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Solons fear budget reform would cut funds for districts

17 August 2018

The Duterte administration may have adopt its 2018 budget for 2019 if lawmakers and the Department of Budget and Management (DBM) could not agree on budget reforms.

Budget Secretary Benjamin Diokno said keeping the 2018 budget allocations was one of the options the executive department has if Congress fails to approve the P3.757-trillion appropriations by December.

The House of Representatives had suspended hearings on the 2019 budget as lawmakers rejected a shift from obligation to cash-based budgeting system.

In the past, the obligation-based budget allowed agencies to spend their respective allocations within a two-year period, sometimes leading to underspending.

“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,” Diokno explained.

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

Congressmen feared that the budget reform would greatly affect budget allocations for their districts, since funding for hospitals, classrooms, and local infrastructure projects like roads might suffer budget cuts.

Rep. Karlo Alexei Nograles, chairman of the House appropriations committee, and other House leaders – representing lawmakers who crossed party lines – have filed a House resolution asking their Senate counterparts to return the budget reform bill that they sent last March.

In view of the rejection of the budget reform, Diokno said having a reenacted 2018 budget for 2019 would sustain the Duterte administration’s infrastructure spending in the absence of a new appropriations bill approved by Congress.

“We are studying all the options, including reenacted budget of 2018,” Diokno said during a press conference on the sidelines of the “Build, Build, Build” job fair on on Aug. 12 at the SMX Convention Center in Pasay City.

“Because so many projects in 2017 and 2018 have not been done, when you add those to projects in 2019, the budget is so big. The ‘Build, Build, Build’ program won’t suffer.”

Under its ambitious “Build, Build, Build” program, the Duterte administration plans to rollout 75 “game-changing” flagship projects alongside spending a total of up to P9 trillion on hard and modern infrastructure until 2022 to usher in the “golden age of infrastructure.”

But some members of the House have been questioning why the 2019 budget proposal, at nominal value, is lower than the record P3.767-trillion 2018 appropriation.

Diokno has explained that this year’s obligation-based budget should not be compared apples to apples to the cash budget proposal for next year.

According to Diokno, the cash-based equivalent of the 2018 budget was P3.324 trillion.

He had noted that “73 percent of the countries around the world, as well as the private sector, are implementing a cash-based budget.”

“This is the way to go if you want transparency and efficiency,” he said. “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.”

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