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The Philippine
Government Budgeting
J O N L E O J . L I C AYA N , C PA

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“No money shall be paid out

of the treasury except in
pursuance of an
appropriation by law.”
S e c t i o n 2 9 ( 1 ) , Ar t i c l e V I o f t h e
1987 Constitution

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National
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The national budget (government budget)

is the government’s estimate of the
sources and uses of government funds
within a fiscal year. This forms the basis
for expenditures and is the government’s
key instrument for promoting its socio-
economic objectives.

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• As to Nature
• Annual Budget- Basis of an annual appropriation.
• Supplemental Budget- a budget which adjusts or supplement a
previous budget which is deemed inadequate for the purpose it is
intended.
• Special Budget- A budget of special nature which is not
adequately provided or not at all included in GAA.

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• As to Basis
• Performance Budget- a budget emphasizing the target output
based on functions, activities, and projects.
• Line-tem Budget- a budget which emphasizes the objects of
expenditure such as: salaries and wages, etc, traveling
expenses, etc.

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• As to Approach and Technique

• Zero-based Budgeting- a process which requires systematic
consideration of all PAPs by presenting them through “decision
packages” or key budgetary inclusions.
• Incremental Approach- a budget where only additional
requirement needs justifications. It focuses analysis of
incremental changes in the budget.
• Old system used by Arroyo Administration

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Balanced Budget
Master title style

In the context of government budgeting, a budget is said to be balanced

when revenues match expenditures or disbursements.

When expenditures exceed revenues, the government incurs a deficit

which may result in the following situations:
1. The government borrows money either from foreign sources or from the
domestic capital market which increases the debt stock of the NG and
its debt servicing requirements;
2. The government borrows money from the Bangko Sentral ng Pilipinas;
or, •
3. The government withdraws funds from its cash balances in the
Treasury

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System
title(GP
style
60)

All appropriations authorized in this Act, including budgetary support to GOCCs, shall be
available for release and disbursement for the purpose specified, and under the same
general and special provisions applicable thereto, until December 31, 2020. While the
amount appropriated herein as financial assistance to LGUs released during the fiscal
year shall be available for disbursement for the purpose specified until December 31,
2021. On the other hand, appropriations for the statutory shares of LGUs shall be
available for obligation and disbursement until fully expended.

After the end of validity period, all unreleased appropriations shall lapse, while
unexpended or undisbursed funds shall revert to the unappropriated surplus of the
General Fund in accordance with Section 28, Chapter 4, Book VI of E.O. No. 292 and
shall not thereafter be available for expenditure except by subsequent legislative
enactment.

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One-Fund
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Master title style

The "one-fund" concept is a fiscal management policy requiring that

as much as possible, all revenues and other receipts of the
government must enter the General Fund and their utilization and
disbursement subject to the budgeting process.

The one-fund concept is significant in that it serves as an avenue

through which fiscal authorities may properly allocate scarce
government resources in accordance with the priorities in the over-all
program of economic development.

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The Budget
Cycle

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Approved Budget
Master title style

The approved budget consists of the following:

1. New General Appropriations
2. Continuing Appropriations
3. Supplemental Appropriations
4. Automatic Appropriations
5. Unprogrammed Funds
6. Retained Income/Funds
7. Revolving Funds
8. Trust Receipts
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Appropriation
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1. New General Appropriations – annual authorizations for incurring obligations,

as listed in the GAA.
2. Continuing Appropriations – authorizations to support the incurrence of
obligations beyond the budget year (e.g., multi-year construction projects).
3. Supplemental Appropriations – additional appropriations to augment the
original appropriations which proved to be insufficient.
4. Automatic Appropriations – authorizations programmed annually which do not
require periodic action by Congress.

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Appropriation
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5. Unprogrammed Funds – standby appropriations which may be availed only

upon the occurrence of certain instances.
6. Retained Income/Funds – collections which the agencies can use directly in
their operations.
7. Revolving Funds – receipts from business-type activities of agencies which
are authorized to be constituted as such. These are self-liquidating and all
obligations and expenditures incurred by virtue of said business-type activity
shall be charged against the fund.
8. Trust Receipts – receipts by a government agency acting as agent.

