By Camille A. Aguinaldo
SENATOR Loren B. Legarda presented to the plenary on Wednesday the bill seeking to modernize the country’s budgeting system.
In her sponsorship speech of Senate Bill No. 1761 or the proposed Budget Reform Act, Ms. Legarda, chair of the Senate committee on finance, said the measure would provide the necessary mechanisms to help achieve higher economic growth and reduce poverty incidence in the country.
“The Budget Reform Act will help achieve the administration’s goals of propelling the economy to grow at 7% to 8% from 2018 to 2022, putting the country into upper-middle income status by 2022, and reducing the poverty incidence from 21.6% to 14% by 2022,” she said.
The bill has been identified by the Legislative Executive Development Advisory Council (LEDAC) as among the priority bills of Congress.
Ms. Legarda said the bill would “cure” the country’s weaknesses in the public financial management, particularly the weak linkage of the plan with the budget, slow budget execution, weak budget reliability and delays in the submission of reports.
The bill introduced a shift in the budgeting landscape from a two-year obligation-based budget to an annual cash-based budget.
Under the proposed system, contractual obligations incurred by the government for a particular year may not go beyond that fiscal year, with up to a three-month extended payment period.
The bill would also institutionalize the General Appropriations Act as an allotment release document, which would become the basis to enter into contract.
It also clarified the use of savings and made it consistent with the Supreme Court’s 2014 ruling on the Disbursement Acceleration Program (DAP).
Under the proposed measure, savings would now be limited to released but unobligated appropriations that result from completion or discontinuance of an activity or project and implementation of efficiency measures resulting in the delivery of the required or planned targets at a lesser cost.
“With this reform, the controversial Dengvaxia deal will never happen again,” the senator said, also noting that the miscellaneous personnel benefits fund (MPBF) can no longer be declared as savings under the bill.
Ms. Legarda added that Congress would have the authority to limit the use of savings and would have stronger power to prevent abuses of a reenacted budget.
Lawmakers filing a revenue eroding and expenditure bill would also be required to include an information sheet, indicating “an estimate of financial and budgetary implication of the proposed bill for the initial year of implementation.”
The Department of Budget and Management (DBM) would also be mandated to publish the “People’s Budget,” summarizing the government’s fiscal policies and expenditure priorities.
The bill also introduced technological innovations in the budgeting, such as the Integrated Financial Management Information System (IFMIS), Unified Accounts Code Structure (UACs) and the Treasury Single Accounts (TSA) for better cash management.
“The prospect of a modern, efficient and open budget system is not an empty dream. It is within our grasp….This bill seeks to set these reforms into law, so that the next President will be constrained from slipping back into the slow, weak and opaque budget system,” Ms. Legarda said.
