The Philippine National Budget and the Power of the Purse

3 Basic Principles of Public Finance Management

1. Aggregate Fiscal Discipline - Spending within Means

2. Allocative Efficiency - Investing in the Right Priorities

3. Operational Efficiency - Delivering the Measurable Results

The National Budget as an Instrument of Development

• Political Tool – a tool for exercising power and for decision making (Budget Politics)

• Socio-economic tool – raising resources and allocating them to achieve socio-economic goals (Budgets and the Economy)

• Human Development Tool – financing public goods and services that enhance human development (Budget and Human Development)

What is Government Budgeting?

a financial plan for a given period (usually one year) which shows what its resources are, how they will be generated, and used over the fiscal period

What is National Government Budget?

also known simply as the budget, refers to the totality of the budgets of various departments of the national government aligned to the NDP, including the NG support to LGUs, SUCs, and GOCCs.

2 Importance of the Budget

1. Administrative Tool – assignment of authorities and responsibilities to government units to perform budgeted tasks

2. Performance measurement tool – exacting desired results from authorized expenditures

Step 1: the Development Budget Coordinating Committee (DBCC)

made up of the DBM, Department of Finance, Department of Economy, Planning and Development (DEPDev), and the Bangko Sentral ng Pilipinas — sets the economic targets, expenditure ceilings and revenue projections to make up the NEP.

→ In the first half of the year, agencies prepare their proposals and submit them to the DBM for review. 

→ The DBCC then approves, consolidates and packages these into the NEP for the president and Cabinet.

Step 2: The President’s Budget

The President submits a budget of expenditure and sources of financing within 30 days from the opening of every regular session of Congress.

→ The President’s Budget includes: (a) BESF, (b) NEP, © Budget Message, and (d) Staffing Summary
→ it should have undergone about 7 months of budget preparation by the Executive Branch

Step 3: Budget Hearing

• The BESF will be scrutinized by the Congress who has the power of the purse. Review, debate, authorize.

• The Congress is composed of: 24 senators (upper house) and up to 250 representatives (lower house)

→ House of Representatives hearings - The appropriations committee reviews big items and last year’s performance. Hearings are public and usually livestreamed.
→ Senate hearings (parallel review) - The Senate finance committee conducts its own review. Both chambers may revise the plan.

Step 4: GAB

→ Each chamber approves a budget bill. Differences must be settled.

→ Bicameral conference committee - House and Senate teams merge the two versions. Their report becomes the General Appropriations Bill (GAB). Meetings are often closed-door.

Step 5: Final Say

• The President may sign, veto items, or return the bill to Congress.

• If no new budget is signed by year-end, the previous year’s budget is used (reenacted budget). New projects and positions cannot start without funding.

Budget Approval Timetable

Note: After half-month of creating the BESF.

3 Other Committees related to 131

1. Committee on Ways and Means

2. Committee on Public Accounts

3. Committe on Accounts

Two Major Legislative Offices for Budgetart Reviews

1. CPBRD - Congressional Policy and Budget Research Department

2. SEPO - Senate Economic Planning Office

Fiscal Policy

the use of government spending and tax policies to influence economic conditions, especially macroeconomic conditions.