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Sequencing Public Financial Management Reforms in the Philippines
December 15-16, 2016
12th OECD-ASIAN SENIOR BUDGET OFFICIALS ANNUAL MEETING
The Oriental Hotel, Bangkok, Thailand
Presentation Outline
• Similarities in PFM Experiences (Philippines and Timor-Leste)
• Sequence of PFM Reforms in the Philippines
• Measuring PFM Performance
• Philippine PFM Reform Roadmap
• 2016 Philippine PEFA Asssessment
Similarities with Timor-Leste
• Dependence on input-based budgeting until 2000
• The Philippine Development Plan (PDP) is the country’s 6-year economic
development plan to guide budgeting, investment programming, agency plans.
A long-term plan for 2040 has been formulated.
• Before 2014, Ministries proposed programs and projects that were listed in the
budget book according to output (MFOs), and broken down expenditures by
allotment class
• Implementation of a performance management instituted across the civil
service
Sequence of Budget Reforms 1997
• Public Expenditure Management (PEM) reform
• 3 Outcomes of PEM
• Aggregate fiscal discipline – “Spending within means”
• Allocative efficiency – “Spending on the right priorities”
• Operational efficiency – “Spending with value-for-money”
• Medium-Term Expenditure Framework (MTEF)
• 6-year Fiscal Plan of projected revenues and deficit targets
• 3-year forward estimates of ongoing programs during the
budget preparation process
• 3-year estimate of available fiscal space for new and
expanded programs and new projects
=> Fiscal Responsibility underlie budget formulation
Sequence of Budget Reforms 2007- 2013
• Organizational Performance Indicator Framework (OPIF)
• OPIF piloted in 20 agencies
• Publication of the OPIF Book of Outputs
• Government-wide implementation of OPIF (2008)
Since 2000, many years of handholding agencies in
formulation and measurement of performance indicators
2012
• Results Based Performance Mgt System
• Gave OPIF a big push by tying up agency and employee
bonuses to accomplishment of OPIF based PIs
2014
• Performance-Informed Budgeting (PIB)
• Publication of performance information (financial and non-
financial) in the budget documents submitted to Congress
• Inclusion of enhanced organizational outcomes
Sequence of Budget Reforms 2018
• Program Expenditure Classification (PREXC)
• Restructuring of agency budgets along programs/outcomes
and identifying output and outcome performance indicators for
each program/sub-program
=> Next phase of PIB to improve accountability and agency
management
2011
• Transparency and Open Government
• Publication of data of interest to citizens (eg FOI, transparency
seals, procurement data)
• Improve public service, integrity and effectiveness by inviting
the participation of CSOs in budget formulation and monitoring
Measuring PFM Performance
2007
• PFM performance was measured during the Public Expenditure
and Financial Accountability (PEFA) framework
2011-2016
• Philippine PFM Reform Roadmap : partnership of DBM, DOF,
COA
• Key findings in the PEFA assessment were included in the
roadmap
• Formalized through Executive Order No. 55, s. 2011
2016
• 2nd PEFA Assessment undertaken by WB and DFAT
PFM Reform Roadmap (2011-2015)
Master plan for modernizing the financial
management system of the government
Improve efficiency, accountability and
transparency of public fund use
Contribute to good governance and fiscal discipline as a strategy for inclusive growth and poverty reduction
Jointly formulated and approved by fiscal oversight agencies (COA, DBM, DOF-BTr) from 2009 to 2011
For 2014 to 2016, updated roadmap design to move its focus from policy to implementation
Rolling-Out Key PFM Reforms
Performance
Informed
Budgeting
Unified
Reporting
System
Treasury Single
Account Integrated
Financial
Management
System
GAA as
Release
Document
In
2014:
Unified Account
Code Structure
Towards:
Broader & Deeper Citizen’s
Engagement
Accounting and
Auditing
Standards
10
Satisfactory
performance
2016 PH – PEFA Assessment
Budgetary Outcome Concerns
• Fiscal discipline: Reconciliation failings, budget execution and
accounting systems inadequate to monitor and facilitate budget
delivery
• Resource allocation: FMIS still in development, procurement lacks
independent complaints mechanism, increasing allocations with
limited absorptive capacity
• Service delivery: Internal control inadequacies, financial reporting
and oversight insufficient to provide assurance on budget policy
delivery
2016 PH – PEFA Assessment
Future Major Steps
• An integrated management information system is evidently
required for accounting processes to support timely decision-
making, monitoring and internal controls
• A review and revision/augmentation of the legal framework for
PFM to ensure clarity, control and comprehensiveness
• Legislative scrutiny arrangements for PFM need to be completed
or substituted through strong oversight from independent
mechanisms in the executive
Thank you!
Sequencing Public Financial Management Reforms in the Philippines