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Issues & Problems of State Accounting

The one-year budgeting system in the Philippines has several problems: it does not allow for long-term budget planning and control beyond two years; it limits the ability to deal with resource shortfalls; and it increases the need to manage budgets on an input basis rather than programs. The government wants to implement a three-year medium-term expenditure framework to address these issues by mapping multi-year program requirements and automatically carrying over approved programs and budgets each year. This provides agencies more certainty to better plan, program and use funds effectively. Having a medium-term fiscal plan is important for setting fiscal direction, ensuring annual budget feasibility, and accounting for macroeconomic changes.

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Martin Acantilado
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436 views13 pages

Issues & Problems of State Accounting

The one-year budgeting system in the Philippines has several problems: it does not allow for long-term budget planning and control beyond two years; it limits the ability to deal with resource shortfalls; and it increases the need to manage budgets on an input basis rather than programs. The government wants to implement a three-year medium-term expenditure framework to address these issues by mapping multi-year program requirements and automatically carrying over approved programs and budgets each year. This provides agencies more certainty to better plan, program and use funds effectively. Having a medium-term fiscal plan is important for setting fiscal direction, ensuring annual budget feasibility, and accounting for macroeconomic changes.

Uploaded by

Martin Acantilado
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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ISSUES & PROBLEMS

OF STATE ACCOUNTING
One-Year Budgeting System
The problem with the Philippines’ current one-
year budgeting system is that:

•It
provides no mechanism for the Government
to control its budget and expenditure beyond
a two-year time horizon. It provides no
systematic way of projecting or managing the
expenditure requirements of ongoing and new
programs of government agencies.
•Itlimits the ability of the budgeting
agency and the agencies administering
programs to deal with resource shortfalls,
because within the one-year budgeting
system, agencies try to resolve their fiscal
problems exclusively by reducing
expenditures while maintaining existing
program commitments.
•It increases the need to manage the
agencies’ budgets on an input basis,
controlling the number of personnel
deployed and the expenditures on specific
items
•A one-year budgeting system also makes
it difficult to develop a system for
projecting the budget implications of
legislators’ proposals for spending .
Medium-Term Expenditure
Framework (MTEF) / Multi-Year
Budgeting System
The Philippine Government wants to set in place a three-
year budgeting system that systematically maps the
requirements of ongoing programs and proposed new
projects on a three-year basis. Under this system,
programs approved by Congress automatically carry over
to the following year and become part of the baseline;
they do not start from scratch every budget preparation
period. This carrying over highlights to decision makers
that the cumulative expenditure commitments of past
years will have to be considered in setting overall
expenditure levels.
With the approval of new projects and the expansion of
programs one year at a time, the budgeting system
recognizes the uncertain nature of fiscal resources and
economic development. It ensures that next year’s budget
starts with an accounting for decisions made during the
previous year. By providing agencies with a three-year
baseline budget that is considered and decided upon with
them during budget preparation, multi-year budgeting
reduces uncertainty and fosters efficient and effective use
of funds. Certainty about the availability of resources that
the agency can draw upon in planning and programming
its activities contributes to better operational and
technical performance.
Thank You!
Having a medium-term fiscal plan is important.

•it provides a framework and sets the direction for


fiscal planning in terms of the formulation of
expenditure, revenue, and borrowing programs.
•it ensures the medium-term feasibility of the annual
budget that is proposed to Congress.
•it provides a systematic way of capturing the effect
of macroeconomic changes in the fiscal program.
The Department of Education is also not
only considering how to increase access to
education; it is concentrating more on
improving the quality of education, shifting
further away from proposing additional
school buildings or new teachers and
emphasizing instead more critical inputs for
education: textbooks, training, and better
deployment.
the promotion of
broad-based growth
stemming from
structural reforms
a steady decrease in
the proportion of improved provision
Filipinos living of public social
below the poverty services, especially
line, from 41 percent education.
down to 25 percent
Philippine economic
history has provided
valuable lessons about
what works for
promoting growth and
equality.
The challenge facing the country:

• How to sustain the country’s poverty reduction


achievements and revitalize economic growth enough to
make a serious dent in poverty.

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