments to government suppliers are being coursed
through bank to bank transaction. Also, procurement innovations
that advance activities even before the GAA is enacted.
• Based on consultations with various departments and agencies, DBM
recognized that underspending could be attributed to structural weakness in
project preparation and implementation.
• More specifically, challenges in the following areas were:

 Poor planning and program project design
 Procurement difficulties including frequent bidding failures
 Bottlenecks in program or project implementation which includes
difficulties in securing permits and clearances, coordination problems
and other legal issues.
NATIONAL BUDGETING
10. DIFFICULTY IN ADOPTING THE TWO-TIER BUDGETING

• Aside from budget execution measures, the government also continues to develop
ways to improve budget preparation.
• DBM is implementing the Two-Tier Budgeting Approach (2TBA).
The processes to be followed by Departments and Agencies to prepare their budget using the 2TBA.
The time frame for budget preparation begins in the second half of the year prior to the budget
preparation year with Agency planning processes. It continues through Tier 1, Tier 2 and
Congressional consideration of the Budget.
Basic Principles in the
Administration of
School Finances
GUIDING PRINCIPLES
INTEGRITY
 Financial management practices must be IMPLEMENTED in

ways that promote and sustain the integrity of the school
district and the community.
GUIDING PRINCIPLES
EFFICIENCY
 A school financial management system MUST use available

resources in ways that most directly and EFFECTIVELY
meet the educational needs of the students.
GUIDING PRINCIPLES
EDUCATIONAL EXCELLENCE FOR ALL CHILDREN
 Must SUPPORT the provision of high quality learning

environments, opportunities and experiences.
GUIDING PRINCIPLES
FUNDING ADEQUACY AND EQUITY
 Must ENSURE that all school and programs are provided

with sufficient resources to provide a quality education to
all students.
GUIDING PRINCIPLES
PUBLIC INVOLVEMENT
 Parents and community members have a MAJOR STAKE in

how schools use public resources to educate their
children and support their communities.
GUIDING PRINCIPLES
TRANSPARENCY
 The need for OPENNESS by school officials to share

information about school finance matters with everyone.
GUIDING PRINCIPLES
COMPETENCE/PROFESSIONALISM
 Local and government organizations should REQUIRE and

PROVIDE training that will enable individuals to reach a
high professional level of competence.
GUIDING PRINCIPLES
ACCOUNTABILITY
 Must GUARANTEE that the process involved in the

administration of public funds are conducted openly, and
that those involved are held accountable to the highest
standards of professional ethics and competence.
THANK YOU!!!!

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Budgeting and

1. THE PORK BARREL

PRIORITY DEVELOPMENT ASSISTANCE FUND (PDAF)

2. SLOW IMPLEMENTATION OF PROGRAMS AND PROJECTS

• Low absorptive capacity of departments and agencies.

3. SUBSTANDARD INFRASTRACTURE PROBLEMS

• Due to lack of funds and very possibly corruption.

4. LACK ON MEDIUM-TERM BUDGET FRAMEWORK (MTBF)

• There is no detailed breakdown by program, or agency beyond the

5. BUDGET DOCUMENTATION PROVIDES INFORMATION

• The new GAA presents for each NGA:

• Incorporating such information into budget

6. BUDGET CREDIBILITY IS UNDERMINED BY COMPLEXITY AND

special purpose funds, and automatic appropriations permanently authorized by

composition od spending during budget execution.

7. THE INSTITUTIONAL FRAMEWORK IS FRAGMENTED.

• Several agencies are involved in the implementation and

• However, some constitutional and autonomous bodies like Commission on

8. THE POLITICAL ECONOMY

• Political engagement in the budget process occurs through a

• In short, it is not possible to foresee the specific utilization of these funds

9. BUDGET EXECUTION IS A PARTICULAR CONCERN, TOGETHER WITH

• Utilizing a cashless and checkless disbursement scheme, around

• More specifically, challenges in the following areas were:

10. DIFFICULTY IN ADOPTING THE TWO-TIER BUDGETING

ways to improve budget preparation.

• DBM is implementing the Two-Tier Budgeting Approach (2TBA).

 Financial management practices must be IMPLEMENTED in

 A school financial management system MUST use available

 Must SUPPORT the provision of high quality learning

FUNDING ADEQUACY AND EQUITY

 Must ENSURE that all school and programs are provided

 Parents and community members have a MAJOR STAKE in

 The need for OPENNESS by school officials to share

 Local and government organizations should REQUIRE and

 Must GUARANTEE that the process involved in the

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