Duterte orders shift to cash budgeting system

FILE: President Rodrigo Roa Duterte delivers his speech at the Malacañan Palace on September 10, 2019. SIMEON CELI JR./PRESIDENTIAL PHOTO

MANILA — President Rodrigo Duterte has ordered the shift to cash budgeting system to speed up the utilization of the government’s 2019 fiscal plan.

Executive Secretary Salvador Medialdea, by the authority of the President, signed Executive Order (EO) No. 91 on Sept. 9 and a copy of the document was released to media on Thursday.

“There is a need to improve the fiscal planning of government agencies through the implementation of an operational cash budget and by setting deadlines for obligation of funds and execution of projects during the fiscal year, in order to speed up the implementation of programs and to promptly deliver goods and services to our people,” the executive order read.

Prior to this EO, the government has been operating on an obligations-based system which allowed funds to be spent beyond the fiscal year.

Under a cash-based budget system, appropriations must be used only until the end of the fiscal year.

The EO noted that unused appropriations at the end of the fiscal year will be reverted to the National Treasury and can no longer be used except if it is allowed by legislative enactment.

Payments for obligations incurred by the government must be made until three months after the end of the validity of the appropriation unless the DBM has determined another period.

Appropriations covering financial subsidy to local government units (LGUs) must be available for obligation and disbursement until the end of the succeeding fiscal year while appropriations for statutory shares of LGUs must be available for obligation and disbursement until fully spent.

Projects with an implementation period of more than 12 months must require the issuance of a multi-year contractual authority (MYCA) by the Department of Budget and Management (DBM).

An MYCA can also be issued for single-year procurement projects or those with implemented within a year or less that are either research or scientific in nature.

The budget department earlier suggested a shift to a cash-based budget for this year.