1. Citizen Participation Strengthening Public Fiscal Management
18 September 2015
Marco Polo Hotel, Pasig, Metro Manila
MAXINE TANYA M. HAMADA
Assistant Secretary
Department of Budget and Management 1

3. Source: http://www. bloomberg

4. The Budget and the Economy
How does the Budget interact with the Economy?
For one, government spending boosts the domestic economy. Government spending supports economic growth—in fact, government spending is measured as a component of gross domestic product (i.e. government final consumption expenditure, public construction). But beyond spending per se, government investments in social and economic programs enable industries and people to be more productive.
Conversely, the state of the economy affects the National Budget. For one, a vibrant domestic economy, with more people getting employed and businesses earning more, generates higher government revenues. Certain macroeconomic indicators—like interest rates and foreign exchange rates—also affect the cost of government debt.
(you may find more information on pages 17 to 19 of the 2014 People’s Budget)

5. The Budget Process Before
Budget Call
Released Late
April
Late Submission of
Agency Proposals
(w/ much lump sums!)
May
Deliberations &
Finalization
June-July
Budget Submitted
Just Before Deadline
August
Budget Legislation
Also Delayed
September-February
In summary, this is how the Budget Process worked in the past:
Budgets were frequently enacted late, if enacted at all, which led to delays in implementation, as well as unbridled discretion to the Executive.
The process was also clogged with a lot of bottlenecks—tedious budget release processes; too many lump sums; and lengthy procurement processes.
What our people saw on the ground: projects implemented late, during the rainy season, leading to poor quality, added costs and waste.
And to top these, there were scant spaces for citizen’s engagement in the process.
Bidding Takes
A Lot of Time
3-4 Months
Allotment Release
a Bottleneck
April
Delayed Implementation
Rainy season leads to delays, cost overruns & poor quality
GAA Enacted Late
March

6. Citizens are more & more empowered throughout the process
The Budget Process Now
Budget Submitted
Right After SONA
July
Agencies have more time
to flesh out proposals,
align with priorities &
engage stakeholders
January-April
Deliberations &
Finalization
May-June
Early Budget Call
January
Budget Legislation
On Schedule
August-December
Citizens are more & more empowered throughout the process
This is how the Philippine Budget Process looks like now: a regime of speed, efficiency and accountability.
A proposed budget that is not only enacted early (wala nang budget reenactment under the Aquino Administration) but also formulated with clear parameters on what to fund in terms of priorities and performance targets.
A budget execution process that enables the timely and efficient implementation of priority programs and projects.
Moreover, the people now have access to performance information of that they can use to hold agencies to account, as well as mechanisms for their participation in the preparation and implementation of the Budget.
GAA Enacted On Time
& Serves as Release Doc
Before End-December
Implementation as
Early as January
Early Bidding
October-December

7. BUT CAN WE ABSORB
FURTHER GROWTH?

8. AND WITH GROWTH,
CAN WE BUILD
GREATER TRUST?

9. Our task
It is institutions that determine the fate of nations - Why Nations Fail by Daron Acemoğlu and James A. Robinson
Nations fail when institutions are “extractive,” protecting the political and economic power of only a small elite that takes income from everyone else.
Success comes when political and economic institutions are inclusive and pluralistic, creating incentives for everyone to invest in the future.

10. Our goal
put the country onto a new trajectory, away from patronage politics and corruption, and towards good governance and inclusive growth

11. Our Trajectory Values-Based Entitlement Meaningful Devolution
Meritocracy
Voice & Vote
Transparency
Entitlement
Dependency
Poverty
Institutional Capture
Opacity

12. Our pillars
Transformation and setting a new trajectory does not only mean the creation of an effective and efficient state which can deliver public services.
It implies taking on a larger agenda for creating an institutional framework that delivers good governance.

