Expenditure Management September 2015

Transcription

1 Expenditure Management September 2015

2 Expenditure Management Department of Budget and Management September

3 January to July 2015 National Government fiscal performance Sustained acceleration of infrastructure spending and expansion of social services continue to support growth momentum National Government (NG) disbursements reached PHP1,283bn as of July 2015, 10.9% higher than the previous year on strong public infrastructure spending and maintenance expenditures in support of various economic development and poverty alleviation programs NG disbursements has been accelerating, 4.5% in Q1 to 12.4% in Q2 to 25.0% in July Jan-Jul (PHP billion) Increase/(Decrease) Amount % (PHP billion) As % of Full-Year Program REVENUES 1, , DISBURSEMENTS 1, , CURRENT OPERATING EXP , of which: Personnel Services Maintenance Expenditures CAPITAL OUTLAYS of which: Infrastructure/Other CO NET LENDING (4.0) (57.9) 11.0 SURPLUS/(DEFICIT) (55.7) (18.5) 37.3 (66.9) 6.5 Infrastructure and Other Capital Outlays presented on this slide excludes infrastructure subsidies to Government Corporations and infrastructure transfers to LGUs. The two are still classified under Subsidies, and Capital Transfers to LGUs, respectively. 3

4 The Proposed 2016 National Budget Paggugol na Matuwid: Saligan ng tuloy-tuloy na pag-unlad Budget by Expense Class (PHP, % share of total budget) Personnel Services PHP810.8bn, 27.0% Allocation to Local Government Units PHP464.5bn, 15.5% Support to GOCCs PHP127.1bn, 4.2% PHP3.002tn 19.5% of GDP 15.2 % YOY Growth Maintenance Expenditures PHP534.6bn, 17.8% Infrastructure and Other Capital Outlays PHP645.4bn, 21.5% Debt Burden PHP419.3bn, 14.0% Infrastructure and Other Capital Outlays presented on this slide excludes infrastructure subsidies to Government Corporations and infrastructure transfers to LGUs. The two are still classified under Subsidies, and Capital Transfers to LGUs, respectively. 4

5 Principles of the proposed 2016 national budget Spending within our means Investing in the right priorities Delivering measurable results Empowering citizens through fiscal transparency, accountability, & participation 5

6 The Proposed 2016 National Budget: Investing in the right priorities Through the Budget Priorities Framework, the programs and projects of the government are aligned with the strategic goals spelled out in the Aquino Social Contract with the Filipino People. These programs and projects are designed to address critical needs, lingering gaps and emerging challenges in the economy and society. Making Growth More Inclusive Good Governance & Anti- Corruption Managing Disaster Risks Sustaining the Growth Momentum Forging Just and Lasting Peace 6

7 The Proposed 2016 National Budget: Investing in the right priorities The Budget is responsive to the needs of the 44 poorest and most climate-vulnerable provinces such as those areas affected by Typhoon Yolanda, provinces under the ARMM, and the provinces with the largest number of poor households. 7

8 The Proposed 2016 National Budget Increasing the share of Social and Economic Services Sectors to the National Budget while decreasing the share of Debt Burden The Aquino Administration is committed to expand the share of more productive expenditures to the National Budget, by channeling more resources to various socio-economic development programs. The share of Social and Economic Services Sectors will increase to 36.8% and 27.6%, respectively, in Debt Burden is projected to steadily decline from the 20.6% at the start of the Administration s term in 2010 to 14.0% in 2016 given our prudent debt management strategy. Selected Sectoral Expenditures (PHP billion) Social Services Economic Services Debt Burden 1, Selected Sectoral Expenditures (% share of total budget) Percent share of selected sectoral expenditures to the National Budget. Nominal data from 2010 to 2014 are actual obligations while for 2015 and 2016 are the enacted budget and proposed budget, respectively. 8

9 The Proposed 2016 National Budget Investing heavily on public infrastructure to accelerate growth and investments The government continues to invest in public infrastructures such as road and transport infrastructures, irrigation, farm-to-market roads and other public infrastructures, as one of the key drivers of economic development PHP766.5bn proposed budget for infrastructure investments in 2016, equivalent to 5.0% of GDP, nearly three (3) times the 1.8% in 2010, and leading the way to the 5.4% medium-term target by These will interconnect growth areas, supporting agriculture and tourism development by providing market access, and accessible routes to tourist destinations, spurring trade, livelihood and investment activities, and at the same time generate employment Infrastructure Outlays (PHP Billion) % Note: are actual figures GAA 5.0% Proposed Target 5.4% 1, Target Nominal data from 2010 to 2014 are actual obligations while for 2015 and 2016 are the enacted budget and proposed budget, respectively. Infrastructure Outlays refer to the infrastructure expenditure of the National Government, inclusive of infrastructure subsidies to Government Corporations and infrastructure transfers to Local Government Units. This level however excludes internally generated funds of the Government Corporations and Local Government Units. 9

