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Philippine PFM Reform Roadmap PFM Reform Roadmap and Developments 1 1 (A Presentation for the 27 th DepEd National Seminar/Workshop on the Preparation.

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Presentation on theme: "Philippine PFM Reform Roadmap PFM Reform Roadmap and Developments 1 1 (A Presentation for the 27 th DepEd National Seminar/Workshop on the Preparation."— Presentation transcript:

1 Philippine PFM Reform Roadmap PFM Reform Roadmap and Developments 1 1 (A Presentation for the 27 th DepEd National Seminar/Workshop on the Preparation and Reconciliation of the CY 2012 Mid-Year Financial Reports) July 23, 2012, Tagaytay City By: Assistant Secretary Luz M. Cantor

2 Philippine PFM Reform Roadmap Presentation Outline PART I: PFM System Gaps/Weaknesses A.What is PFM? B.What ails the Philippine PFM system? PART II: PFM Roadmap and Developments C.Executive Order No. 55 D.PFM Reform Roadmap E.PFM Governance Structure F.PFM Reform Projects 2

3 Philippine PFM Reform Roadmap PFM GAPS PART I 3

4 Philippine PFM Reform Roadmap 4 What is PFM? Public Financial Management (PFM) is a system of rules, procedures and practices for government to manage public finances in the areas of:  budgeting  accounting  auditing  cash management  management of public debt  revenue generation  public reporting on public sector financial operations 4

5 Philippine PFM Reform Roadmap Benchmarks of a Good PFM Credibility of the budget Comprehensiveness and transparency Policy-based budgeting Predictability and control in budget execution Accounting, recording and reporting External scrutiny and audit 5

6 Philippine PFM Reform Roadmap budget not results basedresults lack of funding predictabilityfunding predictability weak oversight of Congress and publicoversight lack of efficient cash managementcash management messy traffic of documentstraffic of documents weak monitoring of contingent liabilitiescontingent liabilities lack of budget credibility PREPARATION EXECUTION ACCOUNTABILITY PFM Gaps in the Budget ProcessAUTHORIZATION 6

7 Philippine PFM Reform Roadmap Messy Traffic of Documents 7 This is now… In the long run, Philippine PFM needs this kind of information system

8 Philippine PFM Reform Roadmap GAP/WEAKNESS Lack of credibility of the budget STRATEGIES DESIRED RESULTS Avoid re-enacted budgets, tighten savings concept, flesh out lump sum funds Development of a Government Integrated Financial Management Information System (GIFMIS) Engage CSOs in the budget process Budget supports targets in the Plan More efficient, transparent and accountable budget execution Real time reporting on budget utilization by agencies and the Government. Pro-active CSO support for budget transparency 8

9 Philippine PFM Reform Roadmap GAP/WEAKNESS Budget not yet results- based STRATEGIES Strengthen results orientation of Agency Performance Reviews (APRs) Institutionalize results based budgeting framework through the OPIF Budget decisions based more and more on physical and financial performance DESIRED RESULTS 9 Make agency accountability reports performance based; improve costing methodology for outputs Institutionalize Zero Based Budgeting (ZBB)

10 Philippine PFM Reform Roadmap GAP/WEAKNESS Lack of a common classification system for budgeting, accounting, auditing and cash management STRATEGIES Revise New Government Accounting System (NGAS) Manual and chart of accounts DESIRED RESULTS Consolidated FM reporting requirements based on harmonized classification of all accounts Real-time reports, access to financial data and control of obligations and disbursements for more effective financial control and accountability 10 Harmonize budgetary and accounting classifications and reporting Codify PFM rules and complete PFM Rules Manual for capacity building Identify common reporting requirements of oversight agencies and line departments

11 Philippine PFM Reform Roadmap DBM and DBCC to approve allotment and cash release program at start of year and update midyear GAP/WEAKNESS Lack of funding predictability STRATEGIES BTr and DBCC to improve cash management practices Review validity of SAROs and NCAs Study feasibility of using GAA as budget release document and eliminate releases thru SAROs Predictable and streamlined allotment and cash release programs throughout the year to support agency operations based on DOFs reliable revenue forecasting and programming. DESIRED RESULTS 11

