the transition of budget scheme in the PH: is it for the better?

During the proposal of the 2019 Budget, the transition from obligation-based appropriations to Cash-based appropriations caused the delay of the budget approval arising from the legislators’ consideration for the change. According to the Department of Budget and Management, House Bill No. 7302,1 otherwise known as the Budget Modernization Bill authorizes the adoption of cash-based budgeting which is their initiative shift to change the budget scheme of the country.

First, let’s focus on the overruled budget scheme which is the Obligation-based appropriations. DBM described this as ‘flawed’  which lead to its overruling. This Obligation-based appropriation is basically committing to pay with cash based on the commitment without predetermined time limit to pay. The supersede Cash-based appropriations authorize the payment of cash within a limited period of time, generally for one fiscal year.

Imagine when someone has debt to pay for you but he or she is not gonna pay you within a year. The obligation is piled up until the bad debts increase as well.

The major difference of the two is the practice and authorization to make cash payments to commitments that may or may not exceed one fiscal year. Basically, the most used between the two is the cash-based because it covers the payments due to one year while some countries still use the multiyear budget appropriations. ---- As soon as the government implemented the new scheme, they reported that its advantage was that the expenditures and projects start to operate faster because of the simple mode of payment for a particular year.

A simple analogy to Cash Budgeting System (CBS) is that obligations and expenditures made in a fiscal year is paid within the same fiscal year. Therefore, the annual budget will cover the disbursements of the annual obligations, this scheme allows a strict and organized flow of fund, unlike the previous scheme where  the payment cycle may extend for more than the current fiscal year, thus, more susceptible to corruption and overspending.

This budget scheme transition is one of the best changes that happened in the administration. It lessens the chance for corruption. Still, we cannot say. They still do it one way or another.