ft S L B A s R

VMOt
REPUBLIC OF THE PHILIPPINES . \
DEPARTMENT OF BUDGET AND MANAGEMENT
GENERAL SOLANO STREET, SAN MIGUEL, MANILA

NATIONAL BUDGET MEMORANDUM

I No. 143
Date: April 28, 2022

For : All Heads of Departments, Agencies, Bureaus, Offices, Commissions,

State. Universities and Colleges, Other Instrumentalities of the
National Government, and all Others Concerned

Subject : BUDGET PRIORITIES FRAMEWORK FOR THE PREPARATION OF

THE FY 2023 AGENCY BUDGET PROPOSALS UNDER TIER 2

1.0 PURPOSE

This FY 2023 National Budget Memorandum (NBM) is being issued to provide the
departments, agencies, and other entities with the following:
/
1.1 The key str-fetegies and programs/projects which will be prioritized for funding under
the fiscal space for Tier 2 as they respond to either a deficiency in the current targets
and/or emerging directions in the different sectors; and

1.2 The specific guidelines in the formulation of the Tier 2 proposals which shall be
submitted on May 31,2022.

The final macroeconomic assumptions and fiscal aggregates for the FY 2023 Budget as
approved by the Development Budget Coordination Committee (DBCC) as well as the
information on the resulting fiscal space, shall be issued separately.

2.0 EXPENDITURE DIRECTIONS FOR FY 2023

As we move forward, resuming economic activity, and start rebuilding after more than two
(2) years of being in the coronavirus disease (COVID-19) pandemic, priority will be given
to health-related expenditures, disaster-risk management, social security, digital
economy/government, local government support, and grovArth-inducing expenditures such
as crucial and shovel-ready infrastructure projects, among others. These will be pursued
considering environmental and social aspects, as we enter the Anthropocene or the Age
of Humans, and continue being committed to the United Nations’ Sustainable
Development Goals^ (SDGs).

The expenditure directions for FY 2023 are crafted based on the priorities identified by the
National Economic and Development Authority (NEDA) which are aligned with the
Updated Philippine Development Plan 2017-2022. These are likewise consistent with the

^ To support the attainment of SDGs by 2030, the DBCC created the Sub-Committee on SDGs. It rnonitors the
country's progress in attaining the 17 deveiopment goals, reviews SDG-related programs and policies, and
submits recommendations to the cabinet level of the DBCC. Likewise, the Senate Committee on SDGs,
Innovation, and Futures Thinking has been established to assess the country’s performance in attaining these
development goals.
1
 objectives outlined in Executive Order No. 166 s. 2022^, which adopts the ten-point policy
agenda to accelerate and sustain economic recovery from the COVID-19 pandemic.

2.1 Infrastructure Development

2.1.1 Sustaining the Build. Build. Build Program

The National Government’s (NG) massive investments in infrastructure
development, through the Build, Build, Build (BBB) Program, continues as the
bedrock strategy supporting the country’s economic growth. However, the
COVID-19 emergency health situation brought unprecedented challenges
resulting in significant delays in the completion of projects and the reduction in
the available fiscal space that can be allocated for the infrastructure portfolio.
This called for a review and reprioritization of the BBB Program, with the
government taking into account emerging priorities under the new normal as
well as those with high economic impact.

While the pandemic remains a major shock to economic activities since 2020,
its impact is seen to become less pronounced In the coming years. Hence, the
government shall continue the country’s infrastructure program to sustain
economic recovery and build greater resiliency.

2.1.2 Addressing Risks for Infrastructure Projects

The Plan-Program-Budget linkage will continuously be strengthened, and only
shovel-ready infrastructure programs/activities/projects (PAPs) shall be
considered in the FY 2023 National Budget Implementing agencies (lAs) shall
ensure that their proposals are included in the NEDA programming documents
as prescribed under NBM No. 142. The proposals shall also be aligned with
existing master plans and roadmaps for the infrastructure sector aimed at a
more integrated development planning responsive to the country’s needs.

