Duterte orders gov't agencies to spend budget, complete projects within one year

President Rodrigo Duterte has directed the adoption of the cash budgeting system in government beginning this year.

Duterte issued Executive Order 91 on September 9 or only barely three months left before the end of the fiscal year.

“There is a need to improve the fiscal planning of government agencies through the implementation of an operational cash budget and by setting deadlines for obligation of funds and execution of projects during the fiscal year, in order to speed up the implementation of programs and to promptly deliver goods and services to our people,” the order stated.

Currently, the Philippines follows an obligations-based budgeting in which appropriation are valid for two years.

Funds are disbursed as commitments or obligations, meaning implementing agencies are not obliged to complete projects within the same fiscal year.

Under cash budgeting, the validity of budget appropriations are reduced to one year with no carry-over provision except for a three-month extended payment period within the following fiscal year to allow agencies to settle payments for goods and services delivered.

Appropriations covering financial subsidy to local government units should be available for obligation and disbursement until the end of the succeeding fiscal year.

Any unreleased appropriations and unobligated allotments at the end of the fiscal year as well as unpaid obligations and undisbursed funds will be reverted to the national treasury. The funds will not be available for expenditure unless authorized by law.

Multi-year procurement projects, or those with an implementation period exceeding one year, are required to secure a multi-year contractual authority (MYCA) from the Department of Budget and Management.

The MYCA will cover the full project cost and will be basis for the approved project for the contract.

The MYCA may be issued for single-year procurement projects or those with an implementation period of one year or less, that are either research or scientific in nature, and by design necessitate implementation covering two fiscal years.

In the first year of the implementation of the cash budgeting system, appropriations for infrastructure capital outlays, including subsidy releases to government-owned or- controlled corporations for infrastructure projects, will be valid for obligation until December 31, 2019.

The completion of construction, inspection and payment will be made not later than December 31, 2020.

Appropriations for maintenance and other operating expenses as well as other capital outlays will also be valid for obligation until December 31, 2019 while the delivery, inspection and payment will be made not later than June 30, 2020. —LDF, GMA News