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Click toExecution
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General Appropriations Act DBM as agency charge to

(National Budget) Control and Implement the GAA

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Agencies submit Disbursement

GAA serves as allotment Agencies
BEDs on Nov 30 authorities. incl.
release document for obligate their
items in “For budgets comprehensive
Comprehensive Release” NCAs for 1st
FCR list semester

But those in BFARs shall

Negative List / serve as
FLR “For Later guidance for
Release” will still further
require SAROs releases 1515
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Master title

(a) Lump-sum Funds within the agency budget, details of which have not
been submitted prior to the effectivity of the GAA;
(b) Special Purpose Funds, including Budgetary Support to Government
Corporations;
(c) Other items subject to compliance with the
conditionalities/requirements specified under the General and/or
Special Provisions and Budget Affirmation/Veto Message in the GAA;
and
(d) All automatically appropriated items, including Special Accounts in
the General Fund.
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Disbursement Authorities
title style

❖Notice of Cash Allocation (NCA). Cash authority issued by the

DBM to central, regional and provincial offices and operating units
through the authorized government servicing banks of the MDS, to
cover the cash requirements of the agencies.

❖Non-Cash Availment Authority (NCAA). Authority granted by DBM

to government agencies to account for the cash equivalent of loan
proceeds availed of through supplier’s credit/constructive cash.

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Disbursement Authorities
title style

❖Cash Disbursement Ceiling (CDC). An authority issued by the

DBM to departments with overseas operations e.g., DFA and DOLE
to utilize their income collected/retained by their foreign service
posts (FSPs) to cover its operating requirements but not to exceed
the released allotment to the said post.

❖Tax Remittance Advice (TRA). Document which agencies issue/file

with the BIR to report and record remittances (constructive payment)
of all taxes withheld from transactions. This serves as basis for BIR
and BTr to record as income, the tax collection and deposit in their
books of accounts.
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Glossary of Common Terms

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Appropriation vs. Allotment
title style

Appropriation refers to an authorization made by law or legislative

enactment directing payment out of government funds under specified
conditions or for specific purposes.

On the other hand, allotment is an authorization issued by the DBM to

an implementing agency to incur obligations for specified amounts
contained in a legislative appropriation.

2020
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Obligations Master
Disbursements
title style

Obligations are liabilities legally incurred and committed to be paid for

by the government either immediately or in the future.

Disbursements refer to the actual withdrawal of cash from the Bureau

of the Treasury due to the encashment of checks issued by agencies
and payment of budgetary obligations.

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Obligation Budget
Mastervstitle
Cashstyle
Budget

The obligation budget is the proposed amount of commitments that

the government may incur or enter into for the delivery of goods and
services in a fiscal year.

On the other hand, cash budget is the aggregate of revenues,

borrowings and disbursements of the National Government. It shows
the actual deposits and withdrawals of cash of national government
agencies from the BTR for payment of current and previous year's
obligations

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Programmed vs. Unprogrammed
title style Appropriations

Programmed appropriations are appropriations with definite/identified

funding as of the time the budget is prepared while unprogrammed
appropriations are those which provide standby authority to incur
additional agency obligations for priority programs or projects when
revenue collection exceed targets, and when additional grants or
foreign funds are generated.

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Disbursement Program
titlevs.
style
Cash Release Program

The disbursement program refers to the actual withdrawal of cash

from the Treasury due to the encashment of checks issued by
agencies and from payment of other obligations.

The cash release program refers to the program of Notice of Cash

Allocation (NCA) releases to be made by the DBM based on the
Agency Work and Financial Plan and the cash available in the Bureau
of the Treasury. The NCA provides the authority for the maximum
amount of withdrawals that an agency can make from government
servicing banks for the month indicated
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Click toExpenditures
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vs. style
Infrastructure Expenditures

Capital expenditures refer to expenditures for capital goods or durable

goods which are used for productive purposes such as the construction of
roads and bridges, dams, power and irrigation works, schools and
hospitals. It is also known as capital outlays, referring to the purchase of
equipment and fixed assets, the benefits of which extend beyond the
budget year and which add to the assets of the government.

Infrastructure expenditures, however, is a subcomponent of capital outlays

which refer to spending for the construction of various basic public works,
such as roads, ports, airports, water supply, irrigation and other capital
investments particularly of the Department of Public Works and Highways,
the Department of Transportation and Communication, the school building
program of DECS and the national irrigation projects of the Department of
Agriculture.
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National Budget
Master
vs. Public
title style
Sector Budget

The national budget refers to the totality of the budget of the various
departments of the national government including support to LGUs
and GOCCs.

The public sector budget or the consolidated public sector budget is

the aggregate of revenues, expenditures and indebtedness of all units
of government, including the national government and its agencies
and instrumentalities, local government units, and government-owned
and/or controlled corporations.

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