Operational issues hampering project implementation shall be identified and the

early resolution of bottlenecks shall be aimed for the timely movement and
completion of priority PAPs.

2.1.3 Promoting Convergence Programs for Infrastructure Development

The concerned lAs shall strengthen program convergence efforts and inter­
agency collaborations to fully realize the optimal benefits of infrastructure PAPs.
Tapping the efficiency and expertise in project delivery and management of the
private sector shall also be encouraged to supplement government efforts and
augment public resources, especially for air and water transport projects.

2.1.4 Climate Change Adaptation and Disaster Resilience

Disaster risk resilience and climate change adaptation measures shall be
incorporated in the design of proposals. Asset management planning and
innovative maintenance strategies shall also be implemented to improve the
infrastructure system’s performance.

2.1.5 Strategic Infrastructure for the Priority Subsectors

2.1.5.1 Transport Infrastructure

Investments in transport infrastructure shall be anchored on the National

2 Adopting the Ten-Point Policy Agenda to Accelerate and Sustain Economic Recovery from the COVID-19
Pandemic, and Directing a Whole-of-Government Approach to Align All Economic Recovery Programs and
Measures of the National Government
2
 Transport Policy (NTP)^ and must secure the unimpeded flow of people,
goods, and services, especially during emergencies. Hence, the
provision of an efficient and reliable mass public transport system and
alternative modes of transport must be prioritized.

2.1.5.2 Social Infrastructure

The construction, renovation and rehabilitation of educational facilities
shall be at the forefront to: (1) support the students and teachers in
geographically isolated and disadvantaged and conflict-afflicted areas
(GIDCAs); and (2) ensure learning continuity, whether through limited
face-to-face classes or alternative education platforms. Meanwhile,
infrastructure proposals for the health sector must follow the objectives
laid out in the Philippine Health Facility Development Plan (PHFDP)
2020-2040.

2.1.5.3 Energy
The energy sector must continue its transition to the low carbon energy
future envisioned in the Philippine Energy Plan (PEP) 2020-2040 by
encouraging the development of downstream natural gas, renewable
energy, and alternative sources of energy.

2.1.5.4 Information and Communication Technologies (ICT) Infrastructure

The increased demand for quality internet connection calls for the
simultaneous implementation of an enhanced common towers policy
and the establishment of a one-stop shop facility in securing permits
and clearances for digital infrastructures. The NG shall also encourage
and capacitate LGUs in promoting wider use of ICT to improve both
public and private services.

2.2 Human Capital Development

According to the World Bank’s Systematic Country Diagnostic, the Philippines has a
Human Capital Index (HCI) score'' of 0.55 in 2018, which implies that deficiency in
education, health, and nutrition will affect the future productivity of an average Filipino
child to fall 45.0 percent below his or her potential. However, in the midst of the COVID-
19 pandemic, the country’s HCI has further declined to 0.52 in 2020. To prevent the
pandemic from further reversing our gains, the government shall continue to support
and strengthen the following sectors:

2.2.1 Health
The government shall continue to support reforms in nutrition and health
consistent with landmark legislations such as the Universal Health Care Act (RA
No. 11223) and the Kalusugan at Nutrisyon ng Mag-Nanay Act (RA No. 11148).
Likewise, this will also cover the implementation of the Mental Health Act (RA
No. 11036) made more relevant by the involuntary shifts in lifestyle and working
conditions brought about by the COVID-19 pandemic.

The country’s recent experience during the pandemic has highlighted the need
to strengthen our health systems. Specifically, focusing on the enhancement of
primary health care facilities as the entry point of patients with the health system
pursuant to the framework of the UHC Act. To supplement the infrastructure

®The NTP was formulated to help achieve the Transport Vision of a “safe, secure, reliable, efficient, integrated,
intermodal, affordable, cost-effective, environmentally sustainable, and people-oriented national transport system
that ensures improved quality of life of the people".
Provides an indication of the impact of human capital on future growth prospects, measured through five index
components: enrollment data, child mortality, harmonized test scores, stunting rates, and adult mortality.
3
 Transport Policy (NTP)^ and must secure the unimpeded flow of people,
goods, and services, especially during emergencies. Hence, the
provision of an efficient and reliable mass public transport system and
alternative modes of transport must be prioritized.

