Peoples Budget 2013

2013 People’s Budget Produced by the Philippine Department o Budget and Management Some Rights Reserved under Creative Commons BY-NC-SA 3.0 License 15 March 2013 Production Team: Usec. Laura B. Pascua Training and Inormation Service Fiscal Planning Bureau OSEC-Public Inormation Unit Information Consolidated by: Fiscal Planning Bureau Budget Technical Service Budget and Management Bureaus A to G Design: Gianne Gaoiran, OSEC-PIU Graphics by Flux Design Labs Paggugol na Matuwid sa Budget ng Bayan: Kataas-Taasang Atas ng Taumbayan

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contents I. 2013 Empowerment Budget Budget • • • •

Paggugol na Matuwid: Atas ng Taumbayan Summary Summa ry of the 2013 Empowerment Empowerment Budget Budget Principles Princip les and and Strategies of the 2013 Empowerment Budget Budget Financing the Budget

4 6 10 18

II. Expenditure Priorities • Anti-Corrupt Anti-C orruption ion and Transparent ransparent,, Account Accountable able and Participatory Governance • Povert Povertyy Reduction Reduction and and the Empowerment of the Poor Poor • Rapid, Inclusive and Sustained Economic Grow Growth th • Just and Lasting Peace and and the Rule Rule of Law • Integrit Integrityy of the Environment and and Climate Change Adaptation and Mitigation

24 28 38 44 46

III. Basics on Budgeting • The National Budget • The Budget Cycle

Glossary

52 56 66

section 1

2013 empowerment budget

Paggugol na Matuwid: Atas ng Taumbayan The people are a nation’s greatest wealth. Their abundant talent and skill, their unagging sense o national identity and cultural pride — these drive and sustain us in our campaign or genuine socio-economic progress. The administration admin istration o President Benigno S. Aquino III II I recognizes the people’s people’s inherent power and constantly assures them that these is theirs to exercise — as they did in EDSA People Power in 1986, and again when they supported and elected President Aquino in 2010. The Aquino government has thus chosen to ocus on the Filipino people’s crucial role as partners i n shaping the nation’s nation’s uture. With this, the government must optimize its resources to liberate the people rom the shackles o poverty, and invest in their capabilities and welare through meaningul social and economic services. As expressed in his Social Contract with the Filipino People, President Aquino knows that empowering the people as nation-builders requires transparent, accountable and par ticipatory governance. Moreover, the Administration Moreover, Adm inistration has broadened its parameters in cratin cratingg the 2013 Empowerment Budget: that is, to involve as many Filipinos as it could reach in this decision-making process. In particular, it engaged members o civil society, people’s people’s groups, and communities representing representing the country’s countr y’s most marginalized margi nalized and impoverished — people compelled by a shared vision o a more vibrant, v igorous Philippines, but whose voices voices have gone unheard through the years. yea rs. This greater g reater openness and deeper public engagement engagement in the budget process stems rom this realization: government cannot anymore claim to have a total mental grasp o the realities that its people ace on the ground. In crating crat ing the 2013 Empowermen Empowermentt Budget, the government has, thereore, adopted the precept precept  Atas ng Taumbayan. This reects President Aquino’s Aquino’s commitment to meet the people’ people’ss most urgent needs, as a s well as as bring them to t o the very center o the Administration’ Admi nistration’ss agenda or rapid, inclusive, and sustainable susta inable development development or all Filipinos. These commitments are not out o the President’s generosity generosity,, but in keeping with people’s sovereign sovereign will, w ill, which they expressed resoundingly in i n the May 2010 Elections: or government government to nally na lly operate with only the people’ss interests in mind. In other words, kung walang corrupt, walang mahirap. people’ PEOPLE’S BUDGET 2013

7

Summary of the 2013 Empowerment Budget  The government’s government’s response to legitimate claims cla ims on exhaustible exhaust ible resources reects its priorities and values. In recognition o the right o each individual to have a voice in shaping social policies as well in the determination o political aairs, aa irs, the government based the 2013 Empowermen Empowermentt Budget on the results o  consultations with the people who stand to be a ected by it. Here, then, is the P2.0059-trillion National Budget or 2013 in a nutshell:

IN BILLION PESOS

Total Obligation Budget Net of Interest Payments

    1     1  .     5     2     8

    1     7  .     8     9     5

20 0 3

    5     5  .     7     4     9

    1     0  .     7     6     8

    5     7  .     7     4     6

    1     1  .     6     0     6

2004

2 0 05

    3     8  .     4     4     0  ,     1

    2     7  .     4     3     7

20 06

    1     6  .     4     1     3  ,     1

    1     5  .     5     5     1  ,     1

    0     4  .     2     4     0  ,     1

    1     7  .     7     8     8

20 0 7

20 0 8

    5     1  .     4     3     4  ,     1

    8     2  .     5     5     1  ,     1

20 0 9

    8     9  .     2     7     4  ,     1

    3     7  .     8     7     1  ,     1

2 01 0

    2     0  .     0     8     5  ,     1

    2     0  .     1     0     3  ,     1

    0     0  .     6     1     8  ,     1

    0     9  .     2     8     4  ,     1

    0     9  .     5     0     0  ,     2

    0     0  .     2     7     6  ,     1

2 0 1 1 2 0 1 2* 2 0 1 3*

*Approved GAA levels. All the r est are based on actual obligations.

What is the government budget? 

A government budget is a nancial plan to pursue the priority programs and projects o the government and its development thrusts.

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PEOPLE’S BUDGET 2013

It is a tool or economic growth through its allocations or inrastructure, agriculture, science and technology, and other areas that will help generate employment and increase the country’s productivity.

It is a tool to improve human development by investing in basic social services like education, health and social welare.. welare

It is also an instrument or good governance, as implementing agencies are accountable or the use o their given budgets by delivering targeted results.

Budget by Sector

P2.006 TRILLION 34.9%

P699.4 B

25.4%

P509.2 B

Economic Services Social Services 18.0% 17.3%

P360.4 B

P347.3 B Debt Burden General Public Services

4.5%

P89.5 B

Deense

The biggest portion o the National Budget still goes to the social serv ices sector. These include include education, health care, housing and other services provided by the government to raise the quality o lie o the poor and the marginalized. The budgetary allocation a llocation or economic economic services has ha s increased by an emphatic 16 percent percent to support the economy’s expansion in an inclusive and sustained way: that is, in a way that creates meaningul jobs and improves incomes or our people. Meanwhile, the Budget or carrying carr ying the t he National Government’s Debt Burden stands at 18 percent o the total budget, down rom 19.6 percent in 2012 and 22.6 percent in 2011. The rest o the Budget will be needed to support General Public Services as well as Deense.

PEOPLE’S BUDGET 2013

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Budget by Expense Class CURRENT OPERATING EXPENDITURES Personnel Services 640.6 B (31.9% (31.9%)) MOOE 312.9 B (15.6%) Subsidies to GOCCs 42.9 B (2.%) Allotments to LGUs 241.8 B (12.1%) Tax Expenditure E xpenditure Fund 26.9 B (1.3% (1.3%))

CAPITAL OUTLAYS Inrastructure and Other COs 297.1 B (14.8%) Equities to GOCCs 2.0 B (0.1%) Capital Transers to LGUs 76.3 B (3.8%) CARP Landowners’ Compensation 5.0 B (0.2%)

DEBT BURDEN Interest Payments 333.9 B (16.6%) Net Lending 26.5 B (1.3% (1.3%))

TOTAL 2,005.9 B 

Personnel Services increased by 7.9 percent to P640.6 billion Personnel bill ion to support the ull impleme i mplementation ntation o the Salary Standardization Law III and the hiring o teachers, nurses and other needed public servants. Maintenance and Other Operating Expenditures (MOOE) jumped by 17.5 17.5 percent to P313.3 P313. 3 billion to support the expansion o the Administration’s Adm inistration’s priority priority social and economic programs. Infrastructure and Other Capital Outlays (COs) went up by 17.7 percent to P297.1 billion — rom P252.4 billion in 2012 — to support inrastructure projects that are necessary or transport, tourism, and agriculture industries. Debt Burden continues to decrease due to smart nancing strategies adopted by government. In particular, the share o interest payments has decreased to 16.6 percent in 2013, rom 18.3 18. 3 percent in the previous year. Subsidies and Equity for GOCCs posted a signicant increase o 105.8 percent, bringing the total to P44.9 billion, due to increased allocations a llocations or inrastructure inrastructu re projects to be implemented implemented by GOCCs. LGU Shares in the National Budget also rose by 9.7 percent to P318.1 billion due to improved i mproved revenue revenue collections in 2010, the base year yea r or computing computing the Internal I nternal Revenue Allotment Al lotment (IRA) o LGUs or 2013. 10