13. Transforming the Budget
Spending within means
Spending on the right priorities
Spending with measurable results
In an empowering regime of transparency, accountability & citizen’s engagement
Pursuit of difficult reforms in budgeting (plugging leakages, minimizing wastages, untangling bottlenecks, and improving government efficiency) 7

14. The “Technical Deficit”
FUNDAMENTAL REASONS:
Poor planning and linkage with budgeting
Poor capacity for program & project design
Complicated budget release process
Long & tedious procurement
process
Poor delivery, monitoring & evaluation

15. Poor Procurement Total APP vs
Poor Procurement Total APP vs. Awarded Contract (in terms of amount, NGAs)
2011
APP = PhP B
Awarded = PhP B
2012
APP = PhP B
Awarded = PhP B

16. NG Disbursements Performance, 2014
Poor Execution
NG Disbursements Performance, 2014
(in PhP billion)

17. 15.57% of the 2016 estimated disbursements
Php468 Billion
carry-over budget
15.57% of the 2016 estimated disbursements

18. Meaningful Devolution

19. Inclusive Development and Meaningful Devolution
INCLUSIVE DEVELOPMENT IS HINGED ON:
Ability of LGUs
to implement programs & projects
Greater LGU accountability for the results of use of public funds
Increased voice & vote of grassroots communities & local civil society

20. Delivering Measurable Results
Alternative Delivery Modes
Performance-Based Downloading to LGUs to support service delivery thru meaningful devolution & community empowerment
We also recognize that we can maximize the ability of agencies to absorb more funds and deliver more services only to an extent. Thus, this Budget enables us to leverage alternative modes of service delivery, in partnership with local governments, local communities, and the private sector.
We have implemented reforms that strengthen LGUs’ delivery capacity and accountability—such as the LGU Public Financial Management Program, the Seal of Good Local Governance, the Performance Challenge Fund, and Bottom-Up Budgeting. The 2016 Budget builds on these by enabling the performance-based downloading of funds to LGUs, where the latter will be empowered to implement key national programs for their constituents while making them more accountable for the proper use of funds and the results delivered. Some P18.2 billion has been allocated for this: P11.7 billion for BUB projects and P6.5 billion for the rehabilitation and upgrading of provincial roads. Eventually, we should come to a point in time where communities themselves are capable of implementing programs and projects that benefit them—and we know we can get there based on the experience of the National Community-Driven Development Program and Bottom-Up Budgeting.
This Budget also leverages Public-Private Partnerships to boost the implementation of big-ticket infrastructure projects—not only those needed for economic expansion, such as the construction of strategic railways, airports, and highways (P21.3 billion for PPP strategic support for DPWH & DoTC* for 2016); but also those which are essential to social service delivery, such as the closure of the classroom gap as well as the Government Assistance to Students and Teachers in Private Education (GASTPE) program (P21.2 billion for 2016). We should expand PPPs to other areas where we need to catch up, such as in the construction of irrigation systems, if feasible.
Notes:
PPP Strategic Support Funds—the government share or counterpart for PPP projects—in the 2016 Budget are as follows :
DOJ OSec (Modernization of BuCor: P200 million
DPWH: P billion
DOTC: 200 million
NEDA (PPP Capacity Building Program): P4 million
Also: Unprogrammed Appropriations include P 30 billion for the Risk Management Program (i.e. contingent liabilities arising from PPPs)
Public-Private Partnerships to boost implementation of big ticket infrastructure

21. LGU-Public Financial Management (PFM)

23. General Provision (GP) on Fund Transfers to CSOs
Salient Points
General Provision (GP) on Fund Transfers to CSOs
GAA 2014 and 2015
National Funds transfer to CSOs and Beneficiaries
Accredited by DSWD
Guidelines by COA-DSWD-DBM
In consultation with agencies
JR on Accreditation
Covers Implementing entities
Principles, criteria, and application for accreditation of CSOs
Coverage and validity
Reporting mechanism
JR on Accreditation
Covers implementing entities
Adopts JR
GAA

24. Principles behind Accreditation Requirements (Beneficiary CSOs)
Application Forms and Basic Documents
Strengthening CSO Existence to tag Public Funds
(location sketch/photo of office, data sheet, Org Chart)
Documents Establishing Corporate Existence and Regulatory Compliance
Strengthening CSO Governance to Decide on Public Funds
(Roster of members, Social Preparation, Organization Policies)
Documents Establishing Track Record and Good Standing
Strengthening CSO Accountability for Public Funds
(List of programs/projects, no derogatory record, affiliation and good standing if part of an umbrella organization)

25. “We have only remained true to what we promised our Bosses: no one will be left behind, as we tread the straight path to progress.”
President Aquino's speech on the signing of the FY 2015 GAA
December 23, 2014
Rizal Hall, Malacañan Palace