2.1.5.2 Social Infrastructure

The construction, renovation and rehabilitation of educational facilities
shall be at the forefront to: (1) support the students and teachers in
geographically isolated and disadvantaged and conflict-afflicted areas
(GIDCAs); and (2) ensure learning continuity, whether through limited
face-to-face classes or alternative education platforms. Meanwhile,
infrastructure proposals for the health sector must follow the objectives
laid out in the Philippine Health Facility Development Plan (PHFDP)
2020-2040.

2.1.5.3 Energy
The energy sector must continue its transition to the low carbon energy
future envisioned in the Philippine Energy Plan (PEP) 2020-2040 by
encouraging the development of downstream natural gas, renewable
energy, and alternative sources of energy.

2.1.5.4 Information and Communication Technologies (ICT) Infrastructure

The increased demand for quality internet connection calls for the
simultaneous implementation of an enhanced common towers policy
and the establishment of a one-stop shop facility in securing permits
and clearances for digital infrastructures. The NG shall also encourage
and capacitate LGUs in promoting wider use of ICT to improve both
public and private services.

2.2 Human Capital Development

According to the World Bank’s Systematic Country Diagnostic, the Philippines has a
Human Capital Index (HCI) score'' of 0.55 in 2018, which implies that deficiency in
education, health, and nutrition will affect the future productivity of an average Filipino
child to fall 45.0 percent below his or her potential. However, in the midst of the COVID-
19 pandemic, the country’s HCI has further declined to 0.52 in 2020. To prevent the
pandemic from further reversing our gains, the government shall continue to support
and strengthen the following sectors:

2.2.1 Health
The government shall continue to support reforms in nutrition and health
consistent with landmark legislations such as the Universal Health Care Act (RA
No. 11223) and the Kalusugan at Nutrisyon ng Mag-Nanay Act (RA No. 11148).
Likewise, this will also cover the implementation of the Mental Health Act (RA
No. 11036) made more relevant by the involuntary shifts in lifestyle and working
conditions brought about by the COVID-19 pandemic.

The country’s recent experience during the pandemic has highlighted the need
to strengthen our health systems. Specifically, focusing on the enhancement of
primary health care facilities as the entry point of patients with the health system
pursuant to the framework of the UHC Act. To supplement the infrastructure

®The NTP was formulated to help achieve the Transport Vision of a “safe, secure, reliable, efficient, integrated,
intermodal, affordable, cost-effective, environmentally sustainable, and people-oriented national transport system
that ensures improved quality of life of the people".
Provides an indication of the impact of human capital on future growth prospects, measured through five index
components: enrollment data, child mortality, harmonized test scores, stunting rates, and adult mortality.
3
 Meanwhile, a recent study^° of the NEDA showed that the increase in investment
in education in the Philippines resulted in improved access but did not translate
to better learning outcomes. The government should address the low student
performance which can be attributed to: a) passive student attitude; b) parental
involvement and parents’ educational attainment: c) shortage of subject-
specialized and high-quality teachers, inadequate/lack of school facilities and
learning materials, congested curriculum, and inability of school leaders to
innovate: and d) school location and limited local government support.

Similarly, the NEDA estimated that distance learning in the Philippines is only
37.0 percent^^ as effective as face-to-face learning. The implementation of
catch-up programs and innovative approaches are necessary to manage the
impact of the prolonged remote learning on outcomes.

2.2.3 Social Protection

The pandemic, volatile fuel prices, and natural and human-induced disasters
and emergencies have amplified the vulnerability of the poor and near-poor in
the country, as seen in their difficulty in accessing food and other essential
goods and services and earning sufficient income. According to the Philippine
Statistics Authority (PSA), poverty incidence among the Filipino population
stood at 23.7 percent for the first semester of 2021, which compares to the 21.1
percent recorded in the same period of 2018.

