Transition to cash-based budget forged with House

House Majority Floor Leader Rolando Andaya Jr. commended Secretary Benjamin Diokno and the Department of Budget and Management (DBM) for pursuing reforms in the budget system, particularly the shift to an annual cash-based budget, during a live television interview on August 30, 2018.

This is to shed light on the recent confusion regarding the status of the proposed 2019 National Budget, as news arose on an apparent compromise of the Congress and DBM, thereby leading to a “hybrid” budgeting system.

Budget Secretary Benjamin Diokno was quick to clarify that the agreement is not a “hybrid” budgeting system, but a transitory one, where the cash-based system’s Extended Payment Period (EPP) is extended from three months to six months for infrastructure projects. The modified system implies that there would now be 12 months to obligate and 18 months to disburse.

Simply put, the President’s budget will remain to be under a cash-based system.

For his part, Cong. Andaya expressed that the agreement was reached due to concerns raised by congressmen, given that 2019 is an election year, with an imminent three-month election ban. Nonetheless, Andaya maintained that the cash-based budget is indeed beneficial to our development prospects, and would make the budget more predictable.

“We are trying to reform our budget system, in fact it is our mission to make it one of the top 10 budget [systems] in the world. We are doing all this for the people,” Sec. Diokno noted.

Representatives from Civil Society Organizations (CSOs) expressed their support for the shift to cash-based budgeting system during the “CSOs Meet with Ben: An Open Dialogue on the Annual Cash-Based Appropriation” held this afternoon at the Ayuntamiento in Intramuros.

The forum, organized by Department of Budget and Management in collaboration with CSO consortium of the Philippine Open Government Partnership (PH-OGP), featured a keynote address from DBM Secretary Benjamin Diokno and an open forum with the Secretary.

In his keynote address, the Secretary explained the difference between the previous budgeting system—a two-year obligation-based budget—and the new annual cash-based budgeting regime.

“In an obligation-based budget system, contracts awarded before the end of the fiscal year can be delivered even after that year,” the budget chief explained. “In a cash-based budget, only projects and services that can be delivered within the end of the year will be included in the budget.”

The cash-based system will be implemented next year, Fiscal Year 2019. It is expected to result to greater fiscal discipline, prudent use of limited resources, and improved delivery of public goods and services.

“At the end of the day, what matters are real and concrete results, not contracts,” Secretary Diokno said.