The Department of Budget and Management (DBM) said on Thursday that it would be enforcing the one-year lapse period for department and agency appropriations.

“One of the major reform measures we aim to enforce in 2013 is the one-year lapse period for all budget allocations. Previously, departments and agencies enjoyed a two-year lapse period for their allocations, which allowed them to carry over their unused appropriations to the following year. We’re drastically changing that. This time, if you don’t use or obligate the budget allotted to you within the year, you lose it,” said Budget Secretary Florencio Abad.

He clarified, however, that the two-year lapse period will still hold for Maintenance and Other Operating Expenditures and Capital Outlay, while allocations for Personal Services (PS) will lapse if they remain unobligated within the fiscal year.

Abad also emphasized the effect of the new regime on budget preparation and implementation this year.

“This reform ought to induce better planning of programs and projects across the bureaucracy, with agencies meticulously crafting their budgets so they can accomplish their targets by year-end,” he said.

“From an expenditure perspective, the one-year lapse period will help institutionalize pre-procurement activities the year before the budget is implemented, enabling faster budget execution among agencies. With all departments making the most of their yearly allocations, we can expect our spending performance to exceed its current trajectory and consequently, reinforce our economic growth,” Abad explained.

The Budget chief also said that the shortened lapse period for budget allocations is a preparatory move for the “GAA-as-Release-Document” regime, which the Aquino administration aims to roll out by 2014.

Under this reform measure, the country’s General Appropriations Act (GAA) will be a budget release document, which will further expedite the release of yearly appropriations to departments and agencies.

“We are easing our transition into a GAA-as-Release-Document regime, which will allow us to hack away at a lot of red tape and make fund releases more efficient. At the moment, the process of releasing allotments to agencies can be elaborate and time-consuming. With the GAA standing as the overall release document, however, the release of allotments will be speedier and more transparent, because all budgetary items will be painstakingly outlined in the GAA itself,” Abad added.