QUICK

ANALYSIS OF BUDGET TRANSPARENCY INITIATIVES Transparency and Accountability Network September 2010 The budget cycle The budget process has four stages: preparation, legislation, execution, and accountability. The process is designed in a manner so that the power over the purse is well-distributed for appropriate checks and balance among government institutions. Of course, in actuality, the powers may weigh more heavily in favor for an institution over another. Budget preparation is the job of the executive branch of government. It is scheduled from May to July. This stage of the process involves: Updating of macroeconomic targets and assumptions Formulating the budget policy and strategy of Issuing a budget call Preparing budget proposals by agencies Reviewing budget proposals Presenting the budget to the Cabinet and the President Submitting the proposed budget to Congress The proposed budget should be informed by the Medium Term Philippine Development Plan (MTPDP), Medium Term Public Investment Plan (MTPIP), Comprehensive and Integrated Infrastructure Program (CIIP), the Local Government Code (LGC), and other laws that define the governments policy. The submission to Congress includes the Presidents Budget Message (PBM), Budget of Expenditures and Sources of Financing (BESF), National Expenditure Program (NEP), Staffing Summary, and the Organizational and Performance Indicator Framework (OPIF). Budget legislation is the job of the legislature. This runs from August to December. The process begins with the House of Representatives reviewing the proposed budget of the executive. The House then endorses the reviewed budget (General Appropriations Bill) to the Senate, which may also make its own adjustment based on its review. If there are disagreements, the House and the Senate resolve this through a Bicameral Committee. Congress finalizes its review and ratifies the Bicameral Committee report and the General Appropriations Bill. These are then submitted to the President for the signing of the General Appropriations Act into law. In legislating the budget, there are built-in checks and balance mechanisms that temper the legislature and executives control over the process, such as: Congress cannot increase the proposed budget, it can only reduce it The President can veto line items in the budget Congress can override the veto of the President

Budget execution and control is largely the playground of the Executive. This includes the following activities: Preparation of the National Budget Program based on the GAA, agency work and financial plans, quarterly allotment and cash programs, fund releases indicated by Special Allotment Release Orders (SARO), Notice of Cash Allocations (NCA), Notices of Noncash Availment Authority (NCAA) Implementation of programs and projects by agencies Review of financial and physical reports
Budget Cycle Budget preparation Current Philippine Experience Basic sectors representatives sitting in government agencies (NAPC, PARC, etc.) get to participate in budget making Regional Development Councils consultation Agency consultations Project analysis Analysis of budget proposal - fiscal policy - macro assumptions - new initiatives Budget brief notes General analysis of budget proposal Sector budget analysis Department budget analysis Project analysis Budget performance analysis using the OPIF targets and indicators Review of previous years audit reports Preparation of a citizens budget Analysis of approved budget Analysis of control policies Potential Analysis of pre-budget statement (i.e., Budget Call) Sector analysis for priority setting Project analysis Consultations with agencies

If Congress fails to pass the GAA, the GAA of the immediately preceding year takes effect

Budget authorization

Alternative budget initiative by the social watch coalition to advocate for higher social services budget Agency program review for the benefit of individual legislators Ad-hoc budget papers

Budget execution/ control

Social watch

Budget execution/ control

Social watch Pork barrel watch Procurement watch Road watch ODA watch Expenditure tracking Participation in public consultations

Analysis of control policies Tracking of mandated activities (e.g., issuance of guidelines or IRRs) Expenditure/budget tracking Impact analysis Analysis of reports (or reporting of NO reports) Extensive use of complaints desk (COA, agencies, etc) Analysis of control policies Tracking of mandated activities (e.g., issuance of guidelines or IRRs) Expenditure/budget tracking Impact analysis Analysis of reports (or reporting of NO reports)