PEOPLE’S BUDGET 2013

Budget by Region

The National Budget alloted al loted or regions increased by 27.1 percent to P979.1 billion, accounting or 48.8 percent o the total budget or 2013. In comparison, the P770.5 billion allocation or the regions in 2011 was only 42.4 percent o the budget.

P129.63 B

P192.08 B

NCR P402.58 B

VISAYAS P254.82 B

The budgetary allocations or Visayas and Mindanao rose signicantly signica ntly by 20.7 percent and 20.3 20. 3 percent, respectively. Mindanao, in particular, has the highest per-capita National Budget at P10,990.

LUZON

MINDANAO

CAR  P31.38 B 

REGION I

REGION 2

 P49.54 B 

 P44.61 B 

REGION 3  P87.26 B 

NCR  P129.63 B 

REGION 5  P62.16B 

REGION 4  P127.64 B 

REGION 8  P55.38 B 

REGION 6  P73.32 B 

REGION 7  P63.38 B 

REGION 13  P34.29 B 

REGION 10 REGION 9  P41.46 B 

 P47.61 B 

REGION 11  P46.75  B 

ARMM  P41.46 B 

REGION 12  P42.84 B 

PEOPLE’S BUDGET 2013

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Top 10 Departments* Department s* and List o Per-D Per-Department epartment Budget DEPARTMENTS

DepEd  P293.36 B 

DPWH  P155.22 B 

DILG  P121.75  P121.7 5 B 

DND  P121.60 B 

DA   P74.76 B 

DSWD  P56.43 B  DoH  P54.18 B  DoTC  P37.08  P37 .08 B  DoF  P33.16 B  DENR   P23.71 B  * The amounts indicated here include the respective departments’ allocations under the MPBF, PGF, BSGC, and other Special Purpose Funds.

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PEOPLE’S BUDGET 2013

1,048 B

Congress o the Philippines Ofce o the Presiden P residentt Ofce o the t he Vice-President Department o Agrarian Reorm Department o Agriculture Department o Budget and Managemen Mana gementt Department o Education State Universities and Colleges Department o Energy Department o Environment and Natural Resources Department o Finance Department o Foreign Aairs Department o Health Department o Interior and Local Government G overnment Department o Justice Department o Labor and Employmen Employmentt Department o National Deense Department o Public Works and Highways Department o Science and a nd Technology Department o Social Welare and Development Development Department o Tourism Department o Trade and Industry Department o Transportation and Communications National Economic and Developm Development ent Authority Presidential Communications Operations Ofce Other Executive Ofces Autonomous Region in Muslim Mindanao Joint Legislative-Executive Councils Judiciary Civil Service Commission Commission on Audit Commission on Elections Ofce o the Ombudsman Commission on Human Rights

10.71 B 2.73 B 420 M 21.43 B 65.07 B 998 M 250.41 B 34.92 B 4.35 B 23.68 B 30.85 B 11.71 B 51.91 B 92.35 B 10.89 B 8.12 B 80.61 B 169.33 B 10.09 B 56.43 B 2.81 B 3.74 B 35.75 B 5.08 B 1.31 B 11.02 B 14.06 B 2M 17.77 B 993 M 8.10 B 8.42 B 1.73 B 318 M

SPECIAL PURPOSE FUNDS

957.77 B

Budgetary Support to Government Corporations Allocations to Local Government Units Calamity Fund Contingent Fund Department o Education - School Building Program E-Government Fund International Commitments Fund Miscellaneous Miscella neous Personnel Personnel Benets Fund Pension and Gratuity Fund Priority Development Development Assistance Assista nce Fund Tax Expenditures Fund Debt Service Fund Fu nd - Interest Payment