10 Continued and strengthened implementation of reforms Strategic Resource Allocation and Timely Budget Execution Two-Tier Budgeting Approach (2TBA) The proposed 2016 National Budget was crafted under a more strategic approach of the 2TBA, an approach separating the discussion and deliberation of 1) ongoing/existing programs, and 2) new or expanded programs. The DBM reviewed the requirements of ongoing programs and overhead expenses of agencies in consideration of the status of their program/project implementation and performance. By doing this, the government was able to free up some PHP583bn in fiscal space that was allotted to new and expanded programs critical to growth and poverty alleviation The government also instituted a Development Budget Coordination Committee (DBCC) interagency committee that evaluated the technical/economic viability and implementation readiness of proposed new or expanded programs/projects costing below PHP1bn. This step will ensure that bottlenecks or other implementation issues will be minimized come implementation year Creation of Full-Time Delivery Units (FDU) Earlier this year, the President issued Administrative Order (AO) No. 46 to facilitate and enable a more timely execution of the FY 2015 Budget. One key measure provided under this AO is the activation of Full-Time Delivery Units (FDU) in line agencies to closely monitor progress of implementation and performance of agencies in their delivery of planned spending commitments and targets or deliverables. The DBM-FDU conduct regular meetings with line agency FDUs and require them to submit monthly/quarterly performance reports The FDU is headed by an Undersecretary supported by key personnel who will take lead in progress monitoring, conduct of regular meetings and oversee compliance with the required monthly/quarterly reports 10

11 Continued and strengthened implementation of reforms Addressing Institutional Weaknesses More Bids and Awards Committees and assignment of full-time secretariats This Budget is also designed to enable us to decisively cure the institutional weaknesses that hamper the ability of agencies to deliver services fast and with impact. It builds on the measures that President Aquino instituted through Administrative Order No. 46 and subsequent orders through the Executive Secretary and the Cabinet Secretary. Aside from the creation of FDUs, the AO 46 also allowed key agencies to convene more bids and awards committees and mandated them to assign permanent support staff. The administrative order, moreover, required agencies to regularly report their financial and physical performance. Hiring of Key Staff The 2016 Budget supports these measures by allocating funds for the hiring of key staff for planning, procurement, project management, and monitoring and evaluation. This Budget also enables agencies to hire key staff that they need such as the hiring of 1,300 more civil engineers for Department of Public Woks and Highways (DPWH) to boost their capacity to design and implement programs and projects well. DPWH as Lead Government Construction Agency The 2016 Budget should enable DPWH to take on its enhanced role as the lead government construction agency, given that it has the mandate and capacity to undertake infrastructure projects. The reforms it has implemented since 2010 enabled it to undertake the right projects, at the right cost, and with the right quality. This enables us to focus the activities of Department of Education (DepEd), Department of Health (DoH), and Department of Agriculture (DA) away from construction and towards their core service delivery mandates. 11

12 Continued and strengthened implementation of reforms Faster and Better Service Delivery Faster Budget Process The Budget sustains the reforms that the Government has introduced to streamline the budget release and disbursement process: these include the GAA-as-Release Document, the policy of allowing agencies to bid their projects early, the roll-out of cashless and checkless disbursements systems, among others. Unified Account Codes (UACs) The Government has introduced the Unified Account Codes: a harmonized classification system developed and adopted by Commission on Audit (COA), Department of Finance (DOF), and Department of Budget and Management (DBM) to replace the old fragmented account codes systems. This reform ensures budget integrity, where each project appropriated for by Congress is clearly and efficiently tracked from enactment to implementation, to accounting, and finally to audit. We also leveraged this reform to push agencies to disaggregate their programs and projects not only by object or sector but also by location. Disaggregation of Agency Lump Sums and Reduction of Special Purpose Funds We are sustaining the policy of disaggregating lump sum funds in the budgets of agencies to ensure faster implementation and better transparency, and align our practices with international standards. Clearer Savings, Augmentation and Realignment Rules To strengthen budget integrity that is, ensuring that each peso spent is in line with the appropriations approved by Congress we have clarified with Congress the parameters for the declaration and use of savings, as well as for the limited realignment of funds. These rules also provide agency heads with enough flexibilities to be able to manage their performance. 12

