Phl. To use cash-based budgeting in 2019



By Rose de la Cruz


With 73 percent of the countries in the world using cash-based budgeting, the Philippines is going that way based on the briefing conducted at the House of Representatives and to Speaker (former president and now Pampanga Rep.) Gloria Macapagal Arroyo recently.


Budget Secretary Benjamin Diokno, who chairs the Development Budget Coordinating Committee, said A cash-based budget instills greater fiscal discipline and prudent use of limited resources. The shift to a cash-based budget will increase the efficiency of government operations, resulting in a faster and improved delivery of public services.


The DBCC, comprised by committee chair DBM Sec. Benjamin Diokno, DOF Sec. Carlos Dominguez, NEDA Sec. Ernesto Pernia, and BSP Gov. Nestor Espenilla, discussed the pertinent details of the country's first-ever cash-based budget, with emphasis on the logic behind the shift from an obligation-based to a cash-based budget. 

The one-year time horizon of budget execution will push heads of government agencies to plan ahead, conduct early procurement, and regularly monitor implementation.


Underspending is reduced


In fact, through the limiting of the validity of appropriations to one-year, underspending has been sizably cut to P85.2 billion (or just 3%) in 2017.


Further, as of the first half of 2018, the spending program exceeded by P34.4 billion (or 2%) due to the frontloading and fast-tracking of the completion of programs and projects, including those left behind by the previous administration. The Budget Secretary noted that such performance is unprecedented.


 “Underspending is the way to go if you want transparency and efficiency,” Diokno remarked.


Annual cash-based appropriations will also encourage a more open and accountable government. In this new system, agency performance will be measured not on contracts awarded (or obligated) but on the actual delivery of goods and services that will improve the lives of Filipinos.

Several congressmen raised their concerns with the apparent nominal "decrease" from the 2018 National Budget of P3.767 Trillion to the cash-based 2019 Budget worth P3.757 Trillion. Diokno reiterated that the 2018 and 2019 National Budgets are not strictly comparable, since the former is obligation-based.

"The 2019 cash-based budget cannot be directly compared to the 2018 Budget, or any previous obligation-based budget for that matter. An appropriate apples-to-apples comparison would be to estimate the cash-based equivalent of the 2018 Budget versus the 2019 appropriations," Diokno explained.

Notably, the cash-based equivalent of the 2018 Budget is P3.324 Trillion. Hence, the 2019 Budget is actually P433 Billion, or 13% higher than the 2018 Budget. 

"The FY 2019 National Expenditure Program was crafted solely with the people's welfare in mind. After all, the budget is born from the money people pay in taxes. This budget guarantees a better and more disciplined, accountable cash-based budget that will support strong, sustainable, and equitable growth," Diokno concluded.


Social Services


The 2019 budget allocates P1.377 trillion to social services, equivalent to 36.7 percent of the Budget and will be used to fund social programs, particularly on human capital development, such as education, healthcare, and social protection.


Education (DepEd, SUCs, CHED, and TESDA) continues to get the lion’s share of the 2019 Budget, with a total funding of P659.3 billion, a 12.3 percent increase from last year’s P587.1 Billion.


The administration’s banner social programs – 4Ps or the 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 P283.0 billion.


Notably, the funding for the Universal Access to Quality Tertiary Education has sizably increased from P40 billion in 2018 to P51 billion in 2019.


Huge resources are assigned to these banner social programs, consistent with the administration’s commitment to reduce poverty through improved and wider access to health and education services, along with social protection services to reduce the vulnerability of the poor and marginalized.


TRAIN Mitigation


Meanwhile, in response to the foreseen transitory price increases due to the TRAIN Law, complementary social mitigating measures are provided in the 2018, 2019, and 2020 National Budgets. These mitigating measures include the unconditional cash transfer program for the poorest 10 million households, the Pantawid Pasada Program, and the PUV modernization program.


The Unconditional Cash Transfer Program would benefit the bottom 50 percent of households, through a cash transfer of P 3600 per year per household in 2019, 50 percent higher than the P 2400 per year per household in 2018. Accordingly, the total allocation for such cash grants has been increased from P25.7 billion in 2018 to P37.6 billion in 2019.


The Pantawid Pasada Program will cover 179,852 units or 100 percent of jeepney units with existing LTFRB franchise. For 2019, P3.86 Billion is allocated to provide an annual fuel subsidy of P 20,514.82 per PUJ unit. This has been increased from a P 5,000 fuel subsidy in 2018. The program has already been launched, and the distribution of 1500 cards is ongoing in the NCR.


Lastly, the PUV Modernization Program is seen to make our public transportation more efficient through the modernization of the signature Filipino transport vehicle, the jeepney. For 2019, around P2.7 billion will be allocated for the program’s implementation, P500 Million of which will be utilized for the capacity building and training requirements of the DOTr. On the other hand, the Land Bank of the Philippines (LBP) and the Development Bank of the Philippines (DBP) will be allocated P1.1 billion each to subsidize a portion of the equity contribution of buyers.




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