Diapositiva 1

Budget Cycle

Dealing with Public Fiscal Administration and Performance MechanismReported by:Ashmyra AbdullahJasmine Ezradin Trihana S. LinsoFiscal Administration- formulation, implementation and evaluation of policies and decisions on taxation and revenue collection; resources allocation; budgeting and auditingFiscal Policiesprograms of action involving the system of government expenditures and revenue administrationFiscal Management> commences from income generation for the public sector, particularly in the form of tax revenues

Revenues> important component of the economy to exist, and without collection there would be nothing to administer or manage.Fiscal Transparency and Its CodeFiscal Transparency> relates to being open to public scrutiny> recognized as a requisite of a well functioning public sector- Adds credibility of institutions or agencies5Fiscal Transparency and Its CodeTo quote Baldrich:

assuming the integrity of fiscal procedures, a transparent fiscal environment limits corruption and diversion and, therefore, facilitates development and increase in living statusJorge Baldrich author of Fiscal Transparency and Economic Performnce6Reports on Observance of Standards and Code (ROSC)> provides an assessment of the corporate governance framework in the Philippines its laws and regulations.

> main idea was to strengthen institutions with the aim of promoting good governance and transparency- Report on Monetary and Financial Policy Transparency, Banking Supervision, Securities Regulation, Insurance Regulation, and Payment SystemsPart of Financial System Stability Assessment - promote accountability and credibility7Code of Good Practices on Fiscal Transparency (CGPFT)> initiated by World Bank (WB) and International Monetary Fund (IMF) in the late 1990s that provided four principles of the Code:a.) clarity of roles and responsibilities of the government;b.) public availability of informationc.) open budget preparation, execution and reportingd.) the assurances of integrity- the centerpieces of global fiscal transparency standards- framework for conducting assessments of countries fiscal transparency, as part of the IMFsReports on the Observance of Standards and Codes (ROSC)initiative.8To quote the IMF:

fiscal transparency should make those responsible for the design and implementation of fiscal policy more accountable. The stronger, more credible fiscal policies that follow would attract the support of a well-informed public, result in more favorable access to capital markets, and reduce the incidence and severity of crisisFiscal AccountabilityIn the words of Francisco S. Tantuico Jr., former Chairman of COA:

Public accountability is the foundation of integrity. It cuts to the soul of government. It unmasks the government of the day of whatever faade it wears.Fiscal AccountabilityAccording to the Constitution of the Philippines:

Public Office is a public trust. Public officers and employees must at all times be accountable to the people, serve them with utmost responsibility, integrity, loyalty and efficiency, act with patriotism and justice and lead modest lives.Fiscal AccountabilityLedivina V. Cario, former Dean of the National College of Public Administration and Governance of the University of the Philippines, defines accountability as:

the evolution of the actions of appointed career officials in terms of whether their actions are within or outside the bounds of their authority. It may be promoted through the imposition of external controls and through the inculcation of self-regulating values. Different levels of Accountability, according to Cario:i) traditional accountability> focuses on the regularity of fiscal transaction and faithful compliance as well as the adherence to legal requirements and administrative policies;

ii) managerial accountability> concerned with efficiency and economy in the use of funds, property, manpower, and other resources;

- Determining if an act is within the provisions of laws and regulations governing the agency- if the person/s who performed it have the authority to do so

2. Main values are economy and efficiency. A) economical: elimination or reduction of needless costs; b) cost constant-increase benefits; benefits constant-decrease cost; 13Different levels of Accountability, according to Cario:iii) program accountability> pays attention to the results of government operations;

iv) process accountability> emphasizes procedures and methods of operation

3 proper disclosure of financial statements, operating reports, and other information required

4 focuses on the black box inside systems which transforms inputs - those responsible for providing the service are expected to perform according to agreed upon terms with stipulated use of resources based on specific performance standards 14Following factors that can help achieve public financial accountability:1.) Strong legal basis, organizational structure, rules, regulations and procedures;2.) Regular monitoring and reporting to the public through the media and civil society organizations;3.) Appropriate information technology system and timely processing of reliable information; 4.) Strong leadership committed to ensuring public financial accountability a leadership committed to promoting good governance

Budgetary Management in the PhilippinesDevelopment Budget Coordinating CommitteeThe Office of the PresidentDepartment of Budget and Management(DBM)National Economic and Development Authority (NEDA)Department of Finance(DOF)Bangko Sentral ng Pilipinas(BSP)Government Budgeting allocating revenues and borrowed funds and management of government expenditures to attain economic goals - important because it enables the govt to plan and manage its financial resources; helps the govt. to prioritize

Development Budget Coordinating Committee Cabinet level interagency committee-Determination of overall economic targets, expenditure levels and budget framework

