1. Why is government budgeting is important?
Government budgeting is the critical process of allocating revenues and borrowed funds
to achieve the country's economic and social goals. It also entails managing government
expenditures in such a way that the most economic impact is generated from the production
and delivery of goods and services while maintaining a healthy fiscal position.
Government budgeting is important because it allows the government to plan and manage
its financial resources in order to support the integration of effective programs and projects
that best promote the country's development. The budget allows the government to prioritize
and implement its plans, programs, and policies within the constraints of its financial capability
as dictated by economic conditions. It also gives an overview of the fiscal policy of the
government where the public can see how much on what items the government spent in the
last fiscal year as well as the current ones. Government budgeting helps in maintaining
stability and control over the government’s finances and are also a means of providing
accountability through financial reporting.
Thus, government budgeting is very important and plays a vital part of any government
processes because as mentioned the money comes from its people and budgeting such
involves the whole country. Budgeting aids in the supervision and allocation of funds for the
government's specified plans and projects for the year. It does focuses on how effective the
government is at implementing projects and plans with the resources available to aid in the
development of the country.
2. What are the major processes involved in national government budgeting?
Budget preparation, budget legislation or authorization, budget execution or
implementation, and budget accountability are the four (4) distinct phases of national
government budgeting.
Budget Preparation- The budget preparation phase begins with the submission of the
Development Budget Call Agencies (DBM) to the Congress Budget Coordination Committee
(DBCC). This starts from the agency heads, they will project revenues generated and possible
borrowings that may be tapped. Once approved DBM issues a budget call where it requires
agencies to prepare their budgets in accordance with the said guidelines. Agencies then
undertake their own internal consultations. After which they submit their budget estimates
then DBM will conduct technical budget hearings where agencies defend their proposals. DBM
then consolidates budgets proposals and submits them to the cabinet where budget is
discussed with the President. Once the budget is approved by the President and the Cabinet,
the President submits it to Congress. This must be done no more than thirty days after the
opening of its regular session, as required under the Constitution.
Budget legislation or authorization- The proposed budget is first reviewed by the
Committee on Appropriations of the House of Representatives. Then this goes to the Senate
Finance Committee for another round of deliberations. Then a Bicameral Conference
Committee is created to resolve differences. And if the committee arrives at a common
version, it is then submitted to the President. The president can either approve or disapprove
the bill, if signed into law it shall be considered General Appropriations Act.
Budget execution or implementation- The expenditure project is implemented during the
budget execution stage. Allotments are made, which are deducted from the regular agency
budgets. It is also at this stage that agencies may submit requests for SPF allocation.
Budget accountability- The budget process concludes with the accountability phase. This
is the time for agencies to report on their actual physical and financial performance.
While distinct, these processes overlap in their implementation over the course of a fiscal
year. Budget preparation for the next fiscal year continues while government agencies carry
out the current fiscal year's budget. Simultaneously, the state is engaged in budget
accountability as it reviews the previous year's budget.
3. How is the annual national budget prepared?
The Development Budget Coordinating Committee (DBCC) determines the overall
economic targets, expenditure levels, revenue projections, and the financing plan, which is
followed by a series of steps in the preparation of the annual budget. The DBCC is an interagency body comprised of the DBM Secretary as Chairman, the Bangko Sentral Governor, the
Secretary of Finance, the Director General of the National Economic and Development
Authority, and a representative from the President's Office as members. The following 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; prescribe 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 a budget hearings were 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 proposed budget to Congress
The budget preparation phase is guided by a budget calendar in order to meet the
Constitutional requirement of submitting the President's budget within 30 days of the start of
each regular session of Congress.
4. How does the budget become a law?
As per the Constitution, the President submits his/her presented annual budget in the
form of a Budget of Expenditure and Sources of Financing (BESF). In which is supported by
details of proposed expenditures in the form of a National Expenditure Program (NEP) and
the President's Budget Message, which summarizes the budget policy thrusts and priorities
for the year.
The proposed budget is first sent to the House of Representatives, which delegated the
task of initial budget review to its Appropriations Committee. The Appropriation Committee,
along with the other House Subcommittees, hold hearings on department/agency budgets
and scrutinize their respective programs/projects. As a result, the amended budget proposal
is introduced to the House as the General Appropriations Bill. While the House of
Representatives is holding budget hearings, the Senate Finance Committee, through its
various subcommittees, begins its own review and scrutiny of the proposed budget and
proposes amendments to the House Budget Bill to the Senate body for approval.
The House and Senate forms a Bicameral Conference Committee that finalizes the General
Appropriations Bill to iron out differences and reach a consensus on the General
Appropriations Bill. After both Houses have approved a common budget bill, it is sent to the
President for his signature, at which point it becomes the General Appropriations Act.
5. What is the General Appropriation Act (GAA)
General Appropriations Act (GAA) is the legislative authorization that contains new
spending bills in the form of specific amounts for salaries, wages, and other personnel
benefits; maintenance and other operating expenses; and capital outlays authorized to be
spent for the application of integrated applications and activities of all departments, bureaus,
and offices of the government for the given year.
General Appropriations Act (GAA) is one of the most important legislations that Congress
annually passes. It defines the annual expenditure program of the national government and
all of its instrumentalities. The expenditure program includes all programs and projects that
are supposed to be supposed to be funded out of government funds of the year.
The process starts with the issuance by the DBCC of the national expenditure ceiling for
the succeeding year. Once the DBM receives this, it issues the national budget call that
provides general guidelines to be followed by the agencies in preparing their budget proposal.
The respective agencies then issue their agency guidelines for their regional offices and directs
them to prepare their respective regional budget proposals. The agency regional officers
prepare their budget proposals and consult their respective local government counterparts
and the regional development council on the on the priority programs and projects to be
funded for the succeeding year’s general appropriations.
The importance of CBMS and any other information database is in the identification of the
region or local-specific programs and projects that shall be funded out of the GAA. The
concerned legislator may participate more effectively even at the regional level preparation
and consultations if they have a better grasp of the conditions as shown by up to date
information such as the CBMS.
Sources:
https://economictimes.indiatimes.com/budget-faqs/why-is-it-important-for-thegovernment-to-have-a-budget/articleshow/67450000.cms?from=mdr
https://www.dbm.gov.ph/wp-content/uploads/2012/03/PGB-B2.pdf
https://pllo.gov.ph/images/Documents/Downloads/RepublicActsJointResolutions/18C_RA_JR
/RA11465_GAAFY2020.pdf
https://www.yourarticlelibrary.com/economics/budgeting/6-important-objectives-ofgovernment-budget/30410