DBM: National budget not equivalent to 'vault full of cash'

The Department of Budget and Management (DBM) on Saturday shed light on the concept of national budgeting, saying that the National Expenditure Program (NEP) is not akin to available cash in a vault.

In a news release, Acting Budget Secretary Kim Robert de Leon addressed misconceptions about the financing of Foreign-Assisted Projects (FAPs), including railways, expressways, and flood-control systems.

The Budget chief said a P10-billion funding proposal for a major infrastructure project does not mean P10 billion has already been released or spent.

“Budgeting is not the same as spending. Ang NEP ay proposed budget. Hindi ito vault na puno ng cash (The NEP is the proposed budget. It is not a vault full of cash),” De Leon emphasized.

The Budget chief said that billions of pesos appearing in the NEP, including proposed Unprogrammed Appropriations (UA), do not automatically represent available cash or actual government expenditures.

De Leon also clarified that foreign assistance does not necessarily mean another country or international institution shoulders the entire project cost.

“Foreign-assisted does not mean foreign-funded lahat. At lalong hindi ibig sabihin na libreng pera ito (Foreign-assisted does not mean everything is foreign-funded. More so, it does not mean it is free money),” he said.

The DBM chief said FAPs may be financed through loan proceeds, or funds borrowed from international development partners, and the Government of the Philippines (GOP) counterpart, representing the portion funded by the Philippine government.

Moreover, the Budget chief said implementing agencies must prepare proposals detailing the project’s purpose, cost, implementation plan, and expected public benefits.

Major projects also undergo applicable evaluation and approval processes, including review by the Investment Coordination Committee (ICC), which assesses their economic justification, financial viability, and potential benefits.

De Leon said that the status and timing of foreign financing arrangements determine how a project’s funding requirements may be reflected in the proposed national budget.

When financing arrangements are completed and applicable conditions are met, the Budget chief said that the corresponding funding requirements may be included under Programmed Appropriations.

If foreign financing has not yet been finalized during budget preparation, the GOP counterpart may be included in the implementing agency’s proposed budget, while the Loan Proceeds may be placed under Unprogrammed Appropriations (UA) - Support to Foreign-Assisted Projects, subject to applicable budget rules.

De Leon said that UA represents standby budget authority, not readily available cash. Before funds can be released, agencies must satisfy the conditions prescribed under existing laws and budget rules, including the necessary financing documents and approvals.

He also clarified that if foreign financing does not materialize, the government does not automatically assume the entire project cost.

The implementing agency must evaluate its options, including securing financing from another development partner, according to de Leon.

“Because in government budgeting, a big number should always come with an equally big responsibility to explain where it comes from, where it goes, and what the Filipino people get in return,” he said. —KG, GMA News