Implementing the

Cash Budgeting
System (CBS)
Philippine Association for Government
Budget Administration (PAGBA), Inc.
1st Quarterly Seminar and Meeting
Punta Villa Resort, Iloilo City
March 13, 2020

Amanella D. Arevalo
Director IV, DBM
Outline
1. Defining Annual Cash-based Appropriations

2. Differentiating Obligation Budgeting and

Cash Budgeting

3. Treatment of Transferred Funds

4. Time Horizon of Transfers to GOCCs & LGUs

5. Multi-Year Contracts

6. Transition in FY 2019-2020
2
Objective of the CBS
Supporting the expansionary fiscal policy of government

4.100T

1.426T

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

3
 25%
50%
75%
100%

0%
DepEd
DPWH
DILG
DOH

2011
DND
DOTr
DA
DepEd
DPWH
DILG
DOH

2012
DND
DOTr
DA
DepEd
DPWH
DILG
DOH

2013
DND
DOTr
DA
DepEd
DPWH
DILG
DOH

2014
DND
DOTr
DA
DepEd
DPWH
DILG
DOH

2015
DND
DOTr
DA
DepEd
DPWH
DILG
DOH
2016

DND
The Principle of Annuality

DOTr
DA
DepEd
DPWH
DILG
DOH
2017

DND
DOTr
A credible budget should be fully executed on an annual basis

DA
Obligation vs. Disbursements
Implementation lags behind the level of obligations

DPWH

2011 2012 2013 2014 2015 2016 2017 2018

5
Snowballing of Continuing Obligations
Carry-overs affect implementation capacity in the following year

DPWH

Unfinished
contracts

2018
6
Annual Cash-Based Appropriations
Shifting to a one-year implementation horizon

Limits incurring contractual obligations and

disbursing payments, to goods delivered and
services rendered and inspected within the fiscal
year.

Payments of these obligations should be settled

within the fiscal year of the budget.

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TIMELINE
1. FY 2019 GAA
• GP 65 – obligations until Dec. 31, 2019
• Veto Message – Cash Budgeting (operational
cash budget for FY 2019 except infrastructure
projects – until December 31, 2020)
2. EO No. 91 dated September 9, 2019
• Adopting the Cash Budgeting System Beginning
FY 2019
3. RA No. 11464 dated December 26, 2019
• (Extending the availability for release and
obligation of the FY 2019 GAA from Dec. 31,
2019 to Dec. 31, 2020)
Executive Order No. 91, s.2019
Adopting the CBS beginning FY 2019

Last 9 September 2019, the President signed

EO No. 91, ordering the national government to
adopt the Cash Budgeting System effective 1
January 2019.
Cash Budgeting System (CBS)
Section 1 of EO 91, s.2019

a. All authorized appropriations shall be available for

obligation and disbursement only until the end of
each FY;
b. Obligations incurred by the NG within each FY shall
be implemented during the same FY; and
c. Payments for obligations incurred shall be made until
the end of the Extended Payment Period (EPP),
which shall be three (3) months after the end of the
validity of appropriations against which they were
obligated

10
Obligation Budgeting vs. Cash Budgeting
When can goods and services be delivered and rendered?

Obligation Budgeting – 24 months & beyond

FY FY + 1
Jan 1 Dec 31 / Jan 1 Dec 31
 Contracts awarded before the end of the FY can be delivered
even after the FY; government has a running balance of not-yet-
due-and-demandable obligations (NYDDO)

Cash Budgeting – 12 months

FY
Jan 1 Dec 31

 12-month contracts should be fully delivered by the end of the FY.

11
Obligation Budgeting vs. Cash Budgeting
When can obligations be paid?

Obligation Budgeting – 24 months & beyond

FY FY + 1
Jan 1 Dec 31 / Jan 1 Dec 31
 Inspection, verification, and payment can be done even after the
FY; government has a running balance of due-and-demandable
accounts payables (DDAP)

Cash Budgeting – 15 months

Extended Payment
Period (EPP)
FY
Jan 1 Dec 31 Mar 31

 Payment can only be done within a 15-month period; contracts

delivered at the end of the FY can be paid during the 3-month
EPP

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Treatment of Transferred Funds
Only payments will be considered as disbursements

All funds transferred between or among

government agencies and LGUs shall not be
considered disbursed under this Section, until
the transferred amounts have been actually
utilized to pay for goods delivered and services
rendered, inspected and accepted.

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Time Horizon of Funds Provided
to GOCCs & LGUs
Fund downloads from the NG should be disbursed within the FY
 Download of funds shall be done within the FY
 Period of Disbursements:
 Budgetary Support to GOCCs – until the end
of the FY
 Funds provided to LGUs:
Program Funds from NGAs Until end of the FY

Financial assistance & other support Until end of the following

to LGUs (LGSF) FY (obligation &
disbursement)
Internal Revenue Allotment (IRA) Until fully spent
Special Shares from Proceeds of
National Taxes & Fees
Multi-Year Contracts (MYCs)
Multi-year projects should be covered by the annual budget

 MYC has an implementation period

exceeding 12 months
 Even under CBS, agencies may enter into
MYCs
 Agencies should secure a Multi-Year
Contracting Authority (MYCA) before
commencing procurement activities for MYCs
 GOCCs should secure an equivalent authority
from its governing board

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Multi-Year Contracts (MYCs)
Multi-year projects should be covered by the annual budget

 MYCA should accurately show the schedule of

the annual cash requirements of the MYP
 MYPs’ annual cash requirements should be
included in the agency budget proposals and
consequently, the GAA, annually
 Certificate of Availability of Funds (CAF) should
be issued annually for MYPs based on the
budget for the purpose
 Contracts with implementation periods that are
12 months or shorter should not spill-over to
the next FY
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MYCA for Research / Scientific Projects
Special exemption on particular single-year projects

A MYCA or an equivalent authority may likewise

be issued for single-year projects that are either
research or scientific in nature, and by design
necessitates implementation covering two (2)
fiscal years.