As part of the government’s strategy during the said crises and moving forward,
social protection shall be continually provided especially in the form of subsidies
for affected individuals and households from disadvantaged sectors. Related to
this, the creation and use of registries is crucial for the effective implementation
of targeted social protection programs. The fasttracking of the implementation
of the Community-Based Monitoring System (CBMS) Act and the Philippine
Identification System (PhilSys) Act, and the integration of the data from the
CBMS and other existing registries and configuration to be interoperable with
the PhilSys are critical at this point.

In addition, due to the higher National Tax Allotment (NTA) that the LCDs
receive starting 2022 pursuant to the Supreme Court’s ruling on the Mandanas-
Garcia Case''^, the LG Us shall be capacitated to deliver devolved social
protection assistance and services^^.

2.2.4 Labor and Employment

The labor and employment sector is beset with concerns on long-term scarring
in the labor market, which includes rising informal employment (i.e., shift from
wage and salary or formal employment to informal employment, majority of
which are self-employment), and disproportionate impact of the COVID-19
pandemic disruptions in education, employment, and earning for young and
prime-age workers. Also, large reallocation of jobs across sectors, and

Factors Affecting Learning Outcomes of Filipino Students

This assumes that the module system is around as effective as the ratio of the Philippines’ Programme for
international Student Assessment (PISA) score to the USA’s PISA score. The resulting ratio is 71,0 percent and
gives us the estimated effectivity of module learning as: 52%*(100-29)=37%
■'2 SC ruling expands the Internal Revenue Allotment base computation to include ALL national taxes,
encompassing NIRT and customs duties with a prospective application, starting 2022.
Devolved programs/activities/projects to LGUs that are evaluated to have sufficient resources and capacities
include programs for rebel returnees; relief operations and population development services; programs for child
and youth, family and community; welfare programs for women, elderly, and persons with disabilities; community-
based rehabilitation programs for vagrants, beggars, street children, juvenile delinquents; livelihood and other
pro-poor projects; and social welfare services such as maintenance of day-care centers (FY 2022 National
Budget Call)
5
 requirements, the collective capacity of the health system to provide health
services should also be improved.

Furthermore, the importance of health and living a healthy lifestyle will be

emphasized. In line with this, the government shall continue to promote nutrition
and health-related interventions and services, especially during the first 1,000
days® of life for mother and child. To address the country’s nutrition crisis, the
government shall adopt a multisectoral approach to the causes of childhood
malnutrition by providing nutrition-specific and nutrition-sensitive interventions.
These interventions are meant to reduce the hunger incidence in the country,
wherein the recent Social Weather Stations (SWS) survey has shown that 11.8
percent or an estimated 3.0 million Filipino families experienced involuntary
hunger® during the last quarter of 2021.

The government shall also continue to accelerate and expand the COVID-19
Vaccination Program, a priority identified in the Ten-Point Policy Agenda, and
encourage acquiring the routinely recommended vaccination for infants and
children to reduce morbidity and mortality among children against the most
common vaccine-preventable diseases. Lastly, the government shall intensify
the implementation of the Family Planning Program, focusing on sexual and
reproductive health services for women-of-reproductive age to prevent
adolescent or early pregnancy.

2.2.2 Education
Several concerns on access and quality of education emerged as flexible
learning is implemented, including the decline in enrollment and completion
rates, and low student performance. To address this, there is a need to continue
and effectively implement online and blended learning modalities in basic and
higher education, and technical vocational education and training (TVET).
Alternative assessment and certification methods shall also be developed and
institutionalized to evaluate student performance, determine skills gaps, and
validate skills acquired.

As restrictions become less stringent, it is important to ensure the safe return to

in-person schooling (i.e., vaccination, well-ventilated classrooms, availability of
water, sanitation, and hygiene [WASH] facilities), while continuously
strengthening and providing for the requirements of distance learning. Crucial
to the success of these efforts is addressing the worsening inequality, especially
due to digital divided Part of the solution can be through the aggressive
implementation of the DepEd Computerization Program, Last Mile Schools
Program, and Alternative Learning System (ALS) Program.

