DBM caps proposed 2019 cash budget at P3.46 trillion

The Department of Budget and Management has capped at P3.469 trillion the proposed 2019 national budget, the first-ever to be cash-based.

Based on National Budget Memorandum No. 130 issued by Budget Secretary Benjamin E. Diokno on April 13, the total disbursement program for next year amounted P3.782 trillion, 12.2-percent bigger than the P3.37 trillion in 2018.

“Of this amount, some P313.3 billion would have to be set aside for the estimated cash requirements of prior years’ accounts payable and not yet due and demandable obligations that are to be settled in 2019. Net of the said items, this will translate to a cash-based appropriations of P3.469 trillion for 2019,” the memorandum read.

Of the cash-based budget cap, more than half or P1.848 trillion will be spent on department and agencies’ ongoing programs and projects.

“Automatic appropriations (such as internal revenue allotment, net lending, among others) and special purpose funds (such as special shares to local government units, contingent fund, etc.) are estimated to require another P1.258 trillion or 36.3 percent of the budget. This leaves a fiscal space of P362.3 billion for expanded and new programs and projects, which will account for 10.4 percent of the total cash-based budget ceiling,” the DBM said.

But the DBM noted “funding pressures” in 2019, including the possible eventual transfer of P60.1 billion in coco levy funds to a separate trust fund following Congress’ approval of the Coconut Farmers and Industry Development Act; the increase in military and uniformed personnel’s base pay approved this year, which is expected to further inflate pension requirements; as well as the further increase to P300 a month next year from P200 this year of the cash transfers to poor families affected by the Tax Reform for Acceleration and Inclusion (TRAIN) Act.

The government nonetheless would “continue focusing on the priorities of infrastructure development and social spending” in allocating the proposed 2019 budget, in line with the goal to become an upper middle-income country as well as a globally competitive economy by 2022, the DBM said.

Twenty infrastructure projects—-five in Metro Manila, six in Luzon, four in Visayas, and five in Mindanao—-would be allocated funding under the 2019 budget.

Diokno had said that the planned shift to an annual cash-based budget in 2019, from the multi-year obligations-based system at present, would further slash underspending, which has been on a decline in the past two years.

Under the new system, “agencies will no longer submit projects to the DBM that are not yet implementation-ready,” Diokno had explained.

“Annual cash-based budgeting, as opposed to multi-year obligations-based budgeting, limits incurring obligations and disbursing payments for goods delivered and services rendered, inspected, and accepted within the fiscal year— meaning, the extent of budget implementation is just one year, with an extended payment period of three months after the fiscal year,” the DBM had explained.

“Shifting to annual cash-based budgeting is expected to speed up the government’s budget utilization and promote disciplined management of the budget. Also, as it shows disbursements rather than obligations or commitments, a cash-based budget tends to reflect more accurately the annual outputs and actions of the government,” the DBM had said.

“The shift to annual cash-based budgeting is especially significant in the context of the Duterte administration’s expansionary fiscal policy, where spending for social services and infrastructure is intended to increase significantly,” according to the DBM.