16Development Budget Coordinating CommitteeOffice of the PresidentDepartment of Budget and Management(DBM)National Economic and Development Authority (NEDA)Department of Finance(DOF)Bangko Sentral ng Pilipinas(BSP)Department of Finance has primary responsibility for managing the financial resources of the government, its subdivisions and associated agencies. It is responsible for formulating fiscal policy, generating and managing government resources, supervising the revenue operations of all LGUs, managing all public sector debt and contingent liabilities and privatizing government corporation and assets.DOF- Mainly responsible for the formulation of fiscal policies and management of government resources17Department of Budget and Management is tasked with formulating and efficiently implementing the national budget -including budget programming and monitoring agency accountability. Development Budget Coordinating CommitteeThe Office of the PresidentDepartment of Budget and Management(DBM)National Economic and Development Authority (NEDA)Department of Finance(DOF)Bangko Sentral ng Pilipinas(BSP)DBM- Responsible for the sound and efficient use of government resources18National Economic and Development Authority coordinates social and economic development planning and monitors major projects. Development Budget Coordinating CommitteeThe Office of the PresidentDepartment of Budget and Management(DBM)National Economic and Development Authority (NEDA)Department of Finance(DOF)Bangko Sentral ng Pilipinas(BSP)NEDA - responsible for economic development and planning19Framework for Budgetary ActivitiesA Development Budget Coordination Committee (DBM, DOF, NEDA, OP, & BSP) determines the overall economic targets, expenditure levels and budget framework

Government funds are allocated to individual departments on the basis of budget estimates that each head of department, government agency and public corporation must submit to the DBM.

DBCC Budget framework

DBMConduct a budget hearings where agencies are called to justify their proposed budgets// before DBM technical panels; Submission of the proposed expenditure program of department/agencies/special for confirmation by department/agency heads. Presentation of the proposed budget levels of department/agencies/special purpose funds to the DBCC for approval. 20Framework for Budgetary ActivitiesReview and approval of the proposed budget by the President and the Cabinet

The estimates are submitted to Congress as the presidents budget, in the form of the National Expenditure Program (NEP) and the Budget of Expenditures and Sources of Financing (BESF).1- House of Representatives, which assigns the task of initial budget review to its Appropriation Committee (conduct hearings on the budgets of departments/agencies) - Senate Finance Committee review and scrutinize budget then pass on to Senate for approval 2 - To thresh out differences and arrive at a common version of the General Appropriations Bill, the House and the Senate creates a Bicameral Conference Committee that finalizes the General Appropriations Bill.

- General Appropriations Bill > budget authorization21Department of Budget and Management (DBM)The lead agency for budget assessment, distribution, and operation in the PhilippinesDepartment of Budget and Management (DBM)Tactical roles and responsibilities towards the achievement of the DBMs institutional relevance:

Fiscal Discipline- to ensure that the Government as a whole lives within its means

2. Effective Resource Allocation- to ensure that Government expenditures, after meeting the basic needs of turning the nations wheels, will be channeled towards strategic requirements for a competitive and job-creating economy. Department of Budget and Management (DBM)Tactical roles and responsibilities towards the achievement of the DBMs institutional relevance:

3. Efficient Government Operations- to ensure that quality government goods and services are delivered on time and at the least costBureau of Internal Revenueas an attached agency of the Department of Finance, BIR, collects more than one-half of the total revenues of the government

BIR shall be under the supervision and control of the Department of Finance and its powers and duties shall comprehend the assessment and collection of all national internal revenue taxes, fees, and charges, and the enforcement of all forfeitures, penalties and fines connected therewith, including the execution of judgments in all cases decided in its favor by the Court of Appeals and the ordinary courtsFramework for TaxationNational Internal Revenue Code- explicit legal basis for all taxes - tasks the BIR with the collection of taxesAccounting Monitoring: COACommission on Audit (COA)- an independent constitutional commission established by the Constitution of the Philippines- has the primary function to examine, audit and settle all accounts an expenditures of the funds and properties of the Philippine governmentResponsibilities of COA

1. Examines, audits, and settles all accounts pertaining to the revenue and receipts of, and expenditure or uses of funds and property owned or held in trust by, or pertaining to, the government.

2. Promulgates accounting and auditing rules and regulations including those for the prevention and disallowance of irregular, unnecessary, excessive, extravagant or unconscionable expenditures, or uses of government funds and properties.Responsibilities of COA

3. Submits annual reports to the President and the Congress on the financial condition and operation of the government.

4. Recommends measures to improve the efficiency and effectiveness of government operations.

5. Keeps the general accounts of government and preserve the vouchers and supporting papers pertaining thereto.Responsibilities of COA

6. Decides any case brought before it within 50 days.

7. Performs such other duties and functions as may be provided by law. New Tax MeasuresSin Tax- improving the structure and increasing the rate of excise tax on alcohol and tobacco products- also known as excise taxes- called sin tax because they are taxes on goods considered as vicesNew Tax Measures2. Passage of Value Added Tax Law- involved expanded coverage of Vat (E-VAT) that resulted in lifting of exemptions from VAT for some professionals, natural gas, coal, and petroleum productsNew Tax Measures3. The Lateral Attrition Law- amended in January 2005 to boos tax administration in both the BIR and Bureau of Customs (BOC) by providing performance incentives and improving performance evaluation systems for both bureaus Improvements in Tax CollectionThe DOF Report the following program as contained in its Achievement and Medium Term Scenario Paper in 2005:1. Run After Tax Evaders (RATE)- The program aims to file tax cases against high profile personalities

2. Run After the Smugglers (RATS)- The objective is to file tax cases against high profile smugglers

3. Revenue Integrity Protection Service (RIPS)- The program involves the conduct of lifestyle checks against officers and employees of the BIR and BOC.Debt and Expenditure ManagementThe Government had drafted a fiscal responsibility bill that proposes a prudent debt and expenditure management strategy.The Government has approved that proceeds from the VAT reform will be used primarily for debt reduction