Budget Preparation

 

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.

 

Early Preparation 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 President’s 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.

“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 “bottom-up” 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.

 

3. Technical Budget Hearings

These are conducted after departments and agencies submit their Agency Budget Proposals to the DBM. Here, agencies defend their proposed budgets before a technical panel of DBM, based on performance indicators on output targets and absorptive capacity. DBM bureaus then review the agency proposals and prepare recommendations.

 

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-à-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 President’s Budget

The budget preparation phase ends with the submission of the proposed national budget—the “President’s Budget”—to Congress. The President’s Budget consists of the following documents, which help legislators analyze the contents of the proposed budget:

• President’s 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 government’s 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.