Moreover, the implementation of student financial programs® shall be enhanced

and its sustainability shall be ensured. Various scholarship and grants-in-aid
programs shall be harmonized and monitoring of tuition and other school fees
being charged by higher education institutions (HEIs) and technical vocational
institutions (TVIs) to the government shall be pursued.

® Covering pregnancy and the first two years of life

® Being hungry and not have anything to eat
^ Issues of expensive, slow, and unreliable internet connection, and added expenses for devices are major
challenges to enable the use of flexible learning modalities, especially for those who are poor and in GIDAs.
® Government Assistance to Students and Teachers in Private Education (GATSPE); Student Financial
Assistance Programs (Universal Access to Quality Tertiary Education, TESDA Scholarship Programs), among
others
4
 management of bio-medical wastes (protocol on proper disposal and treatment) shall
also be prioritized.

2.5 Enterprise Development

The reliance on digital transactions resulted in the rise of digital technology and digital
transformation as key enablers of activities. However, the use of digital technologies
in the Philippines is still below its potential, with the country’s digital adoption trailing
behind many regional peers. Hence, supporting the three major broad strategies^® of
the National Broadband Plan (NBP), the country’s blueprint in building information
structures (infostructures) for a digital nation, shall be prioritized.

The government shall also provide the necessary interventions and incentives to
accelerate investment in the telecommunications and ICT sector, particularly in remote
areas. The full implementation of the Ease of Doing Business and the Efficient
Government Service Delivery Act shall supplement this thrust. To sustain the
momentum of pervasive infostructure development, measures to stimulate demand
and increase broadband take-up rate shall also be established.

Equally important are investments in analog complements such as skills, regulations,

and institutions to leverage the old economy (i.e., pre-digital transformation).
Operationalizing the strategies''® under the Inclusive Innovation and Industrial Strategy
(i3s) will contribute in increasing the competitiveness, innovativeness, and resilience
in all sectors. Moreover, the adoption of appropriate technologies, with complementary
training programs, will enable startups and micro, small and medium enterprises
(MSMEs) to strengthen linkages to local and international markets.

Human capital development shall be supported with policies promoting the

transformation of jobs, facilities, processes, and future skills needs. The reskilling and
upskilling of workforce in the information technology (IT) and business process
management sector and other labor-intensive manufacturing sectors must be pursued
to leverage technological advancements.

The development of the country’s digital financial infrastructure shall also be promoted
to ensure the readiness of the financial system to shift towards a cash-lite economy,
following the widespread use of financial technologies (fintechs). The government shall
fasttrackthe implementation of e-governance projects, which will help promote greater
inciusivity, improve efficiency, and enhance security.

2.6 Science, Technology, and Innovation (STI)

The STI sector has been set back by several issues thereby preventing it from
achieving its full potential over the past years. Hence, there is a need to advance and
support the health and resilience of the country through the use of digital technology.

In order to scale up the adoption of technology in the agriculture, industry, services,

and health sectors, there is a need to intensify the rollout of available technologies
which can be used during pandemic, state of calamities, emergencies, among others.

(1) establishment of policy and regulatory reforms; (2) government investment in broadband infostructure; and
(3) stimulation of broadband demand
16 The i^s is based on five major pillars aimed at pursuing the following strategic actions in coordination with other
government agencies, industry, and academe: (1) building new industry, clusters, and agglomeration; (2)
capacity-building and human resource development; (3) MSME growth and development; (4) innovation and
entrepreneurship; and (5) ease of doing business and investment environment.
7
 Meanwhile, a recent study^° of the NEDA showed that the increase in investment
in education in the Philippines resulted in improved access but did not translate
to better learning outcomes. The government should address the low student
performance which can be attributed to: a) passive student attitude; b) parental
involvement and parents’ educational attainment: c) shortage of subject-
specialized and high-quality teachers, inadequate/lack of school facilities and
learning materials, congested curriculum, and inability of school leaders to
innovate: and d) school location and limited local government support.

