Directions: Answer the following questions concisely. Each item is equivalent to 10 points.

Kindly indicate the source citation or reference of your answer.

1. What is government budgeting?

➢ Government budgeting is a crucial process that involves distributing funds

and borrowing money to achieve the nation's social and economic

objectives. It additionally comprises allocating government funds in a

manner that will maximize the economic impact of goods production and

delivery and services while maintaining a sound financial situation.

2. Why is government budgeting important?

➢ The budget allows the government to set priorities and implement its plants,

initiatives, and regulations within the limitations of its financial capacity

according to what the economy dictates. The importance of government

budgeting is to allow the government to plan and oversee its financial assets

to facilitate the execution of diverse initiatives and programs that best

advance national development.

3. What are the major processes involved in national government

budgeting?

➢ There are four major processes involved in national budgeting. These are

budget preparation, budget authorization, budget execution, and

accountability.

4. How is the annual national budget prepared?

➢ There are several steps involved in creating the annual budget, and they

start with determining the overall economic goals, spending amounts,

revenue forecast, and financing plan by the Development Budget

Coordinating Committee (DBCC).

 ➢ These are the major activities involved in the preparation of the annual

national budget:

a. Determination of overall economic targets, expenditure levels, and

budget framework by the DBCC;

b. Issuance by the DBM of the Budget Call which defines the budget

framework; sets economic and fiscal targets; prescribes the priority thrusts

and budget levels; and spells out the guidelines and procedures, technical

instructions, and the timetable for budget preparation;

c. Preparation by various government agencies of their detailed budget

estimates ranking programs, projects, and activities using the capital

budgeting approach and submission of the same to DBM;

d. Conduct budget hearings where agencies are called to justify their

proposed budgets before DBM technical panels;

e. Submission of the proposed expenditure program of

department/agencies/special for confirmation by department/agency

heads.

f. Presentation of the proposed budget levels of

department/agencies/special purpose funds to the DBCC for approval.

g. Review and approval of the proposed budget by the President and the

Cabinet;

h. Submission by the President of the proposed budget to Congress.

5. How does the budget become a law?

➢ First, the House of Representatives receives the proposed budget in

Congress which gives its Appropriations Committee the responsibility of

conducting the first budget review.

➢ The other House Subcommittee and the Appropriations Committee hold

hearings on agency and department budgets and examine the

corresponding projects and programs. As a result, the General

 Appropriations Bill, which contains the revised budget proposal, is

introduced to the House.

➢ As the House of Representatives continues its budget hearings, the

➢ The Senate Finance Committee also begins to carry out its own

examination and analysis of the proposed budget through its various

subcommittees, and it suggests changes to the House Budget Bill to the

Senate for consideration.

➢ To resolve disagreements and produce a standard version of the General

A Bicameral Conference Committee is established by the House and the

Senate to finalize the General Appropriations Bill.

6. What is the General Appropriations Act?

➢ The legislative authority known as the General Appropriations Act (GAA) is

what includes the updated appropriations, broken down by specific salary

amounts. Salary and benefits for employees; upkeep and other operational

expenditures; as well as capital expenditures approved for use in the

execution of different projects, programs, and activities of all departments,

bureaus, and government offices for a specific year.

7. How is the budget implemented?

➢ The release of funds to the agencies marks the beginning of budget

implementation. To expedite the execution of government initiatives and

projects and guarantee the prudent utilization of government funds that are

allocated, the government started using the Simplified Fund Release

System (SFRS) in 1995.

Following the SFRS, the agency budget matrix (ABM) is prepared by the

DBM in consultation with the agencies at the beginning of each budget year,
upon approval of the annual General Appropriations Act. The ABM is a

disaggregation of all the programmed appropriations for each agency into

various expenditure categories. As such, the ABM serves as a blueprint that

provides the basis for determining the timing, composition, and magnitude

of the release of the budget.

