Duterte OKs P3.8-T cash-based budget for 2019

President Rodrigo Duterte. (Photo by TOTO LOZANO / Presidential Photographers Division)

Published: 10:59 a.m., July 10, 2018 | Updated: 12:47 a.m., July 11, 2018

The Department of Budget and Management (DBM) will submit the proposed P3.757-trillion cash-based national budget for 2019 to Congress on July 23 to coincide with President Duterte’s third State of the Nation Address.

The proposed budget is slightly lower than this year’s record P3.767 trillion.

Budget Secretary Benjamin Diokno told the Inquirer on Tuesday that the President approved the proposed budget during Monday’s Cabinet meeting, which lasted well past midnight.

At a press briefing in Indang, Cavite province, presidential spokesperson Harry Roque on Tuesday said P1.185 trillion (31.5 percent) would be spent for personal services, P752.7 billion (20 percent) for capital outlay, P640.6 billion (17.1 percent) for local governments and P562.9 billion (15 percent) for maintenance expeditures.

He said P414.1 billion (11 percent) will be allocated for debt payments while support for government-owned and -controlled corporations and tax expenditures would get P181.7 billion (5 percent) and P14.5 billion (0.4 percent).

New budget system

Diokno last week said the planned shift to the annual cash-based budget in 2019 from the current obligation-based system would further reduce underspending, which has been declining over the past two years.

Under cash-based appropriations, agencies will be forced to spend their budgets within the fiscal year, or else lose them.

In the past, the obligation-based budget allowed disbursements within a two-year period.

Under the new system, “agencies will no longer submit projects to the DBM that are not yet implementation-ready,” Diokno explained to reporters after last week’s Cabinet-level Development Budget Coordination Committee’s (DBCC) meeting.

Underspending

“Government spending will continue to be a growth driver for the Philippine economy, especially as we invest on public infrastructure and human capital development. We are optimistic that we will virtually eradicate underspending in fiscal year 2019, as we transition to cash-based budgeting,” he said.

The DBM in February reported an underspending rate of 2.4 percent in 2017, down from 3.6 percent in 2016 when the President took office.

These were sharp drops in the underspending rate that was as high as 13.3 percent in 2014 and 12.8 percent in 2015, the DBM said.

The DBM said shifting to annual cash-based budgeting was expected to “speed up the government’s budget utilization and promote disciplined management of the budget.”

Proposed 2019 budget

A cash-based budget also would tend to reflect “more accurately the annual outputs and actions of the government” as it would show disbursements rather than obligations or commitments.

The proposed 2019 budget will be equivalent to 19.4 percent of gross domestic product (GDP), Diokno said.

The 2019 budget will finance the wider fiscal deficit program for 2019 of P624.4 billion, equivalent to 3.2 percent of GDP.

The expenditures program for next year of P3.833 trillion would exceed the P3.208-trillion revenue target.

Higher deficit cap

Economic managers last week said the higher budget deficit cap for next year, up from the previous ceiling equivalent to 3 percent of GDP, would accelerate the ambitious “Build, Build, Build” infrastructure program.

The government also wanted to jack up spending on education, healthcare and social services.

The DBCC programmed budget deficits of P637.6 billion in 2020, P702.4 billion in 2021 and P774.3 billion in 2022, approximate 3 percent of GDP.

This year, the budget deficit program was capped at P523.7 billion, or 3 percent of GDP, as the programmed government expenditures on public goods and services of P3.369 trillion was expected to outpace total tax and nontax revenues of P2.846 trillion by year-end.

/cbb /pdi /atm