Budget chief De Leon explains how gov't plans multi-year projects

Acting Budget Secretary Kim Robert de Leon explained Saturday how the government commits to fund major projects spanning several years without releasing the entire project cost in one go.

In a news release, the DBM cited as an example the construction of a P10-billion bridge project, which will take three years to finish, should the government release the entire required budget all at once.

The Budget chief said, "No," explaining that major infrastructure projects may require contractual commitments covering several years. He said such funding requirements are programmed according to their implementation schedule and remain subject to the annual budget process.

De Leon said multi-year projects undergo several stages and often take years to complete, government must plan not only the total project cost, but also the contract period, implementation schedule, and funding requirements for each year.

For eligible locally funded multi-year projects, this is where the Multi-Year Contractual Authority (MYCA) comes in.

MYCA allows a government agency to enter into a contractual commitment extending beyond one year, subject to applicable DBM rules and requirements.

The DBM chief explained that MYCA enables an eligible multi-year project to be covered by a multi-year contract, instead of treating it as though the government's commitment ends after only one year.

This provides greater continuity in project implementation and allows agencies to plan the project through completion, he said.

Programmed funding

Also using the three-year P10-billion bridge project as an example, De Leon said its funding requirements can be programmed at P3 billion in the first year, P4 billion in the second, and P3 billion in the third.

Thus, while the contract may cover several years, the project's annual funding requirements remain subject to the applicable annual appropriations, budgeting, accounting, auditing, and other government safeguards.

For Foreign-Assisted Projects (FAPs) financed through foreign loans, De Leon said that under applicable rules, foreign loan-funded FAPs do not require MYCA before entering into a multi-year contract because their financing arrangements and governing rules differ from those of locally funded multi-year projects.

Beyond the groundbreaking

However, the Budget chief said this does not mean foreign-assisted projects are exempt from proper planning and budget discipline.

De Leon said that when billions of pesos in public funds and several years of implementation are involved, government planning must look beyond the start of a project and toward its completion.

"Kapag bilyon-bilyong piso ng taumbayan at ilang taon ng trabaho ang pinag-uusapan, hindi puwedeng hanggang groundbreaking lang ang plano. Dapat hanggang completion. Hanggang resulta. Hanggang sa mamamayan," he said.

(If we are talking about billions of pesos in taxpayers' money and years of work, the planning should not just be until the groundbreaking. It should be until the completion. Until the results are achieved and felt by our citizens.) — VDV, GMA News