Legarda: PH must ‘bite the bullet’ in implementing cash-based budgeting

Senator Loren Legarda (Photo by Ryan Leagogo / INQUIRER.net)

Senator Loren Legarda said that the transition to cash-based budgeting is a difficult but necessary move in order to spur the effective implementation of government projects and services.

Legarda explained during the Meet Inquirer Multimedia forum on Thursday that an obligations-budget, which the government is currently utilizing, causes a slow-implementation of government projects because it allows agencies to postpone the obligations and disbursement of the budget.

“If we keep on doing an obligations-based budget, it will forever be slow. As I said, the 2015 budget is just being implemented in 2018,” Legarda said.

“There are challenges along the way in the implementation of a cash-based budget and it may be difficult but we have to transition there somehow,” Legarda added.

In a cash-based budget, Legarda said that the implementation of projects will be spurred since the implementation of projects is limited to one fiscal year.

“Because next year is cash-based budget, meaning the appropriation for next year’s budget will have to be obligated, it will have to be disbursed, so that it can be implemented. Cash-based budget, simply put, instills discipline, brings the products and services faster and closer to the people,” Legarda said.

A cash-based budget limits incurred contractual obligations and disbursement of payments to goods delivered and services rendered and inspected within the fiscal year. Payment of these obligations should be made within the same year.

Legarda admitted that even though it would be a difficult transition, the government ought to try this and observe the results after a year.

“It has been thoroughly studied on how a cash-based budget can really spur the economy. I know it’s difficult because ang kinasanayan natin mabagal. So we have to bite the bullet and see how it’s going to be. Maybe we cannot do it. So let’s rethink it. Let’s just try one year of cash-based and let’s see,” she said. /jpv

READ: IN THE KNOW: What is cash-based budgeting?