BUDGETARY SYSTEM

( Budget Process in the National Government )

The Budget Cycle

There are four phases in managing the National Budget:

Budget Preparation
Budget Legislation
Budget Execution
Budget Accountability

During the preparation phase, the Executive prepares the proposed

National Budget. This is followed by the legislation phase where the
Congress authorizes the General Appropriations Act.

In the execution phase, agencies utilize their approved

budgets and during the accountability phase, the
executive monitors and evaluates the use of the budget.

Budget
Preparation

This starts with the Budget Call and ends

with the Presidents submission of the
proposed budget to Congress

What is the Budget Call?

What is Early Preparation?
What is Stakeholder Engagement?
What is Bottom-Up Budgeting?
What are Technical Budget
Hearings?
What is the Executive Review?
What is Consolidation, Validation,
and Confirmation?
What is a Presentation to President
and Cabinet?
What is the Presidents Budget?

1. The Budget Call

At the beginning of the budget preparation
year, the Department of Budget and
Management (DBM) issues the National
Budget Call to all agencies (including
state universities and colleges) and a
separate Corporate Budget Call to all
GOCCs and GFIs.

The Budget Call contains budget

parameters (including macroeconomic
and fiscal targets and agency budget
ceilings) as set beforehand by the
Development Budget Coordination
Committee (DBCC); and policy guidelines
and procedures in the preparation and
submission of agency budget proposals.

Under the Aquino Administration, the DBM

has established a new tradition of beginning
the Budget Preparation phase earlier, to
ensure that the National Budget is enacted on
time. Under the new Budget Preparation
Calendar, the Budget Call is issued in
December (versus around April in the past);
and the submission of the Presidents budget
a day after the State of the Nation Address (in
contrast to earlier practice where it is
submitted during the late in the 30-day
window that the Constitution prescribes).

2. Stakeholder Engagement
A new feature in budget preparations
which seeks to increase citizen
participation in the budget process,
departments and agencies are tasked to
partner with civil society organizations
(CSOs) and other citizen-stakeholders as
they prepare their agency budget
proposals.

This new process, which was

piloted in the preparation of the
2012 National Budget, is now
being expanded towards
institutionalization.

Departments and GOCCs Mandated

to Conduct CSO Consultations

Bottom-Up
Budgeting
For the first time in history, the National
Budget for 2013 will be prepared using a
breakthrough bottom-up approach. As
opposed to the conventional way of
allocating resources from top to bottom,
grassroots communities will be engaged
in designing the National Budget.

The Aquino government, through the Cabinet

Cluster on Human Development and Poverty
Reduction, has identified 300 to 400 of the poorest
municipalities and will engage these in crafting
community-level poverty reduction and
empowerment plans. This initial salvo of bottomup budgeting will focus on rural development
programs and the conditional cash transfer
program, and will thus involve DA, DAR, DENR,
DSWD, DepEd and DoH. These agencies will then
include the community plans in their proposed
budgets.

4. Executive Review
The recommendations are presented before an
Executive Review Board which is composed of
the DBM Secretary and senior officials.
Deliberations here entail a careful prioritization
of programs and corresponding support, vis-vis the priority agenda of the national
government.
Implementation issues are also discussed and
resolved.

5. Consolidation, Validation and

Confirmation

DBM then consolidates the recommended agency

budgets and recommendations into a National
Expenditure Program and a Budget of
Expenditures and Sources of Financing (BESF).
As part of the consolidating process, the
deliberations by the DBCC will determine the
agency and sectoral allocation of the approved
total expenditure ceiling, in line with the
macroeconomic and fiscal program. Heads of
major departments are invited to this meeting.

6. Presentation to President and

Cabinet
The proposed budget is presented by
DBM, together with the DBCC, to the
President and Cabinet for further
refinements or reprioritization. After the
President and Cabinet approve the
proposed National Expenditure Plan, the
DBM prepares and finalizes the budget
documents to be submitted to Congress.

7. The Presidents
Budget
The budget preparation phase ends with
the submission of the proposed national
budget the Presidents Budget to
Congress.
The Presidents Budget consists of the
following documents, which help
legislators analyze the contents of the
proposed budget:

Presidents Budget Message (PBM)

This is where the President explains the policy
framework and priorities in the budget.
Budget of Expenditures and Sources of Financing
(BESF)
Mandated by the Constitution, this contains the
macroeconomic assumptions, public sector context
(including overviews of LGU and GOCC financial
positions), breakdown of the expenditures and funding
sources for the fiscal year and the two previous years.

National Expenditure Program (NEP)

This contains the details of spending for each department and
agency by program, activity or project, and is submitted in the
form of a proposed General Appropriations Act.

Details of Selected Programs and Projects

This contains a more detailed disaggregation of key
programs, projects and activities in the NEP, especially
those in line with the national governments development
plan.
Staffing Summary
This contains a summary of the staffing complement of
each department and agency, including number of
positions and amounts allocated for the same.

Budget Legislation
Alternatively called the Budget
Authorization phase, this starts upon
the House Speakers receipt of the
Presidents Budget and ends with the
Presidents enactment of the General
Appropriations Act.

What are House Deliberations?

What are Senate Deliberations?
What are Bicameral Deliberations?
What is Ratification and
Enrollment?
What is the Veto Message?
What is Enactment?
What are Reenacted Budgets?

1. House Deliberations
The House of Representatives, in plenary, assigns the
Presidents Budget to the House Appropriations Committee.
The Committee and its Sub-Committees then schedule and
conduct hearings on the budgets of the departments and
agencies and scrutinize their respective programs and
projects. It then crafts the General Appropriations Bill (GAB).
In plenary session, the GAB is sponsored, presented and
defended by the Appropriations Committee and SubCommittee Chairmen. As in all other laws, the GAB is
approved on Second and Third Reading before transmission
to the Senate. (Note: In the First Reading, the Presidents
Budget is assigned to the Appropriations Committee.)

2. Senate Deliberations
As in the House process, the Senate conducts its own
committee hearings and plenary deliberations on the
GAB. Budget deliberations in the Senate formally start
after the House of Representatives transmits the GAB.
For expediency, however, the Senate Finance
Committee and Sub-Committees usually start hearings
on the GAB even as House deliberations are ongoing.
The Committee submits its proposed amendments to
the GAB to plenary only after it has been formally
transmitted by the House.

3. Bicameral
Deliberations
Once both Houses of Congress have
finished their deliberations, they will each
constitute a panel to the Bicameral
Conference Committee. This committee will
then discuss and harmonize the conflicting
provisions of the House and Senate
Versions of the GAB. A Harmonized
Version of the GAB is thus produced.

4. Ratification and
Enrollment
The Harmonized or Bicam Version is
then submitted to both Houses, which will
then vote to ratify the final GAB for
submission to the President. Once
submitted to the President for his
approval, the GAB is considered enrolled.

5. The Veto Message

The President and DBM then review the
GAB and prepare a Veto Message, where
budget items subjected to direct veto or
conditional implementation are identified,
and where general observations are made.
Under the Constitution, the GAB is the only
legislative measure where the President can
impose a line-veto (in all other cases, a law
is either approved or vetoed in full).

6. Enactment
When the GAA is not enacted before the fiscal year
starts, the previous years GAA is automatically
reenacted. This means that agency budgets for
programs, activities and projects remain the same.
Funding for programs or projects that have already
been terminated is realigned for other expenditures.
Because reenactments are tedious and prone to
abuse, the Aquino Administrationwith the support
of Congresshas committed to ensure the timely
enactment of a new GAA every year.