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House approves budget reform bill on final reading

/ 10:25 PM March 20, 2018

The House of Representatives on Tuesday night approved on third and final reading the budget reform bill, which had been certified as urgent by President Rodrigo Duterte.

Voting 158-8 with one abstention, the lawmakers approved “An Act to Reform the Budget Process by Enforcing Greater Accountability in Public Financial Management (PFM), Promoting Fiscal Sustainability, Strengthening Congress’ Power of the Purse, Instituting an Integrated PFM System, and Increasing Budget Transparency and Participation” (House Bill No. 7302).


The proposed measure seeks to strengthen the oversight power of Congress by monitoring and reviewing actual performance and results against targets and by holding government offices accountable for their financial and nonfinancial performance.

The bill also mandates the Office of the President to approve the Statement of Policy and the Medium Term Fiscal Strategy for submission to Congress, as well as the Bugget Priorities Framewok to identify priority areas for government spending.


The President is also given power to impound appropriations, subject to the approval of Congress. The said impounded appropriations could not immediately be used except by subsequent legislative enactment.

It also shifts the country’s current two-year budget validity to one year, with no provision for carry-over, except for a three-month extended payment period in the next fiscal year. This is to allow agencies to settle payments for goods and services delivered, inspected and accepted during the previous fiscal year.

The other key provisions of the budget reform bill include the following:

  • Shifts from an obligation-based budgeting to an annual cash-based budgeting making the appropriations law the authority of agencies to contract out and disburse funds within the fiscal year
  • Enforces one-fund-concept wherein monies received by the national government shall accrue to the general fund and remitted to the national treasury. Special funds shall be authorized by law and limited to trust fund, revolving and retained funds
  • Special Purpose Funds are limited to National Disaster Risk Reduction and Management Fund, the Contingent Fund, and the Statutory Shares of local government units (LGUs) and the details of which could not be determined during the budget preparation stage.
  • Savings can be declared due only to the completion, fiscal discontinuance or abandonment of an activity or project for which the appropriation is authorized.
  • In case fiscal discontinuance or abandonment shall be used as basis, such activity or project shall no longer be proposed for funding in the next two fiscal years. Allotments not used due to fault of the agency shall also not be considered savings.
  • Authorizes constitutional officers to use savings to cover a deficiency in any existing item of appropriation within their respective offices.
  • Provides integrated financial management information system, a single portal of all financial transactions and reports to be used by national government agencies, government-owned or controlled corporations (GOCCs) and LGUs to integrate budgetting cash management and accounting processes.

The bill also provides sanctions and penalties for failure to comply with the reporting and posting of requirements, among which are:

  • The Department of Budget and Management will not approve any request for release of allotments under the negative list, modifications or use of savings
  • Commission on Audit may disallow any expenditure;
  • Disbursement may be rendered void.
‘Impoundment provision prone to abuse’

Kabataan Rep. Sarah Elago criticized the impoundment provision embedded in the budget reform bill as it “heavily outweighs the positive impact” of the proposed measure.

“The impoundment provision creates a situation wherein the president can withhold fund releases when he deems the appropriations no longer necessary,” Elago said to explain her no vote.

If this provision is enacted, she said the President would have the power to discontinue funding programs and projects deemed no longer required and would in effect, “usurp the congressional power of the purse.”


“This power can be used by the president as a leverage to control the release of funds based on political motivation,” the lawmaker said.

“This essentially widens the President’s discretion over the national budget, clips the Congressional power of the purse, and can be abused to serve patronage politics and a looming dictatorship,” she added.

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