how our national budget is decided: the first phase

Budgeting is not an easy task.

It takes time, self-debating, and revisions just to come up with our personal or household budgets for a short period of time, this struggle is incomparable to when national budget is at stake and for defined whole year. The budget of the country comes from the income or revenue of our taxes and other non-tax sources, and it also comes from the domestic and foreign borrowings made by the government, which is one of the reasons why the budget process needs a lot of approvals before implementation, all because the fund comes from the hard earned income of the country’s taxpayers.

This budget call is issued by the Department of Budget and Management (DBM) that is an outline of the budget proposals by each agencies, either national budget call or corporate budget call based on the addressee. 

There are four major phases of the budget cycle here in the Philippines. Let me first focus on the first phase, budget preparation.

1. The first phase is the preparation of budget that is when the Budget Call is issued that contains the presented guidelines and expected goal performance and expenditures of every agencies that also highlights their past performance and goals attained with their previous budget. This is a framework that reflects the guidelines and procedures of each agency, their priorities and programs to be executed, their budget commitment and the timetable for the fund. Basically, it is like a report to the president on their plans to how they will use the budget and how much is their expected requirement fund to carry out their specific duties. Note that this article will first tackle the first phase which is the budget preparation and I hope that you gain insight about this one as well.

2. Approving the budget is a time

3. Execution and disbursement of the budget

4. Regular evaluation for the performance of the agencies

So, for the first phase, every agencies (DepEd, DOH, DSWD etc.) issues their budget call that would be given to the DBM. This document would contain the estimated budget for the fiscal year (calendar year) that would later on determine how much fund they would get, so the role of the DBM is to review every budget proposals and carefully deliberate each programs and examine whether the estimate could be increased or decreased based on the prioritization of the government. This stage is crucial to determine whether the proposed programs and plans and its estimated budget reflects the real fund needed in order to avoid corruption (for me, this is the perfect stage to do dirty business between the people that are involved. May they find integrity so our nation would not suffer)

Reference that helped me.

Every person who sets budget doesn’t always have an idea whether it is accurate and enough, hence, contingencies and sudden costs may happen making the budget inadequate. Like any other household budgets, the approved national budget could also be not enough to cover the actual expenses and disburses is greater than the revenue, thus, equating to budget deficits. This budget deficit is experienced by every economy because of occasional overspending but it can be offset by cutting government expenditures as well or even raising the taxes levied to the citizens. Based on its term, supplemental budget means additional budget requested by agencies to the Senate for approval whenever deficiencies on funds happen.

Supplemental budget is necessary especially if the fund shortage is significant to cover relevant expenses, that is why the government has not set any limit to its amount as long as it will cover necessary expenses and approved after the filing of request letter and budget bill.

Basically, this budget is for contingencies that may arise from sudden nationwide emergencies like nation disasters and outbreak. The government agencies issue this, like what happened to the pandemic, DOH fund is not enough, thus, they filed this document so their fund would be increased to cover and combat the battle against the virus which would be used for researched, medical supplies and many more.

Reference that helped me.

After the deliberation of the Department of Budget and Management, they will finalize and submit the proposals to the House of Representatives to be further deliberated as the start of their regular session. (30 days allotment)

The budgeting process is not easy but sadly, corruption is easier if everyone turns a blind eye.

Individual agencies > DBM > Congress > Senate > President of the Philippines --- Budget Law

Note: The next three phases would be discussed in another article. Thank you. Let us all be aware. Stay safe!