‘Cash-based’ nat’l budget system to cut gov’t underspending

MANILAThe Development Budget Coordination Committee (DBCC) on Tuesday presented to the Senate finance committee the proposed PHP3.757-trillion national budget for 2019, the third budget of the Duterte administration and the first cash-based budget of the government.

The proposed 2019 National Expenditure Program represents 19.3 percent of the gross domestic product (GDP) and is 13 percent higher than the 2018 budget.

In his presentation, Budget Secretary Benjamin Diokno said the DBCC adopted the annual cash-based system for next year as a means to minimize and gradually eliminate underspending in government, as well as to modernize the country's budgeting system to become at par with international standards.

Diokno pointed out that since President Rodrigo Duterte came into power, the administration has instituted measures to cut underspending in government.

Underspending in the past administration caused delayed or non-delivery of essential public services. This deprived our people of better opportunities, and a comfortable life and bright future they deserved, he said.

Diokno said underspending reached 13 percent in 2013 and 2015, which resulted in foregone projects amounting to a total amount of PHP631 billion.

While reforms by the Duterte administration led to a sizable reduction in government underspending to only PHP85.2 billion in 2017, Diokno said a cash-based budget would further enhance government efficiency in delivering basic goods and services.

Under a cash-based system, obligations or contracts for programs, activities and projects intended to be implemented for the fiscal year should be fully delivered by the end of the fiscal year, he said.

Payments for all the programs and activities should also be made within the fiscal year, which could be extended until the first three months of the next fiscal year, he added.

Under the old system, payments could be done in two years and beyond.

The shift would lead to a more transparent and accountable government as agency performance is measured in terms of actual delivery of goods and services, not on contracts awarded, Diokno said.

Expenditure Priorities

The theme of the proposed 2019 budget is "Building a bright future for the Philippines and its people."

"The theme is consistent with the administration's goal of transforming the country into a middle income society where everyone has the opportunity to make his/her life better through the provision of infrastructure and human capital development, Diokno said.

The expenditure priorities of the cash-based 2019 National Expenditure Program reflect these objectives.

Education still gets the lion's share of the 2019 budget, with a total funding of PHP659.3 billion, a 12.3 percent increase from last year's PHP587.1 billion.

Infrastructure is also given top priority by the Duterte administration with a proposed total infrastructure funding of about PHP909.7 billion for fiscal year 2019.

Under the infrastructure program, road networks will receive the largest share of the infrastructure budget at PHP346.6 billion, equivalent to 38 percent of the total infrastructure program.

Meanwhile, construction of school buildings will have a budget of PHP37.6 billion in 2019.

Construction of flood control systems and irrigation systems will be allocated with PHP133.6 billion and PHP26.3 billion, respectively.

Meanwhile, railway projects will have a budget of PHP24.6 billion in 2019.

Social mitigating measures provided under the Tax Reform for Acceleration and Inclusion (TRAIN) Law is also funded in the proposed 2019 budget with the Unconditional Cash Transfer Program getting PHP37.6 billion, Pantawid Pasada Program with PHP3.9 billion, and the PUJ modernization program with PHP2.7 billion.

The administration's banner social programs Pantawid Pamilyang Pilipino Program, National Health Insurance Program, Universal Access to Quality Tertiary Education, Free Irrigation for Farmers, Basic Educational Facilities Program and Rice Subsidy for Military and Uniformed Personnel will receive a total allocation of PHP283 billion.

Key Budget Dimensions

By expense class, Personnel Services (PS) expenditures has the highest share with an allocation of PHP1.185 trillion, equivalent to 31.5 percent of the 2019 budget.

Capital Outlays has the second largest share at PHP758.4 billion (20.2 percent) to cover the requirements for flagship infrastructure projects under the Build, Build, Build Program of the government.

Maintenance spending has an allotment of PHP557.5 billion or 14.8 percent of the proposed budget.

Allotment to LGUs will also receive significant allocations, amounting to PHP640.6 billion and accounting for 17.1 percent of the proposed total cash-based appropriations.

These consist largely of the Internal Revenue Allotment (PHP575.5 billion), Local Government Support Fund (PHP34.3 billion), and Special Shares of LGUs (PHP27.3 billion).

Government-owned or -controlled corporations (GOCCs) will be supported with some PHP187.1 billion, accounting for 5 percent of the total appropriations.

Meanwhile, debt burden will comprise 11 percent of the budget (PHP414.1 billion), and tax expenditures at PHP14.5 billion (0.4 percent).

The biggest allocations go to the Social Services and Economic Services sectors, amounting to PHP1.377 trillion (36.7 percent) and PHP1.068 trillion (28.4 percent), respectively.

The General Public Services sector will be allocated PHP709.4 billion (18.9 percent), Debt Burden with PHP414.1 billion (11 percent), and Defense with PHP188.2 billion (5 percent).

Education is still considered the administration's top priority with a combined budget of PHP659.3 billion up 12.3 percent from 2018, while the Department of Public Works and Highways (DPWH) is second with PHP555.7 billion.

The Department of the Interior and Local Government budget is proposed at PHP225.6 billion in 2019, an increase of 30.9 percent.

Similarly, the budget of the Department of National Defense grew by 34.4 percent, amounting to PHP183.4 billion in 2019.

The Department of Social Welfare and Development is fifth with an allocation of PHP173.3 billion, higher by PHP8.9 billion or 5.4 percent; while the Department of Health has a budget of PHP141.4 billion.

The Department of Transportation is at seventh with PHP76.1 billion. It has the highest increase in budget.

The agency's budget for 2019 is higher by PHP35.9 billion from its 2018 budget, or by a huge increase of 89.3 percent.

Rounding up the top 10 are the Department of Agriculture, the Judiciary, and the Autonomous Region in Muslim Mindanao (ARMM).

Going through the list, Diokno noted that the Commission on Elections (Comelec) has frontloaded the cost of the 2019 elections with a budget of PHP16.2 billion for 2018. The poll body's 2019 budget is at PHP10.3 billion.

So there will be an election next year, he said.

Diokno said the FY 2019 National Expenditure Program was crafted solely with the people's welfare in mind.

After all, the budget is born from the taxes of the people, he said.

This budget guarantees a better and more comfortable life for most Filipinos. It is a budget that will support strong, sustainable, and equitable growth, a budget that will make the Philippines better, fairer, safer, greener and more beautiful than what it was the year before. The budget is always for our shared future, Diokno said. (PNA)

Source: Philippine News Agency