Similarly, the NEDA estimated that distance learning in the Philippines is only
37.0 percent^^ as effective as face-to-face learning. The implementation of
catch-up programs and innovative approaches are necessary to manage the
impact of the prolonged remote learning on outcomes.

2.2.3 Social Protection

The pandemic, volatile fuel prices, and natural and human-induced disasters
and emergencies have amplified the vulnerability of the poor and near-poor in
the country, as seen in their difficulty in accessing food and other essential
goods and services and earning sufficient income. According to the Philippine
Statistics Authority (PSA), poverty incidence among the Filipino population
stood at 23.7 percent for the first semester of 2021, which compares to the 21.1
percent recorded in the same period of 2018.

As part of the government’s strategy during the said crises and moving forward,
social protection shall be continually provided especially in the form of subsidies
for affected individuals and households from disadvantaged sectors. Related to
this, the creation and use of registries is crucial for the effective implementation
of targeted social protection programs. The fasttracking of the implementation
of the Community-Based Monitoring System (CBMS) Act and the Philippine
Identification System (PhilSys) Act, and the integration of the data from the
CBMS and other existing registries and configuration to be interoperable with
the PhilSys are critical at this point.

In addition, due to the higher National Tax Allotment (NTA) that the LCDs
receive starting 2022 pursuant to the Supreme Court’s ruling on the Mandanas-
Garcia Case''^, the LG Us shall be capacitated to deliver devolved social
protection assistance and services^^.

2.2.4 Labor and Employment

The labor and employment sector is beset with concerns on long-term scarring
in the labor market, which includes rising informal employment (i.e., shift from
wage and salary or formal employment to informal employment, majority of
which are self-employment), and disproportionate impact of the COVID-19
pandemic disruptions in education, employment, and earning for young and
prime-age workers. Also, large reallocation of jobs across sectors, and

Factors Affecting Learning Outcomes of Filipino Students

This assumes that the module system is around as effective as the ratio of the Philippines’ Programme for
international Student Assessment (PISA) score to the USA’s PISA score. The resulting ratio is 71,0 percent and
gives us the estimated effectivity of module learning as: 52%*(100-29)=37%
■'2 SC ruling expands the Internal Revenue Allotment base computation to include ALL national taxes,
encompassing NIRT and customs duties with a prospective application, starting 2022.
Devolved programs/activities/projects to LGUs that are evaluated to have sufficient resources and capacities
include programs for rebel returnees; relief operations and population development services; programs for child
and youth, family and community; welfare programs for women, elderly, and persons with disabilities; community-
based rehabilitation programs for vagrants, beggars, street children, juvenile delinquents; livelihood and other
pro-poor projects; and social welfare services such as maintenance of day-care centers (FY 2022 National
Budget Call)
5
 3.1.2 Proposals for the scaling up of activities in terms of policy change not previously
approved such as scope, beneficiaries, design or implementation schedule; and

3.1.3 Essential operations, maintenance, asset replacement and minor capital cost,
including funding required for technical assistance programs to LGUs and those
under the Organizational Effectiveness Proposals (OEPs) of agencies as a
result of the devolution of functions to LGUs^®.

A list of Tier 2 inclusions by allotment class are detailed in Annex A of NBM No. 142 -
National Budget Call for FY 2023. Agencies are reminded to tightly prioritize their
proposals given the limited fiscal space.

3.2 Formulating the Tier 2 Proposals

3.2.1 The foreign exchange rate of P50.50:$1.00 shall be used for the computation of
the peso equivalent of dollar-denominated requirements of Tier 2 proposals for
FYs 2023-2025.

3.2.2 The departments/agencies, as well as the DBM Budget and Management

Bureaus (BMBs) and Regional Offices (ROs), shall do the necessary
analysis/evaluation to reflect the budgetary requirements of their Tier 2
proposals. To determine the budgetary requirements of such items in Tier 2
proposals for FYs 2023-2025, the FY 2022 National Expenditure Plan (NEP)
shall be used as the base figure in the formulation.

