2nd General Membership Meeting of FINEX Governance and Reforms in Public Finance

Posted on February 15, 2017

February 15, 2017 | 11:30 - 2:00 | New World Makati Hotel Secretary Benjamin E. Diokno

​Ladies and gentlemen, guests, members and officials of FINEX, fellow workers in government: good afternoon.

​In May 2016, President Duterte won the hearts of the electorate with the campaign for real change. True to his word, the National Budget for 2017 gives flesh to the pro-poor, pro-growth, and pro-development agenda of the Duterte Administration.

In a nutshell, the Budget addresses the most compelling needs of the nation by upgrading our public infrastructure while investing in our greatest resource – our young people.

​Having said this, the crafting and passage of the National Budget is only half the battle in fulfilling the reform agenda of the government. Reforms must be instituted in the entire budget cycle – from preparation, legislation, and execution, up to monitoring, evaluation and accountability. It is only then that we can deliver the best results that concretely benefit our citizens.

​In this context, I wish to discuss with you several of the game-changing budget reforms that we have introduced to enhance the efficiency, transparency, and public participation in the budget process.

Policy Environment for Effective and Efficient Spending

Now that we’re implementing the FY 2017 budget, the President’s marching order to all Cabinet Members is plain and simple: use it or lose it. Meaning, use your budget or lose your job. The President does not, and will not tolerate incompetence.

The Department of Budget and Management (DBM) already laid down the necessary policy framework and continues to provide the supporting environment needed by national government agencies for more effective and efficient spending.

In line with our What You See is What You Get (WYSIWYG) philosophy, we have streamlined the release and management of funds – the General Appropriations Act serves as the official fund release document. Therefore, the 2017 National Budget has been ready for implementation sinceJanuary 1st of this year.

Budget tracking has also been upgraded with the use of modern technology. We will geo-tag major projects to curb “ghost projects” and ensure the timely delivery of outputs.

Geo-tagging projects will complement our plans of pursuing construction work 24 hours a day, and 7 days a week for major infrastructure projects in large urban areas like Cebu, Davao, and Metro Manila. These reforms will allow us to usher in the Golden Age of Infrastructure.

Our Budget and Treasury Management System, an integrated, web-based financial management information system, is also in full swing. It collects and organizes financial information in a central database to support the Budget Execution and Budget Accountability phases of the budget cycle.

​Looking ahead, we expect the further utilization of technology to improve the budget process. Managing large swathes of data is only possible with an automated and integrated information system specifically designed to analyze the Budget.

Improved Budget Preparation and Capacity Building

With unprecedented amounts being featured in the 2017 Budget and the Budgets for the coming years, underspending is a cause of concern for many. Rightfully so, underspending had been an issue that plagued our fiscal policy in the past.

However, let me assure all of you that we will exert all efforts to prevent this from happening again. Underspending is unacceptable. Funds delayed are services denied, and our people definitely deserve the speedy delivery of public services.

So besides the reforms I have mentioned earlier, we are currently implementing the Two-Tier Budgeting Approach (2TBA). With this strategy, we conduct separate reviews for on-going/approved programs vis-à-vis new or expanded ones to give better focus on each type of program. This allows for the thorough scrutiny of projects, such that poorly planned projects will have a hard time of getting into the Budget.

In terms of capacity-building, we are also conducting measures to ensure that the people who prepare the Budget are equipped with the technical skills to identify implementation-ready programs. This is why we have the Public Financial Management Certificate Program and the DBM Young Professionals Program for the PFM practitioners of the national government.

As underspending is also due to the inexperience of some government leaders, the DBM also gives executive briefings on the budget process for Cabinet members and senior officials in charge of their respective agencies’ finances to ensure timely and efficient utilization of funds.

Moving forward, planning and preparation will only be enhanced. A reform that the public can look forward to is the Program Expenditure Classification (PREXC). To be implemented in 2018, this reform restructures an agency’s budget to group all recurring activities and projects under appropriate programs or key strategies.

Likewise, performance targets will be set at the level of programs. This will be a departure from the status quo where funds are assigned at the level of agencies or major final outputs. With this impending budget structure, we will be able to clearly see and monitor where our public funds are going, and how it contributes to national development.

Promoting Accountability through Fiscal Openness

​As one of the current global leaders in fiscal transparency, we are continuing to implement innovations that make our budget more transparent and accountable. As a testament to this, we have reaffirmed our commitment to the Open Government Partnership and the Global Initiative for Fiscal Transparency.

In line with the President’s issuance of Executive Order No. 2, s. 2016, implementing the proposed Freedom of Information (FOI) bill in the Executive branch, we have also taken steps to facilitate the public’s clamor for information with regards to our Department.

In fact, the DBM is one of the pilot agencies from which the public can request information through the electronic FOI portal. More so, we have crafted a People’s Manual to guide the public of the procedures to be observed in requesting information, documents, or records from the DBM.

We, of course, are pursuing greater fiscal transparency not for the mere sake of dumping data to the public, but ultimately to enable greater citizens’ participation in the budget process.

Looking ahead, we are pushing to pass a Budget Reform Bill which will institutionalize budget data disclosure, civil society participation in budgeting, and all of the necessary ingredients of a modern budget system.

This proposed measure also seeks to clarify the limits of the Executive’s budgetary powers and strengthen the Congress’ power of the purse.

We believe that this bill will embody and consolidate most of the public financial reforms we have in mind, and we are confident of its passage.

Conclusion: Realizing Change

​Public sector reform is no easy task – that is one thing I have learned in my service spanning half a decade. But with intelligent preparation, due diligence, and the political will of the President, these reforms are closer to reality.

​We will not waver in our pursuit for change. With the private sector as able partners for development, we envision the Philippines to become a high-middle income country by 2022.

So please support us in this challenging but highly rewarding journey of reforming public financial management for rapid growth and equitable development.

Thank you and mabuhay!