12 Philippine PFM Reform Roadmap GAP/WEAKNESS Weak oversight role of Congress and the public over the budget process STRATEGIES Capacity building for Congress and CSOs Oversight Committees in Congress and the public use DBM and COA reports more extensively DESIRED RESULTS 12

13 Philippine PFM Reform Roadmap GAP/WEAKNESS Lack of efficient cash management STRATEGIES Improve Treasury Cash Management operations Complete inventory of agency bank accounts and rationalize their number Shift to transaction-based fees for government banking arrangement Improved Cash Programming by BTr and DBM Predictable and stable revenue inflows and cash disbursements DESIRED RESULTS 13

14 Philippine PFM Reform Roadmap Compel agencies to disclose their contingent liabilities GAP/WEAKNESS Lack of accurate database on contingent liability STRATEGIES Make DOF the authority on issuance of policy on contingent liabilities (for GOCCs and NGAs) Monitor and report regularly contingent liabilities Develop database on contingent liabilities DESIRED RESULTS Improved system for capturing and reporting all liabilities of government entities; real and contingent National Government able to manage all its financial exposure 14

15 Philippine PFM Reform Roadmap Where are we now? (PFM Gaps and weaknesses) Where are we going? How are we going to achieve the reforms? 15

16 Philippine PFM Reform Roadmap PFM ROADMAP AND DEVELOPMENTS PART II 16

17 Philippine PFM Reform Roadmap PFM Reform Roadmap  Master plan for improving the financial management system of the government  Jointly formulated and approved by fiscal oversight agencies (COA, DBM, DOF, BTr) from 2009 to 2011 17

18 Philippine PFM Reform Roadmap PFM reforms support Aquino Administration priorities Good Governance PFM Goal Societal Goal 5 Priority Areas Sector Goal Fiscal Discipline Inclusive Growth and Poverty Reduction “Kung walang corrupt, walang mahirap” Anti- corruption/ Transparent, Accountable & Participatory Governance Poverty Reduction & Empower ment of the Poor Rapid, Equitable & Sustained Economic Growth Just, Inclusive & Lasting Peace & the Rule of Law Integrity of the Environment/ Climate Change Mitigation & Adaptation Improve efficiency, accountability and transparency of public fund use to ensure direct, immediate and substantial delivery of public services specially to the poor. 18

19 Philippine PFM Reform Roadmap Executive Order 55 19 Directing the Integration and Automation of Government Financial Management System (signed by President Benigno S. Aquino on 6 September 2011) 1. Installation of PFM systems:  Government Integrated Financial Management Information System (GIFMIS)  Treasury Single Account (TSA)  Efficient Budget Release System  Systematic Financial and Physical Reporting and Auditing

20 Philippine PFM Reform Roadmap EO 55 2.Created the PFM Committee (formerly the GIFMIS Committee)  Devise a 5-year plan for the development and installation of GIFMIS  Oversee the implementation of the PFM Reform Roadmap  Shepherd and champion the passage of supporting legislation needed in Congress  Coordinate budgetary and donor funding 20

21 Philippine PFM Reform Roadmap PFM Governance Structure 21 PRINCIPALS (COA Chair, DBM and DOF Secretary) PFM COMMITTEE PROJECT MANAGEMENT OFFICE PROCUREMENT UNIT PIU GIFMIS DEVT PROJECT PIU BUDGET REPORTING & PERFORMANCE STANDARDS PROJECT PIU IMPROVEMENT OF TREASURY CASH MANAGEMENT PROJECT PIU LIABILITY MANAGEMENT PROJECT PIU CAPACITY BUILDING PROJECT TRACK 2TRACK 1 PIU ACCOUNTING AND AUDITING REFORMS PROJECT