13 Continued and strengthened implementation of reforms Fiscal Transparency and Participation Transparency Seal Government agencies are making their key budget data and financial information available to the public under its Transparency Seal As of the end of 2014: 98% of all NGAs and GOCCS are now compliant with the Transparency Seal provision Open Data The public can now access budget/expenditure data in open formats. The open data portal, data.gov.ph, which was launched in 2014, now houses more data with some 1,669 datasets available for download and 13 dashboards and 87 visualizations for reference CSO Engagement The government remains committed to opening the national budget process to different sectors of the society to improve the budget s comprehensiveness and capacity to represent and respond to the needs of the larger public. For the 2016 budget preparation, the DBM entered into some 186 Budget Partnership Agreements with various CSO Bottom-Up Budgeting (BUB) Local Government Units are empowered in the budget process by identifying priority local poverty reduction projects that will be funded by the National Government This 2016 budget preparation, LGU participation is higher by 154% to 1,514 cities and municipalities since the start of the program in A total of PHP24.7bn worth of local poverty reduction projects is included in the proposed 2016 National Budget, almost 200% increase from the initial level in

14 Continued and strengthened implementation of reforms Performance-Informed Budget To further strengthen the budget-planning linkage, the government is simplifying the budget presentation where appropriations of specific programs/projects are matched with their corresponding outcomes and output performance indicators Organizational outcome statements and corresponding performance indicators of government agencies have been continuously refined in the 2016 budget Alignment of line item budgets into major programs, each addressing a common outcome, is ongoing to improve transparency and accountability LGU-Public Financial Management (PFM) The LGU-PFM seeks to enhance local government capacities to efficiently and effectively manage government resources and the delivery of public services LGU PFM Reform Roadmap and Implementation Strategy, and the Handbook on CSO Participation in the Local Budget Process were already launched earlier this year Continuous capacity building of LGUs helped some 321 out of the 445 LGUs (71%) comply with PFM standards Risk Analysis and Management Risk Management Program Comprehensive fiscal risk report have been published by the government since 2011, outlining both the key risks, challenges and opportunities in the macroeconomic, fiscal and monetary sectors, including disaster management To cover contingent liabilities that may be realized from the implementation of PPP projects, an amount of PHP30.0bn has been included under the Unprogrammed Fund in the 2015 Budget The Bureau of the Treasury has established investment, debt and risk management divisions to enhance its overall operational efficiency and capacity for debt and risk management 14

15 Continued and strengthened implementation of reforms Other Ongoing Fiscal Transparency Initiatives Four (4) bills have already been filed in both houses to institutionalize good governance and public expenditure reforms. This is a product of technical assistance (TA) from the International Monetary Fund (IMF), World Bank (WB) and Australian Department of Foreign Affairs and Trade (DFAT). The key measures of the bill include: Public Financial Management Law Open Budget Index and Fiscal Transparency Evaluation Creation of an Office of the Comptroller General to strengthen the oversight of internal control in government and improve financial reporting Stronger role for Congress in budget legislation Establish the Treasury Single Account and modernize government cash management Tightening rules on savings, realignments and use of Unprogrammed Fund; and rationalization of lump-sum funds, Special Purpose Funds and earmarked revenues Scored 64 in the 2015 Open Budget Survey, highest in ASEAN and ranked 4th in Asia and judged by the International Budget Partnership (IPB) to provide the public with substantial budget information Publication of all eight (8) Budget Documents, including pre-budget statement, Citizen s Budget, Mid-Year Review and Year-End Report Pursuit of the following measures to further transparency: Expansion of open data sets and improvement of DBM website structure and usability Conduct of regular public engagement Report agencies compliance with Transparency Seal Formulation of Technical Working Group on Fiscal Transparency Inclusion of Performance Informed Budgeting (PIB) in the National Expenditure Program and of additional tables in the Budget of Expenditures and Sources of Financing Harmonization of reporting documents and formulation of an integrated fiscal calendar 15

16 Expenditure Management September 2015