Shifting to a cash-based appropriations system from a multiyear obligation budget might be too “radical and disruptive”, a senior research fellow at a government-owned think tank warned.
Philippine Institute for Development Studies (PIDS) public finance expert Rosario Manasan, in a report, expressed concerns over Senate Bill (SB) 1450 or the Budget Reform Bill authored by Senator Loren Legarda.
SB 1450 limits the validity of the cash-based budget to one year, contrary to the current budgetary practice that allows appropriations and obligations to be extended to the next fiscal year.
“While it is important to have an appropriation with a one-year validity, the concurrent shift to a cash-based budget system might be too radical and disruptive a step to take a leap,” Manasan said.
She explained that under the new proposal, the government can initiate the procurement process short of award (meaning pre-procurement activities such as advertisement of the procurement and/or request for quotation until the post-qualification of bids) six months prior to any given budget year at the earliest.
This also implies that payments can only be made for projects completed within the 12-month period of the given budget year.
Although the bill would allow agencies to settle payments for goods and services delivered during the previous fiscal year within three months immediately following the current budget year, Manasan said “this is a very tight schedule” given the difficulties government agencies experience with regard to fully utilizing programmed funds within the fiscal period.
She urged Legarda to “introduce a transitory period of one to two years, upon enactment of the bill into law.”
Mansan also opined that the proposed legislation would weaken Congress’ role in crafting the budget, particularly in terms of multiyear projects.
Sections 36 and 37 of the bill, she said, implies that the “legislative approval of appropriations for multiyear projects will be limited to the approval of cash allocations for single-year payment of said projects, and that the approval of multiyear projects will be the sole prerogative of the executive branch,” in this case through the Department of Budget and Management.
She also observed that SB 1450 does not have a section pertaining to budget approval and authorization.
Manasan urged that new sections be inserted under Part IV of the bill pertaining to budget approval, which “may include provisions on the content of the General Appropriations Act and the prohibition on Congress to increase the aggregate appropriation level beyond the amount proposed by the executive under the National Expenditure Program.”