Budget accountability

Special investigative reports Ad-hoc budget papers Citizens audit

Extensive use of complaints Budget accountability is being done by the Commission odeskudit (lead), the etc) n A (COA, agencies, legislature and the executive. The process includes a review and audit of budget utilization. To effectively evaluate budget performance, various reports have to be prepared, such as: budget utilization reports summary reports, agency performance reviews, agency annual reports (financial and physical accomplishments), audit reports by agency, and the Consolidated Annual Financial Reports. These reports are required by Congress, Commission on Audit, the Department of Budget and Management, and Office of the President. Budget Transparency Initiatives of Civil Society Organizations An initial scan of budget transparency initiatives of civil society organizations reveal that most efforts are concentrated in the area of budget execution and control. These initiatives range from procurement training, monitoring and expenditure monitoring. Very few organizations do oversight work for budget preparation, legislation, and accountability. (See Table 1.0) In budget execution/ control, many of the CSO efforts are on procurement and expenditure monitoring. Procurement monitoring initiatives are supported by a legal framework (Republic Act 9184, Government Procurement Reform Act) that requires government agencies to invite observers from non-government organizations. Since the passage of the law in 2003, there have been numerous capacity-building activities launched by various organizations on how to monitor government procurement. This is matched by increased public interest brought

about by media reports on abuses in public spending, such as the Comelec- Megapacific case, NBN-ZTE, Northrail project, etc. Former Budget Secretary Emy Boncodin presents a map of budget transparency initiatives by civil society organizations according to activities. Boncodin also lays out the potential involvements of CSOs in the different stages of the budget process, as shown below: Table 2.0
Budget Cycle Budget preparation Current Philippine Experience Basic sectors representatives sitting in government agencies (NAPC, PARC, etc.) get to participate in budget making Regional Development Councils consultation Agency consultations Project analysis Analysis of budget proposal - fiscal policy - macro assumptions - new initiatives Budget brief notes General analysis of budget proposal Sector budget analysis Department budget analysis Project analysis Budget performance analysis using the OPIF targets and indicators Review of previous years audit reports Preparation of a citizens budget Analysis of approved budget Analysis of control policies Tracking of mandated activities (e.g., issuance of guidelines or IRRs) Potential Analysis of pre-budget statement (i.e., Budget Call) Sector analysis for priority setting Project analysis Consultations with agencies

Budget authorization

Alternative budget initiative by the social watch coalition to advocate for higher social services budget Agency program review for the benefit of individual legislators Ad-hoc budget papers

Budget execution/ control

Social watch Pork barrel watch Procurement watch

Budget execution/ control

Social watch Pork barrel watch Procurement watch Road watch ODA watch Expenditure tracking Participation in public consultations

Analysis of control policies Tracking of mandated activities (e.g., issuance of guidelines or IRRs) Expenditure/budget tracking Impact analysis Analysis of reports (or reporting of NO reports) Extensive use of complaints desk (COA, agencies, etc) Analysis of control policies Tracking of mandated activities (e.g., issuance of guidelines or IRRs) Expenditure/budget tracking Impact analysis

Budget accountability

Special investigative reports Ad-hoc budget papers Citizens audit

Analysis of reports (or reporting of NO reports) According to Boncodin, civil society groups face the following challenges in budget monitoring: Extensive use of complaints desk (COA, agencies, etc) 1) Complexity of the national budget process requiring highly technical training; 2) Lack of regular data on the budget apart from the annual budget documents 3) Macro level perspective is not interesting to the general public 4) The national budget mystique For Boncodin, to be successful in national budget work, CSOs must develop technical knowledge on key economic issues, the budget process and the key elements of a good budget. They must be able to effectively communicate these knowledge and information to the public through media. They must be able to produce budget analysis and information that are easily accessible, accurate and released in a timely manner. They will have to work closely with policymakers. And most importantly, CSO budget oversight must be supported by an open and transparent environment that will facilitate open access to government financial information. References: Who Really Holds the power of the purse?, Philippine Institute for Development Studies, Policy Notes No. 2009-08

Citizen Engagement in Anticorruption Programs in the Philippines: The Budget Network Case, Emilia T. Boncodin, Delivered in the World Civic Forum, Seoul Korea, May 5-8, 2009