The Department of Budget and Management (DBM) is seeking the help of Congress in passing an organic budget law to institutionalize public fiscal management reforms recommended by the International Monetary Fund (IMF) after a recent assessment.
In a statement, the DBM said the government has begun implementing measures to address a number of concerns cited in the IMF’s recent Fiscal Transparency Evaluation (FTE) report, and is moving to insti tutionalize these reforms through the proposed Public Financial Management (PFM) bill.
According to the DBM, the Philippines scored favorably across three of the four pillars of the IMF’s Fiscal Transparency Code (FTC) in terms of fiscal reporting, fiscal budgeting and forecasting, and fiscal risk management.
The fourth pillar, Revenue Resource Management, was not mentioned in the DBM statement, as it is still under development, the IMF said.
In particular, the DBM cited a number of government reforms that have helped the country score high with the 36 FTE indicators, from the level of “Not Met” and “Low to Good” to “Advanced.”
“[T]hese reforms—which the FTE report cited as enabling ‘high-quality reporting on public finances that is relatively comprehensive, frequent and timely, with many areas of good and advanced practices’—helped make an impact in the IMF’s evaluation,” it said.
The DMB said that measures highlighted in the FTE included the preparation of comprehensive technical notes on the budget; the disaggregation of 87 percent of lump sum funds in the 2015 National Budget; the implementation of the General Appropriations Act as-released document policy; the Two-Tier Budgeting Approach; and the filing of the Tax Incentives Management and Transparency Act in Congress to mandate yearly reporting.
“We’re greatly encouraged by the IMF’s favorable evaluation, especially with respect to our reform efforts in public fiscal management. We still need sustainable solutions for some lingering issues, however, so we’re seeking the help of Congress to create an organic budget law to institutionalize these reforms,” said Budget Secretary Florencio Abad.
The DBM said the proposed PFM bill would address other recommendations made by the IMF report that are yet to be implemented by the government.
The additional IMF recommendations were the creation of an Office of the Comptroller General that will consolidate the financial accounts of the agencies, and the tightening of rules on savings, realignments, and the use of the Unprogrammed Funds, as well as the rationalization of the lump sum funds, Special Purpose Funds (SPFs), and earmarked revenues.
Also included in the recommendations were the creation of 10-year debt sustainability analysis (DSA) to be included in the 2015-2016 Fiscal Risks Statement (FRS); giving the Department of Finance (DOF) the tasks of managing and consolidating government guarantees; and periodic reporting to Congress and the public.
“With the IMF as our partner in establishing greater fiscal transparency, we can boost the budget’s responsiveness to the people’s needs, as well as protect the integrity of the expenditure process,” Abad added.