By Bernadette D. Nicolas, July 25 2018; Business Mirror
Image Credit to Department of Budget and Management
BUDGET Secretary Benjamin E. Diokno said on Wednesday he expects 100-percent completion in 2019 of all government projects, including those under the “Build, Build, Build” program, intended to be implemented for the fiscal year because of the country’s “revolutionary” shift to annual cash-based budgeting.
Diokno told reporters that there is now “pressure” for all departments and agencies, especially the Departments of Transportation (DOTr) and of Public Works and Highways (DPWH), since their cash appropriations will revert to the Treasury and will need to be re-appropriated if they fail to complete the projects intended to be implemented within the fiscal year.
“So [for] all the projects listed in the 2019 budget, we expect them to be completed in 2019.” Diokno said in a forum, noting that the proposed national budget of P3.757 trillion is 13 percent higher compared to its cash-based equivalent of the 2018 budget, which is P3.324 trillion.
The country used to practice obligation-based budgeting prior to the shift to annual cash-based budgeting.
The two types differ on time horizon or period of implementation and period of payment. Under the new kind of budgeting to be followed by the government, contracts for projects and programs intended to be implemented for the fiscal year should be fully delivered, inspected and accepted by the end of the fiscal year. Payment should also be done within the fiscal year and up to a three-month extended payment period after the fiscal year for goods and services accepted by December 31 of the fiscal year.
On the other hand, under obligation-based budgeting system, contracts awarded within the fiscal year can be delivered even after the end of the year and the inspection, verification and payment is done within and beyond the fiscal year.
“In this sense, we are limiting the budget and allocating the actual cash resources of the government to only those projects that can be done in the given fiscal year.
This is how it is done in all countries in the world except the Philippines and this is how it is done in the private sector,” he pointed out in a forum.
With the shift, he also expects to improve the budget utilization rate of all agencies to bring it close to 100 percent.
At present, Diokno said there are agencies with a budget utilization rate at around 60 percent to 70 percent. This, he said, was also considered as basis for the agencies’ cash-based budgets.
Under the proposed national budget, the DOTr had the largest increase of 89.3 percent in its cash-based budget for 2019 from its cash-based equivalent in 2018, bringing the budget of the DOTr to 76.1 billion from P40.2 billion.
Meanwhile, the cash-based budget for the DPWH also increased to P555.7 billion for 2019, from its cash-based equivalent from P441.8 billion. The 2018 cash-based equivalent for the DPWH included the projected current year’s accounts payable to be paid in 2019.
The Commission on Audit (COA) had reported this July that the DPWH failed to utilize 66.4 percent or P440 billion, of its P662.69 billion allocated budget for 2017, while the DOTr only utilized and disbursed P18 billion, or 25.60 percent, of its P71-billion budget for 2017.
Asked why the cash-based budgets of the DOTr and DPWH were increased despite the COA-reported budget underutilization, Diokno explained that these departments need more money to ramp up infrastructure in the country.
“We need more roads, we need more bridges. You can’t penalize them on that,” he said. “In fact, they said they lack people, I am giving them more people. They lack right-of-way money? I am giving them more right-of-way money,” he said.
Diokno also noted that they cannot decrease the budgets of these departments over the budget underutilization, as this will affect the people who are supposed to benefit from the projects. “In fact, for the next 10 years, we have to still build. We have the poorest infrastructure in this part of the world,” he added.
The 2019 cash-based budget of the Department of Health saw a decrease of 25.6 percent from its 2018 cash-based equivalent because of “low” budget utilization rate.
He also warned heads of departments and agencies to use their budget well, as the President can fire them if they can’t comply.
“Use well your budget or lose it; not lose your budget, but lose your job,” he said.
He also explained the decrease in the 2019 cash-based budget of the Department of Agriculture by more than 1 percent: it was on account of the completion of its foreign-assisted project.
The Commission on Elections also had a decrease of 36.4 percent in its budget compared to its 2018 cash-based equivalent. Diokno said this is because the poll body had already frontloaded the requirement for the next election.