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Budget delay lessons to determine future of cash-based system

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OFFICIAL GAZETTE

THE Department of Budget and Management (DBM) is still considering whether to implement a full cash-based budgeting system this year following the delayed approval of the 2019 General Appropriations Act (GAA).

“We’re pushing the cash budgeting but we’re studying the transition. Let’s see what will happen for 2019 then lets see if there’s still a need for a slower pace in trying to adopt it fully,” DBM Acting Secretary Janet B. Abuel told reporters in Manila on Friday.

“Based on the veto message of the President for the 2019 GAA, he actually clarified that in view of the delayed passage of the GAA for 2019, as well as the election ban, we recognized that it will be difficult to fully implement the cash budgeting system which requires all government agencies to (spend) within the year,” according to Ms. Abuel.

Ms. Abuel said that due to the budget delay, the national government moved its deadline to pay for infrastructure projects funded by the 2019 budget to Dec. 30, 2020 from the initial schedule of June 30, 2019. Payments for non-infrastructure outlays such as equipment are due on June 30, 2020.

“…The original transition plan or transition timeline was to move the payment or the deadline of the payment for these 2019 contracts and implementations to June 30, 2019. That was the original but what we did, because of the circumstances, we moved a little further to offset the delay as well as the election ban by six months…the deadline for infrastructure projects or payments for infrastructure contracts would be Dec. 31, 2020,” Ms. Abuel said.

“Infrastructure outlay… covers all other capital outlays. For capital outlays, Dec. 31, 2020… MOOE (Maintenance and Other Operating Expenses) plus other capital outlay, ito yung (these are) non-infrastructure capital outlays like equipment, that’s June 30, 2020,” Ms. Abuel said, noting that DBM hopes it would lessen the worries of the agencies in paying their creditors.

Government should have shifted from the usual obligation-based budgeting system to cash-based this year according to the veto message released on April 16.

According to Mr. Duterte, the shift would be necessary “to ensure the availability of cash resources for priority development projects and speed up of delivery services.”

The delay in the approval of the budget was deemed a major factor in the slowing of economic growth to 5.6% in the first three months of 2019 due to underspending from the public sector.

Ms. Abuel, however, said that DBM is committed to fast-track the release of funds to government agencies, particularly the Department of Transportation (DoTr) and the Department of Public Works and Highways (DPWH), which is expected to spend a combined P803.1 billion which the Finance department considers enough to cover the national government’s infrastructure target.

Finance Secretary Carlos G. Dominguez III has said that in order to achieve the government’s target of 6% growth this year, it needs to ramp up spending, with disbursements targeted at P3.774 trillion, equivalent to 19.6% of gross domestic product (GDP).

Total infrastructure disbursements, meanwhile, would have to hit P1 trillion, equivalent to 5.2% of GDP, according to Mr. Dominguez.

Ms. Abuel added: “We know that the DPWH has the largest chunk in so far as the infrastructure disbursements are concerned. They said that in order to be able to realize their commitment then everybody has to work together, not just the DPWH, so it would also entail the fast release of funds from the DBM, and we commit to that.”

“One thing that they raised earlier, in so far as the licenses of the contractors are concerned. For example there is a licensing requirement from the PCAB (Philippine Contractors Accreditation Board), that’s something that was raised… they alerted the DTI (Department of Trade and Industry) to double check if the licenses are indeed being issued immediately or as required. Otherwise, if there are delays in the other requirements before they can fully implement the project, it would be difficult to realize their commitment. That’s how the discussion came about,” Ms. Abuel added.

The 2019 budget, which was proposed at P3.757 trillion, was cut down to P3.66 trillion after Mr. Duterte vetoed a P95.3 billion allocation for DPWH in April.

Meanwhile, Ms. Abuel said that the DBM targets to submit the P4.1-trillion budget proposal on the same day of Mr. Duterte’s State of the Nation Address (SONA) on July 22.

“We’re done with the technical budget hearing, so may mga higher levels pa (there are still higher levels) before we present,” Ms. Abuel said. — Reicelene Joy N. Ignacio

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