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Issuance of a “Zero CAF”
For MYPs with no funding requirements in a given year

RA 11260 GP Sec. 29. In case of Multi-year

Projects with no funding requirement on any
given year, instead of the CAF, the Chief
Accountant shall issue a certification that no
fund is needed for the year, as indicated in the
approved MYCA.

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Clarifying Common Misconceptions
Procurement strategy & existing budgeting rules ease the transition

1. That it converts all projects into one-year

contracts

2. That all projects should be converted into multi-

year contracts so that these are “protected” by
a MYOA/MYCA

SOLUTION: Choose the proper procurement

strategy for the project

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Clarifying Common Misconceptions
Procurement strategy & existing budgeting rules ease the transition

3. That delayed projects that were not finished

within the year will require rebidding

SOLUTION 1: Inclusion in the succeeding year’s NEP

SOLUTION 2: Using the Transitory SPF

CLARIFICATION: The NDRRMF and QRF shall also

be used for obligation and payment of Spill-over
Projects approved or funded from the NDRRMF or
QRF of the immediately preceding Fiscal Year.

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Spill-Over Projects
Continuing delayed projects in the succeeding FY

 These are contracts authorized & undertaken

in the immediately preceding GAA which were
not fully implemented, including any unpaid
obligations, after the end of the EPP

 FY 2021 Budget Call includes BP Form No.

201-G where agencies shall propose funding
requirements for the continued implementation
of 2020 procurement projects that will not be
fully implemented by 31 December 2020 due ot
delays

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Clarifying Common Misconceptions
Procurement strategy & existing budgeting rules ease the transition

4. That contracts unfinished by the end of 2018

will no longer be honored upon the start of the
new budgeting system

CLARIFICATION: All obligations incurred before

the start of FY 2019 will be honored and shall
be issued NCAs for, provided that they are (a)
delivered according to specifications and (b)
accepted by the agency

These NCAs shall not be counted against their

2019 appropriations
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Clarifying Common Misconceptions
Procurement strategy & existing budgeting rules ease the transition

5. It’s impossible for single-year contracts to finish

within the fiscal year

SOLUTION: Early Procurement shall be the rule

and not the exemption.

RA 11260 GP Sec. 20. Notwithstanding mandatory

procurement timelines under RA 9184 and its revised
IRR, agencies are authorized to undertake early
procurement activities, from pre-procurement
conference until post-qualification of bids, as soon as
the proposed national budget is submitted to
Congress.
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Early Procurement Activities
When should PEs Upon submission of NEP to Congress
undertake EPA?
Is the CAF required No. The amount in the indicative APP consistent
to start EPA? with the NEP or MYOA/MYCA shall be the basis
of certification or confirmation of the availability of
funds.
What procurement Projects undertaken through:
modalities are not • Repeat Order
covered by EPA? • Shopping
• Emergency Cases
• Take-Over of Contracts
• Small Value Procurement
What must an The PE shall indicate in the Invitation to Bid and in
Invitation to Bid the Bidding Documents that the project is an EPA.
contain?

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 Preparation of
Budget Proposals
& Procurement Early Procurement
Plans Activities

January May July Dec Mar

Award of Implementation Extended

Contracts Payment Period
Remedying a Reenacted Budget
New contracts may still be awarded amidst budget reenactment

GPPB Circular No. 09-2018 clarifies that even on a

reenacted budget, procurement projects that underwent
Early Procurement may still be awarded provided that
these are funded by recurring items in the budget.

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 Transition in FY 2019-2020
A modified version of the system will be implemented

EXPENSE
FY OBLIGATION IMPLEMENTATION EPP
CLASS

PS Until 31 Dec 2020

Included in the
MOOE & Until 31 Dec
2019 Until 30 June 2021 Implementation
Non-Infra CO 2020
Period
Infra CO Until 31 Dec 2021

1 Jan – 31 March
PS Until 31 Dec 2020
2021
MOOE & Until 31 Dec
2020 Until 30 June 2021 Included in the
Non-Infra CO 2020
Implementation
Infra CO Until 31 Dec 2021 Period

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UPDATES ON CBS per EO 91, s. 2019
REVERSION OF UNEXPENDED BAL.
At the End of FY
• Unreleased appropriations
• Unobligated allotments

At the End of EPP

• Unpaid obligations
• Undisbursed funds
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Important Reminders for Agencies
1. Ensure that funds are obligated by December
31, 2020
2. Clarify implementation arrangements for
transferred funds
3. Settle PS-related payables
4. Reassess implementation timelines for
contracts continuing in 2021
5. Project Requirements for Spill-Over Projects
in 2021
6. Conduct planning and early procurement
activities for the 2021 budget
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Conclusion
1. CBS is a reform that will decrease administrative
burden & increase implementation capacity of
agencies
2. CBS emphasizes that planning comes first
before budgeting
3. CBS instills discipline in preparing and
implementing the budget
4. CBS is closely linked with proper procurement
management
5. Success of the reform depends on close
coordination among budget, planning,
procurement, and operations units
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