Ending the Budget Standoff

By Bernadette D. Nicolas

“Change is coming” in the budgeting system as the government moves to shift from the old practice of obligation-based budgeting to the new cash-based system.

Although analysts appreciate the good side of this change, they also warn of some unintended consequences that it could bring and point out that the change in the budgeting system is just one of, and not the only solution to fully address the faster implementation of projects.

As opposed to multiyear obligation-based budgeting, the annual cash-based budgeting “limits incurring obligations and disbursing payments for goods delivered and services rendered, inspected and accepted within the fiscal year.” This means that the extent of budget implementation is just one year.

Originally, the Department of Budget and Management (DBM) also proposed that the Extended Payment Period just be limited to three months after the fiscal year. However, this was extended further to six months after the House and the Executive met to resolve the budget impasse on the proposed 2019 budget of P3.757 trillion and agreed on a transitory cash-based system.

In other words, the government would have 12 months to obligate and 18 months to disburse its budget under this system.