DBM chief says gov’t to adopt multi-year budgeting

The government will adopt a three-year budgeting process in place of the annual appropriations planning for an efficient and predictable allocation of public funds, Budget Secretary Rolando Andaya Jr. said yesterday.

Andaya said starting next year, the Department of Budget Management (DBM) will use of the Medium Term Expenditure Framework (MTEF) in budget preparation on a pilot basis.

"It adopts a medium term perspective to ascertain future costs of existing policies to determine the leeway to support key sectoral priorities vital for growth and competitiveness.

"Essentially, this budget strategy will map out the costs of ongoing policies over a period of three years," he said.

Andaya said the MTEF is a three-year rolling expenditure framework that supports a strategic and policy-based approach to budget formulation and preparation.

"A longer timeline would result in predictable funding for programs and at the same time align revenues for these activities," he said.

Andaya said the use of the three-year budgeting framework will cure the government of "expenditure myopia" in which some programs in the past were aborted in midstream for a variety of reasons.

"Cobbling together expenses and income in three-year clusters — or 1,000-day phases — would allow budget planners to incorporate macroeconomic and demographic parameters in appropriations," he said.

"The beauty of using a longer and integrated planning scenarios is the seamless implementation of projects and programs which take years to complete," he said.

Andaya said with the MTEF as guide, continuity of programs is assured and disruption of the flow of program implementation is avoided.

"This way, spending hews to policy and configured to meet not just annualized needs but medium-term requirements," he said. "By putting activities in three-year platforms, instead of yearly compartments, we can see government programs from a wider panorama."

Andaya said the MTEF uses "Forward Estimates" which plots "future floor government expenditures" against expected revenues.

Revenues above these minimum expenditures are called "allocable amounts" or "budget space," which be applied on activities that will yield the greatest benefit to the public, he added.

At present, the DBM draws up budget plans for Congress to approve on an annual basis.

However, it has been the norm for its passage to be delayed in Congress for several months or halfway into the fiscal year that the proposed money measure was supposed to be funding.

This year’s proposed P1.053-trillion national budget has yet to be approved by Congress.

The DBM has already issued a budget call for all departments for next year’s proposed expenditure program amounting to P1.136 trillion.