3.2.3 With the continuing shift to cash budgeting, the Tier 2 proposals shall be limited
to the PAPs or goods and services that are to be delivered and paid within the
year. Accordingly, the intended appropriations for these proposals shall only
pertain to the cash requirements to be fully disbursed within the fiscal year,
including their impact to the two out-years.

3.2.4 To properly allocate the limited fiscal space. Tier 2 proposals shall be evaluated
based on the following considerations:

3.2.4.1 Available fiscal space set bv the DBCC

3.2.4.2 Implementation Readiness

The PAPs to be included in the budget must be implementation-ready,
and to be delivered and executed within the year. Proposals must
include clear, comprehensive, and complete submission of relevant
supporting documents such as:

a. Feasibility Studies;
b. Detailed Engineering Designs;
c. Annual Procurement Plans;
d. Relocation Action Plans;
e. Right of Way Acquisitions:
f. Agency Operational Plans;
g. Agency Sector Roadmaps;
h. Network Plans;
i. Inter-agency Clearances and Permits; and,
j. Proofs of coordination with LGU implementors.

In adherence to EO No. 138, as implemented by DBM-DILG Joint Memorandum Circular No. 2021-2 dated
August 12, 2021
9
 other necessary information like monitoring and evaluation (M&E)
plans and risk management plans indicating efforts done to ensure
PAPs implementation or execution are encouraged.

If preparatory works are still required prior to actual execution,

particularly for the new programs and projects, the necessary funding
requirement shall only cover the first phase of implementation.

3.2.4.3Aaencv Absorptive Capacity

The agency absorptive capacity as indicated by the recent budget
utilization rates, represent the likelihood that the new allocation can be
utilized by the agency. A low absorptive capacity reflects that the
agency is unlikely to utilize additional funds.

3.2.4.4 Consistency with the Priorities in the BPF

Proposals that address the identified gaps through the strategies
indicated in this BPF will be prioritized for funding.

3.2.4.5 Indicative Annual Procurement Plan (APP)

An indicative APP shall be prepared alongside the budget proposal to
enable the agency’s conduct of the early procurement process once the
NEP is submitted to Congress in July 2022.

The Budget Preparation (BP) Forms 202 and 203 issued in NBM No.
142, as well as BP Forms 709 and 710 for GOCCs issued in Corporate
Budget Memorandum (CBM) No. 44, and other relevant supporting
documents shall be the bases for the evaluation. Hence, clear,
comprehensive, and complete submissions are required.

3.2.5 Agencies shall include prioritization of their budget proposals by straight ranking
(i.e., only one PAP per rank and without subranking).

3.2.6 Submission of Tier 2 proposals shall be done on or before May 31,2022.

3.3 Full Devolution of Certain Functions of the Executive Branch to LGUs

The proposals under Tier 2 may:

3.3.1 Include the funding requirement for capacity building programs for LGUs to
enable them to assume the devolved functions and services;

3.3.2 Prioritize subsidies for local projects of LGUs belonging to the 5‘^ and income
classes, the GIDA as well as those with the highest poverty incidences, ranked
in top third highest; and

3.3.3 Be consistent to the DBM-approved DTPs, or the DTP duly endorsed by its
Devolution Transition Committee if the plan has not yet been approved by the
DBM.

3.4 Planning and Budgeting Linkage

3.4.1 The 2023 budget also aims to strengthen the vertical and horizontal linkages of
the government. The strategic regional needs are to be prioritized in the national
plans while ensuring that regional plans are aligned with the national priorities.
Regional agency programs must also be responsive to the needs of the poorest,
disadvantaged but well-performing LGUs in their sectors.

10
 3.5.3 The Office of the Presidential Adviser on the Peace Process (OPAPP) for review
of budgetary requirements of the Payapa at Masaganang Pamayanan
(PAMANA) Program.

3.5.4 Other endorsing entity for review of budget proposals involving specific
concerns as detailed in Section 5.2 and 5.3 of the National Budget Call for FY
2023.

Only proposals that pass the respective review process/es shall be considered for
funding under the FY 2023 Budget.

4.0 For immediate compliance.

TINfR^^^!Rlil^"cANDA

Officer-in-Charge, DBM

12