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Cash-Based Budgeting To Spur Government Infrastructure Program

The proposed national budget of ₱3.757 trillion for 2019 deviates from the multi-year obligations-based budgeting system used up to this year.  According to the economic managers during the recent briefing of the interagency Development Budget Coordination Committee (DBCC) for the proposed budget at the House of Representatives, the proposed 2019 national budget also slashed funding for underperforming projects to give implementing agencies time to fine-tune the implementation of programs.

Socioeconomic Planning Secretary and NEDA chief Ernesto Pernia also said that the new budget system would accelerate the delivery of projects particularly for the government’s infrastructure program as agencies would be pressured to complete projects on time. This is because in cash-based budgeting, cash needs to be expended in a year’s time with a grace period of three months at most.   He also added that this will not adversely affect the government’s infrastructure program. In fact, projects will be implemented faster because implementing agencies are now under pressure to make sure projects are delivered in a year’s time.

However, this new budget system drew objections from various lawmakers, because this might mean fewer project commitments to their constituents. The lawmakers also pointed out that their constituents would be expecting more projects because of the implementation of the tax reform law which generated more funds for the government.

However, Pernia justified that this would foster discipline among implementing agencies and would encourage prudent and efficient use of limited resources. “Reducing the validity of appropriations to one year from two years, the change in the budgeting system is a major part of the budget reform bill being pushed by the DBM with the Department of Finance, Bureau of the Treasury, NEDA and Commission on Audit,” he said.

This is also part of the legislative agenda in the Philippine Development Plan 2017-2022, the country’s blueprint for development, he noted.


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