The Department of Economy, Planning, and Development (DEPDev) is coordinating with the Department of Budget and Management (DBM) to set indicative budget ceilings for each region, a measure intended to help more priority projects secure funding in the national budget.

Economy Undersecretary Carlos Bernardo O. Abad Santos said only about 30% of projects prioritized by regional development councils (RDCs), the primary planning and coordinating bodies for each of the country's regions, currently make it into the General Appropriations Act (GAA), the law that authorizes the government's spending each year. Projects left out of the GAA go unfunded for the year, so the share that survives into the budget shapes how public resources are spread across the country.

"What we're going to do with DBM is to establish the ceiling per region. And if you have that indicative ceiling, then you can say that the LGUs will not over-list," Mr. Abad Santos told reporters last week. The LGUs he referred to are local government units, whose proposals feed into each region's list.

In the absence of clear ceilings, regions are able to draw up project wish lists without knowing how much funding is available, he said. Setting indicative limits earlier would help them identify which projects to prioritize.

A joint memorandum circular that DEPDev is pursuing with the DBM seeks to raise the share of RDC-prioritized projects included in the National Expenditure Program (NEP) and eventually funded by the GAA. The NEP is the spending proposal submitted to Congress each year, and the GAA is the version enacted into law after legislative deliberations.

"We're not batting for 100% because we have a fiscal constraint, but (we need to) improve that 30%," he said. While raising the share to 50% would be an improvement, he noted that the agencies first need to establish regional ceilings to guide project proposals.

The planned changes also seek to hold regional consultations earlier, so agencies can take RDC priorities into account before submitting their budget proposals to the DBM. Under the previous process, agencies were already preparing their budgets by the time RDCs met to discuss regional priorities, he said.

Meanwhile, Mr. Abad Santos said a reenacted budget could weigh on economic growth by limiting government spending and delaying the benefits of public investments. A reenacted budget occurs when Congress does not pass a new GAA before the fiscal year begins, leaving the previous year's appropriations in place. He noted that the proposed budget is larger than the previous year's and that government spending accounts for a significant share of gross domestic product. Reenacting the previous budget could also make spending less efficient and carry opportunity costs, he added.

Even so, he considered a reenacted budget unlikely, although deliberations could take longer in the Senate and the bicameral conference committee. "I personally don't believe that it will be reenacted," he said. The issuance of the joint memorandum circular, and the budget's passage through Congress, will be the markers to watch as the alignment effort moves toward the next budget preparation cycle. — Justine Irish D. Tabile

Source: BusinessWorld