MANILA – Senator Loren Legarda on Wednesday urged for the passage of the proposed Budget Reform Act as she highlighted the importance of the measure in improving government spending and delivery of services to the people.
In her sponsorship speech for Senate Bill 1761, Legarda said that the proposed Budget Reform Act will institutionalize budgetary reforms that have already been established by the administration in the last two years to improve the budgetary process, increase spending, and most importantly, accelerate the delivery of government services to the people.
“The Budget Reform bill is vital at this point in our country’s ongoing development and growth because it was crafted specifically to institutionalize many reforms that are meant to cure a number of weaknesses in our public financial management (PFM) system,” she said.
“It will provide, as well, the necessary mechanisms to help achieve the Administration’s goals of propelling the economy to grow at 7 percent to 8 percent from 2018 to 2022, putting the country into upper-middle income status by 2022, and reducing the poverty incidence from 21.6 percent in 2015 to 14 percent by 2022,” Legarda added.
To achieve these lofty goals, the chair of the Senate Committee on Finance said that the administration of President Rodrigo R. Duterte is investing heavily in infrastructure development via its “Build, Build, Build” Program, targeting total infrastructure spending to reach 7.3% of GDP (gross domestic product) by 2022.
“The exponential rise in the planned infrastructure spending would need a modern, efficient and transparent budget system,” she said.
As an accompanying goal, the Duterte Administration also plans to invest heavily in education, health services and social welfare to develop the citizenry’s full potential.
“This Budget Reform Act, if enacted, can be a powerful tool to bring these goals to fruition as it incorporates globally-recognized PFM principles and practices that could ensure that funds are carefully managed and used, and that the right goods and services are delivered to their potential beneficiaries at the right place and at the right time,” Legarda said.
She said that the key provisions of the bill seek to address the country’s PFM weaknesses which include weak linkage of the plan with the budget; slow budget execution; weak budget reliability; delays in the submission of reports due to manual recording of transactions and ambiguity in the definition and use of savings.
These provisions which could address these PFM gaps and weaknesses are the shift from a two-year obligation-based budget to an annual cash-based budget; early procurement as a general rule; institutionalizing the practice which considers the General Appropriations Act (GAA) as an allotment release order; allowing multi-year contracting authority by government agencies and an “Impoundment” provision which allows the President to propose the recession of appropriations to Congress when the appropriations are no longer required to fulfill the objective originally sought to be achieved or in case of unmanageable deficit.
Under an annual cash-based budget system, contractual obligations incurred by the government for a particular year may not go beyond that fiscal year. Payments should be made for goods and services delivered, inspected and accepted within the fiscal year, with up to a three-month Extended Payment Period.
“This new system will result in better planning of programs and projects by government agencies, reduced underspending, greater focus on implementation, and will foster a better business environment,” Legarda explained.
The bill also clarifies the use of savings, and more importantly, promotes fiscal transparency and access to information.
“The main goal of this proposed measure is to modernize the Philippine budgeting system: to make it advanced, credible, and compliant with international best practices. It is a measure that promises not just change – for as we all agree, change has already begun – but the stability and permanence of change,” Legarda said, pointing out reform measures instituted by the Executive Department can still be reversed.
“Precisely, this bill seeks to institutionalize these reforms, set them into law, so that the next President, who at the moment is nameless and faceless, will be constrained from slipping back into the slow, weak and opaque budget system,” she said.
Legarda urged her fellow lawmakers to support the Executive in its quest for a modern budget system.
“This prospect of a modern, efficient and open budget system is not an empty dream. It is within our grasp. Let us play our role and be part of the solution. I urge you to vote for this game-changing Budget Reform Act,” Legarda said. (Jose Cielito Reganit/PNA)