71.40 B 319.84 B 7.50 B 1B 1B 1B 2.64 B 69.09 B 98.72 B 24.79 B 26.90 B 333.90 B

Principles and Strategies of the 2013 Empowerment Budget  This Budget pursues pur sues empowerment empowerment by creating more opportunities or public participation in governance. It invests signicantly signi cantly in the people’s capabilities capabilities by prioritizing prioritizin g unding undin g or public services that provide jobs, educate our youth, ensure a healthier citizenr y, and empower empower each Filipino Fil ipino to participate in economic activity. The Aquino Administration Adm inistration ollowed these principles in crating the 2013 Empowerment Budget:

Accelerated Completion o Priority Program Targets

Stronger Government Accountability to Perorm

Greater and Deeper Commitment to the Aquino Social Contract

Transparency or Faster Fast er Budget Execution and Clearer Results

Greater Stakeholder Participation in Budget Preparation and Execution

PEOPLE’S BUDGET 2013

13

Greater and Deeper Commitment to the Aquino Social Contract The 2013 National Budget B udget is designed to deepen and reinorce the implementation implementation o President Aquino’s Social Contract with the Filipino Fil ipino people. people. The Budget reects the President’s belie that the best way to combat poverty is to establish and nurture a society ounded on justice and airness, compassion and mutual support, and concern or the environment. Such a society will not have room or or corruption. The Budget ocuses government resources resources on the ve Key Result Resu lt Areas o Social Socia l Contract, as dened in i n Executive Order No. 43:

The Aquino Administration wants to make sure that public unds go to these priority areas. Using the Program Budgeting Approach , the Administration dened key component programs per KRA, as well as their intended outputs and outcomes, which should be prioritized in the a llocation o unds. This new approach also helps government improve improve the coordination and a nd collaboration between its departments and a nd agencies. The Zero-Based Budgeting Approach has also been used to scale down unding or activities which are not aligned with the priority programs, or which are otherwise inefcient and ineective, and raught with leakages. Zero-Based Budgeting requires each agency or department to justiy its entire budget every year, building rom a  base o zero.

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PEOPLE’S BUDGET 2013

Accelerated Completion o Priority Program Targets To speed up the pace o implementing implementing and a nd completing completing priority programs, progra ms, government has to rethink rethin k existing existin g structural congurations in government and introduce changes accordingly. One o these innovations is to assign the Department of Public Works and Highways (DPWH) as the Principal Infrastructure Agency, to which all capital outlays or the construction o classrooms, rural health acilities, hospitals, and a nd arm-to-market roads, among others, have been transerred tran serred or implementatio implementation. n.

Delivery of their Core Core Mandates. Social service delivery This allows Agencies to Focus on Accelerating the Delivery agencies like the Department o Education (DepEd), (DepEd), or example, will ocus on improving literacy and a nd cohort survival surv ival through th rough the implementation implementation o its K-12 K-12 Program; Progra m; and the Department Depa rtment o Health (DoH) on delivering its Universal Health Care.

To speed up the implementation o inrastructure inrastructu re and other projects, government agencies like the DPW H have been tasked to conduct Early Procuremen meaning,, to undertake bidding, short o award, even beore beore the Procurement: t: meaning approval o the Genral Appropriations Act (GAA). This has allowed them to award contracts and start projects on the rst day o 2013. With this innovation, the DPWH, or instance, has been able to award 84 percent o all its inrastructure projects as o 31 January 2013.  Account Management Teams Teams (AMTs) have also been deployed deployed to monitor the perormance per ormance o agencies more closely,, to speed up the delivery o priority progra ms and projects, to identiy and closely a nd address critical implementation bottlenecks, and to make sure that nothing crucial alls through the cracks. These AMTs have been deployed in nine major departments:

Department o Public Works and Highways

Department o Agrarian Reorm

Department o Education

Department o Transportation and Communications

Department o Health

Department o National Deense

Department o Social Welare and Development Development

Department o Interior and Local G overnment

Department o Agriculture PEOPLE’S BUDGET 2013

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Stronger Government Accountability to Perorm The Government has brought accountability to the t he people to a higher level, ensuring ensurin g that government transactions are done with airness and consistency, particularly by ensuring the close linkage o plans, budgets and perormance.