27. Performance-Based Downloading LGU Performance Requirements
Bottom-Up Budgeting
P11.7 B
Engage local CSOs via BUB
Meet Good Financial Housekeeping standards (SGLG)
Submit quarterly reports to DBM & Congress
Updating of project status through Open BUB Portal
Provincial Roads
P6.5 B
Provincial road network plan & other reports at start of the FY
LGU PFM assessment report
Submit quarterly reports to DBM & Congress
Updating of project status through Open Roads Portal

28. 1,514 cities and municipalities (ARMM not included) P24.714 B budget
FY 2016 QUICK OVERVIEW
PROJECTS
14,326 projects
1,514 cities and municipalities (ARMM not included)
P B budget
18% increase from 2015 budget of P20.905B
ADMINISTRATIVE COST AND M&E
3% M&E: P741 M
PMO Budget (DILG): P350 M
*Two LGUs did not submit their LPRAP:
Pagadian City and Pantar, Lanao del Sur

29. DISTRIBUTION BY AGENCY
Less than 1%
DOE
NEA
NCIP

30. P8 B P20 B P20.9 B 595 1,225 1,599 Bottom-up-Budgeting 2013 Budget
(Enacted)
2014 Budget
(Enacted)
2015 Budget
(Enacted)
Budget Year
6062 projects
17398 projects
14300 projects
P8 B
P20 B
P20.9 B
Amount of Locally- Developed Projects
595
Cities & Municipalities
1,225
Cities & Municipalities
1,599
Cities & Municipalities
Participating Local Govts 25

31. The Many but Small
Be faithful in small things because it is in them that your strength lies. Mother Teresa
You've got to think about big things while you're doing small things, so that all the small things go in the right direction.
Alvin Toffler

32. P953 Huge NG Budget for Social Services
Should this be LGUs’ in the first place?
P953
billion
P390
billion
National Government Budget for SOCIAL SERVICES, 2015
Internal Revenue Allotment (IRA), 2015

33. Inclusive Development and Meaningful Devolution
INCLUSIVE DEVELOPMENT IS HINGED ON:
Ability of LGUs
to implement programs & projects
Greater LGU accountability for the results of use of public funds
Increased voice & vote of grassroots communities & local civil society

34. Online Reporting, Monitoring and Evaluation on openbub.gov.ph
National Executive enabled to deeply align spending, priorities and measurable performance and focus on expanding inclusive growth
Local Executives strengthened to deliver frontline governance based on performance & accountability

35. Better Target Planning usung the RSBSA Coconut farmers (% of crop farmers) on middle, lower east side of Batangas (Specific Trend)
Batangas (Region IV-A)
Population: 2,377,395
Household: 511,530
Farmers: 90,256
Coconut Farmers: 12,292

36. Better Monitoring and Reporting with Open Roads platform

37. We are perfecting the reforms. We must perform as we reform.
More Work?
We are perfecting the reforms. We must perform as we reform.

38. AWARDED 3rd Place (Gold) OPEN GOVERNMENT AWARDS
Open Government Partnership
September 24, 2014
New York City

39. NOMINATED as Philippine Entry ? OPEN GOVERNMENT AWARDS 2015
Local Governments
Seal of Good Housekeeping and
Performance Challenge Fund ?

41. Citizen Participation Strengthening Public Fiscal Management
18 September 2015
Marco Polo Hotel, Pasig, Metro Manila
MAXINE TANYA M. HAMADA
Assistant Secretary
Department of Budget and Management 41

42. Extra Slides

43. RESHAPING BUDGET PRIORITIES
Basic Ed 9

44. Reshaping Budget Priorities
777 k
households
1 M
households
2.3 M
households
3.1 M
households
3.8 M
households
4.3 M
households
4.3 M
households 16

45. RESHAPING BUDGET PRIORITIES
Public Health 10

46. RESHAPING BUDGET PRIORITIES
Infrastructure 11

47. Budgeting not linked to Planning
Philippine , Regional & Local Dev’t Plans
LGUs
LGUs
LGUs

48. Revenues lower than target, Actual spending higher

49. Budget accountability, reporting, and controls need to be strengthened

50. Indication of weak fund stewardship in LGUs
Dependence on IRA:
Indication of weak fund stewardship in LGUs