22 Philippine PFM Reform Roadmap Funding Support 22 GOP P978.5 (2012 Budget eGov Fund) GOP P978.5 (2012 Budget eGov Fund) AusAID A$30M (P1.2B) Facility Grant AusAID A$30M (P1.2B) Facility Grant WB-IDF Intl Devt Fund WB-IDF Intl Devt Fund EU LGU PFM EU LGU PFM ADB

23 Philippine PFM Reform Roadmap 23 Outputs and Results Outputs Major Strategies Treasury Single Account GIFMIS Real Time Financial Information 1. Build up Credibility of PFM 2. Review Fund Release Procedures 3. Capacity Building for Congress and CSOs 4. Improve Treasury Cash Management Operations 5. Develop & Implement GIFMIS Contingent Liabilities Better Mgt of Contingent Liabilities Results Based Budgeting PFM REFORMS ROADMAP

24 Philippine PFM Reform Roadmap Initial PFM Reform Projects 24 ProjectLead Agency 1.Improvement of Treasury Cash Management Operations BTr 2. Budget Reporting and Performance Standards DBM 3. GIFMIS DevelopmentDBM, DoF/BTr, COA 4. Liability ManagementDoF 5. Capacity BuildingDBM, DoF/BTr, COA 6. Accounting and Auditing ReformsCOA

25 Philippine PFM Reform Roadmap Improvement of Treasury Cash Management Operations Project Objective to increase operational efficiency of implementing agencies while minimizing cost of treasury operations Output and Timeframe a system of cash management that can keep daily cash balances of government at appropriate levels Treasury Single Account (TSA) in place by 2014 25

26 Philippine PFM Reform Roadmap Budget Reporting and Performance Standards Project Objective to produce quarterly reports within 2 weeks of next quarter (short term) to generate real-time reports on budget utilization and financial performance through GIFMIS (long term) Output and Timeframe Consolidated and agency level budget execution and budget utilization reports published in COA and DBM website Harmonized forms by Dec 2012 Unified Account Code Structure Framework on Performance Standards implemented by March 2014 26

27 Philippine PFM Reform Roadmap GIFMIS Development Project Objective to facilitate physical development of a working GIFMIS that can collect and organize financial information in a central database Output and Timeframe Web-based GIFMIS Version 1 – initially for national government agencies (for completion in 8 months) Web-based GIFMIS Version 2 – for all government agencies (operational by 2016) 27

28 Philippine PFM Reform Roadmap Liability Management Project Objective to put in place a system for managing government's exposure to contingent and other liabilities Output and Timeframe a complete list of liabilities of the national government, real and contingent (immediate) LM system established by 2013 28

29 Philippine PFM Reform Roadmap Accounting and Auditing Reform Project Objective continue to enhance government accounting systems and strengthen external audit capacity Outputs and Timeframe Harmonized PGAS with IFRS and IPSAS by June 2012 Enhanced NGAS for GIFMIS Track 2 by Dec 2012 Guidelines on the audit of multi-sectoral programs/projects Revised guidelines on participatory audit Intensified conduct of IT/ information systems audit (2012- 15) 29

30 Philippine PFM Reform Roadmap Capacity Building Project Objective develop skills of personnel of oversight and implementing agencies on PFM competencies build stakeholder support for the reforms Target Participants personnel of the oversight and implementing agencies legislators civil society organizations other stakeholders 30

31 Philippine PFM Reform Roadmap PFM Reform Roadmap Leading the way to the right path 31 Improved efficiency, accountability and transparency of public fund use Direct Immediate Substantial The Filipino People especially the poor Improved Public Service Beneficiary

32 Philippine PFM Reform Roadmap ‘…it is incumbent on all of us to confidently assert that governments that do things right should have no problem keeping our fellow citizens informed and engaged, and are thus, partners of government in its fundamental task of addressing the needs of the people. The result is an empowered citizenry, which is the essential aspiration at the heart of the digital revolution sweeping the globe...’ President Benigno S. Aquino III Speech at "The Power of Open: A Global Discussion" Google New York, 75th Ave., New York 19 September 2011


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