With this, the t he Empowerment Empowerment Budget o 2013 deepens the practice o  Performance-Based Budgeting : where each peso leads to concrete and measurable results. The system necessitates a close and careul ca reul look at perormance indicators to determine the t he results o our work, the eectiveness o our actions, a nd points or improvement. improvement. Fairness is one o the pillars o the Aquino administration’s reorm platorm. With this, it wants to make sure that good perormers are properly awarded, be they government agencies or individual employ employees. ees. To move towards this direction, the Administration is reconciling and harmonizing all disparate perormance management systems in government into a single Results-Based Performance Management System (RBPMS). Through this, government will wil l be able to monitor the perormance o each agency and individual i ndividual government worker worker based on measurable results indicators and perormance benchmarks. To reward public institutions and public servants who meet or even surpas s their outputs and commitments Incentive System (PBIS). As under the Aquino Social Contract, this Budget introduces a  Performance-Based Incentive President Aquino has expressed in his h is 2012 State St ate o the Nation Address, “simula ngayon, magpapatupad tayo ng sistema kung saan ang bonus ay nakabase sa pagtupad ng mga ahensiya sa kanilang mga target para sa taon.”  Under the 2013 Budget, P9.97 billion has been allocated to und the incentives under this new system.

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PEOPLE’S BUDGET 2013

PERFORMANCE-BASED BONUS Why change the current incentive system?

 How can a department qualify qualify for the PBB?  Achieve at least 90% of Major Final Output (MFO) targets and Priority Program targets under Key Result Areas in EO43.

 1

MFOs of agencies are measured on the basis of how the needs of the citizens are efficiently and effectively addressed by the products or services that the agency is mandated to deliver. For For Example: Department of Education

Department of Health

% of school leavers compared to previous year

2

targets 2,800 healthworkers in rural areas for 2013

Meet 2 to 3 Good Governance conditions or requirements set by the AO25* Task Force annually under the performance drivers of the Results-Based Performance Management System (RBPMS). Mandatory posting of budget reports (Philippine Transparency Seal). Posting of all invitations to bid, and awarded contracts in the Philippine Government Procurement Electronic System (PHILGEPS). Liquidation of all cash advances for the year within the reglementary period. Establishment of a Citizen’s Charter or its equivalent.

3

* AO25, s. 2011 | Creating an Inter-Agency Task Force on the Harmonization of National Government Performance Monitoring, Information and Reporting Systems

Submit reports on or before the deadline.

The incentive rates will be based on 2 factor factors: s:

Bureau/Unit ranking

Best Upper 10th percentile

Better Upper 25th percentile

Good Upper 50th percentile

Employee performance appraisal

Best

Better

Good

Poor

Upper 10th percentile

Upper 25th percentile

Upper 50th percentile

Lower 15th percentile

P35,000

P20,000

P10,000

P25,000

P13,500

P7,000

P15,000

P10,000

P5,000

Below Satisfactory Rating

No Bonus PEOPLE’S BUDGET 2013

17

Transparency or Faster Fast er Budget Execution and Clearer Results The Aquino administration wishes to ensure that government resources are used or their intended purposes, with scrupulous regard or the integrity o the process. The 2013 Budget asserts that transparency is an essential tool not only in preventing corruption but also in enabling the delivery o ast and clear results. The Administration sustained its policy or the Disaggregation of Lump-Sum Funds. In the past, such lumpsum unds u nds have not only caused delays in program and a nd project implementatio implementation, n, but have also been prone to abuse and corruption. Thus, in preparing the 2013 Budget, departments and agencies have been reminded to break down their proposed budgets into specic programs and a nd projects. With the Budget containing greater detail on programs and projects, the government will be able to Shift to a  Budget-as-Release Document Regime by 2014, where the repetitive budget request and release process is eliminated. To support this new regime, the predictability o public expenditure will be strengthened through a  new policy o  One-Year Validity of Appropriations in 2013. The government also continues to roll out Techno Technological logical Innovations to speed up budget processes and make them more transparent. For instance, the Depar tment o Budget and Management, the Department o Finance a nd the Commission on Audit are currently cur rently developing developing a Government Integrated Financial Fina ncial Management Ma nagement Inormation Inormation System (GIFMIS), which, once completed by 2016, will improve the speed, accuracy and accountability in the management o the government budget budget and nances. na nces.

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PEOPLE’S BUDGET 2013