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Duterte orders shift to cash budgeting system

MANILA, Philippines — President Rodrigo Duterte has ordered the shift to cash budgeting system to hasten the utilization of the government budget beginning fiscal year 2019.

Duterte signed Executive Order No. 91 authorizing the change from the current obligation budgeting to cash budgeting system to improve the government’s fiscal planning and project implementation.

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Under the current obligation budgeting scheme, contracts awarded within the fiscal year can be delivered even after the end of the year.

But with Duterte’s order,  all authorized appropriations shall be available for obligation and disbursements only until the end of each fiscal year.

“There is a need to improve the fiscal planning of government agencies through the implementation of an operational cash budget and by setting deadlines for obligation of funds and execution of projects during the fiscal year, in order to speed up the implementation of programs and to prompt deliver goods and services to our people,” the EO stated.

For projects with an implementation period exceeding 12 months, the Department of Budget and Management (DBM) is mandated to issue a Multi-Year Contractual Authority (MYCA) prior to the conduct of procurement.

“A MYCA may also be issued for single-year procurement projects or those with an implementation period of 12 months or less, that are either research or scientific in nature, and by design necessitate implementation covering two fiscal years,” the EO stated.

In the first year of implementing cash budgeting system, government agencies and qualified GOCCs are required to comply with the following:

  • Appropriations for infrastructure capital outlays, including subsidy releases to GOCCs for infrastructure projects, shall be valid for obligation until December 31, 2019. Meanwhile, the completion of construction, inspection and payment shall be made not later than December 31, 2020; and
  • Appropriations for maintenance and other operating expenses as well as other capital outlays shall likewise be valid for obligation until December 31, 2019. On the other hand, the delivery, inspection and payment shall be made not later than Jun 30, 2020. /je

READ: IN THE KNOW: What is cash-based budgeting?

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