1 st PAGBA Quarterly Meeting and Seminar Public

1 st PAGBA Quarterly Meeting and Seminar Public Financial Management Reforms Towards Inclusive Development Secretary Florencio B. Abad Department of Budget and Management

Objectives of Effective PEM PUBLIC EXPENDITURE MANAGEMENT FISCAL DISCIPLINE ALLOCATIVE EFFICIENCY OPERATIONAL EFFICIENCY “SPENDING WITHIN MEANS” “SPENDING ON THE RIGHT PRIORITIES” “SPENDING W/ MEASURABLE RESULTS” Schick (1998) and author’s interpretations

2010 -2012: Restoring Public Trust

Opening Salvo: Zero-Based Budgeting “Ang anumang pagbabago ay magmumula sa pagsiguro natin na magwawakas na ang pagiging maluho at pagwawaldas. ”

Commitment to Fiscal Consolidation

Tighter Alignment with Priorities • 2010: Zero-Based Budgeting • 2011: Alignment of Budget with 5 Social Contract KRAs – – – Transparent, Accountable & Participatory Governance Poverty Reduction and Empowerment of the Poor Rapid, Inclusive and Sustained Economic Growth Just and Lasting Peace and Rule of Law Integrity of the Environment and Climate Change Adaptation and Mitigation • 2012: Program Budgeting Approach

Delivering the Dividends of Reform Increased Share of Social, Econ Services 40, 0% 35, 0% 30, 0% 25, 0% 20, 0% 15, 0% 10, 0% Social Service Economic Service Debt Service Gen. Public Service Defence Net Lending 5, 0% 0, 0% 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Source of Basic Data: DBM

Delivering the Dividends of Reform Meaningful Social Services • Pantawid Pamilyang Pilipino – Expansion to cover 4. 6 M by 2015 – Supplants dependency ties w/ traditional patrons • Closing the Gaps in Human Investments – Supporting K-12 Basic Education Reform by closing teacher, classroom, textbook gap – Supporting Universal Healthcare by covering Q 1&Q 2 in NHIP & closing rural health unit gap

Faster Budget Execution • 2010: Disaggregation of Lump Sum Funds • 2011: Procurement Innovations (Early Procurement & Expansion of Phil. GEPS) • 2012: Account Management Teams • 2013: One-Year Validity of Appropriations

Performance Budgeting • 2011: Review of Organizational Performance Indicator Framework • 2011: Started Work on Results-Based Performance Management System • 2012: Performance-Based Incentive System and Performance-Based Bonuses

Fiscal Transparency and Participation • 2010: Government-CSO Principles of Constructive Engagement • 2011: Mandatory Disclosure Provisions (2012: Transparency Seal) • 2011: NGA-CSO Budget Partnerships • 2011: Use of Technology for Transparency (PDAF webpage, Budget. Ng. Bayan. Com, etc. ) • 2012: Bottom-Up Budgeting

Leveraging Technology • Government Integrated Financial Management Information System • Philippine Government Electronic Procurement System • Government Manpower Information System and National Payroll System • Cashless Purchase Cards

PH: “Newest Aspiring Tiger” Inquirer Front Page

Challenge for 2013 -2016: Inclusive Development

Wealth & Power in the Hands of a Few

PFM Reform in Support of Inclusive Growth • Fiscal Discipline: sustain trajectory of fiscal consolidation, 2% deficit-to-GDP by 2013 • Allocative Efficiency: put horse before cart through Budget Priority Framework • Operational Efficiency: new face of budget: – Budget as Release Document – Performance-Informed Budget • Deeper Fiscal Transparency & Participation

PAGBA as Key Advocate of Reform

1 st PAGBA Quarterly Meeting and Seminar Public Financial Management Reforms Towards Inclusive Development Secretary Florencio B. Abad Department of Budget and Management