Based on updated resources and economic development thrusts and

consistent with the cash budget program, the Allotment Release Program

(ARP) which prescribes the guidelines in the prioritization of fund releases

is prepared.

The ARP serves as the basis for the issuance of either a General Allotment

Release Order (GARO) or a Special Allotment Release Order (SARO), as

the case may be, to authorize agencies to incur obligations.

Subsequently, the DBM releases the Notice of Cash Allocation (NCA) on a

monthly or quarterly basis. The NCA specifies the maximum amount of

withdrawal that an agency can make from a government bank for the period

indicated. The Bureau of the Treasury (BTr), replenishes daily the

government servicing banks with funds equivalent to the amount of

negotiated checks presented to the government servicing banks by

implementing agencies.

The release of NCAs by the DBM is based on: 1) the financial requirements

of agencies as indicated in their ABMs, cash plans, and reports such as the

Summary List of Checks Issued (SLCI); and 2) the cash budget program of

the government and updates on projected resources.

 Agencies utilize the released NCAs following the "Common Fund" concept.

Under this concept of fund release, agencies are given maximum flexibility

in the use of their cash allocations provided that the authorized allotment for

a specific purpose is not exceeded. Project implementation is thus made

faster.

8. Why are adjustments made to the budget program?

➢ Adjustments are made to the budget even during implementation primarily

because of the following:

1. Enactment of new laws - Within the fiscal year, new legislations with

corresponding identified new revenue sources are passed which

necessitate adjustments in the budget program.

2. Adjustments in macroeconomic parameters - The macroeconomic

targets considered in the budget are periodically reviewed and updated to

reflect the impact of recent developments in the projected performance of

the national economy and on the set fiscal program for the year. The

relevant indicators affecting the budget aggregates include the following:

the Gross National Product (GNP), inflation rate, interest rate, foreign

exchange rate, oil prices, and the level of imports. Thus, a sensitivity

measure on the impact of these parameters on the budget will determine

whether recent macroeconomic developments have a negative or favorable

effect on the budget.

3. Change in resource availabilities - Budget adjustments are undertaken

when additional resources become available such as new grants, proceeds

from newly negotiated loans and grants. Corresponding budget

adjustments are also made when resource generation falls below the

targets.
9. What mechanism ensures that funds have been properly allocated

and spent?

➢ Cognizant of the fact that no propitious results can be obtained, even with

maximum funding, if agency efficiency is low and funds are wastefully spent,

systems and procedures are set in place to monitor and evaluate the

performance and cost-effectiveness of agencies. These activities are

subsumed within the fourth and the last phase of the budget process-the

budget accountability phase. At the agency level, budget accountability

takes the form of management's review of actual performance or work

accomplishment concerning the work targets of the agency vis-à-vis the

financial resources made available. Also, detailed examinations of each

agency's book of accounts are undertaken by a resident representative of

the Commission on Audit (COA) to ensure that all expenses have been

disbursed under accounting regulations and the purpose(s) for which the

funds have been authorized.

10. Is the role of the DBM in the budgeting process limited to national

government agencies?

➢ No, the role of the DBM in the budgeting process is not limited to national

government agencies. It coordinates all three levels of government-national

government department/agencies, government-owned and controlled

corporations (GOCCs) and local government units (LGUs) - in the

preparation, execution and control of expenditures of their corresponding

components entities. The DBM reviews the corporate operating budgets of

GOCCs and ensures the proper allocation of cash. The DBM likewise

formulates and recommends the budget policy covering the allowable deficit

and the criteria for the determination of the appropriate subsidy and equity

of GOCCs. For LGUs, the DBM reviews the annual and supplemental

budgets of provinces, and highly urbanized cities and manages the proper
 allocation and release of the Internal Revenue Allotment (IRA) of LGUs and

their share in the utilization of national wealth.

References:

https://www.dbm.gov.ph/wp-content/uploads/2012/03/PGB-B2.pdf