Duterte orders shift to cash-based budgeting

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Metro Manila (CNN Philippines, September 12) — President Rodrigo Duterte has ordered the government to shift to a cash-based budget, even if Congress has previously rejected the move when the government first attempted to switch to cash-based budgeting for the 2019 fiscal plan.

Under Executive Order No. 91, which Duterte signed Monday, all authorized appropriations can only be used until the end of each fiscal year. Any unused funding at the end of the fiscal year will be returned to the national treasury.

“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 promptly deliver goods and services to our people,” Duterte said.

The government had long been operating on obligations-based budgets, which allowed for funds to be spent beyond the current year. The Duterte administration believes that this leads to delays in the implementation of projects.

Under the executive order, funding for subsidies of local government units (LGUs) would be available for use for two fiscal years. On the other hand, funding provided to LGUs by law can be used until it is fully spent.

Obligations incurred by the government within a fiscal year would only be implemented during the same period. They can be paid until three months after the end of the fiscal year, or the extended payment period (EPP). If left unpaid after the EPP, these would revert to the national treasury.

Meanwhile, projects with an implementation period spanning more than a year would have to obtain a multi-year contractual authority from the Budget department before their procurement.

A multi-year contractual authority can also be issued for research or scientific projects which only have an implementation period for a year or less.

The Budget department attempted to switch to a cash-based budget for 2019, but this was rejected by Congress.

Duterte, however, remained insistent, telling Congress in his veto message for portions of the 2019 budget that he will push for a cash-based budget.