The Budget Cycle • Conclusion

5. Agency Tier 1
1. Budget Call 2. Citizen Engagement 3. RDC Consultations 4. Program
Proposals (Ongoing
Jan of Prior FY Before Tier 1 & 2 Before Tier 1 & 2 Convergence
Expenditures)
Fiscal Year) Proposals Proposals Before Tier 1 & 2 Proposals
February of Prior FY

PREPARATION
9. Audit Report 6. Tier 1 Deliberations
Within Next FY March of Prior FY

8. DBCC Year-End 7. Budget Priorities

Report Framework
Within Next FY April of Prior FY

8. Agency Tier 2
7. DBCC Mid-Year
Proposals (New/
Report
September of FY
Expanded Spending)
May of Prior FY

6. In-Year Reports 9. Tier 2 Deliberations

Monthly & Quarterly June-July of Prior FY
ACCOUNTABILITY

10. Presentation to
5. Performance Review
President & Cabinet
Throughout FY
July of Prior FY

4. Agencies’ 11. Confirmation &

THE BUDGET CYCLE

Accountability reports Finalization
Monthly & Quarterly July of Prior FY

The budget and management reforms

3. Monitoring & 12. The President’s
Evaluation
implemented since 2010 have Budget
Throughout FY strengthened the manner by which July-August of Prior FY

the government prepares, authorizes,

implements, and accounts for the use of 1. House Deliberations
2. Citizen Engagement
Throughout FY
the National Budget. August-October of
Prior FY
The four phases of the Budget Cycle overlap
in continuing cycles. While the Executive
LEGISLATION

1. Performance Targets implements the Budget for the current year, it 2. Senate Deliberations
October-December of September-November of
Prior FY also prepares the Budget for the next fiscal year Prior FY

or defends it before Congress. At the same time,

the government monitors, evaluates, and reports 3. Bicameral
6. Disbursement on actual performance year-round. Deliberations
Throughout FY November-December of
Prior FY

5. Cash Allocation 4. Ratification &

January (Comprehensive) Enrollment
and Throughout FY EXECUTION December of Prior FY

1. Early Procurement
3. Allotment Release 2. Budget Program 5. Enactment of the
4. Obligation Activities
January (Comprehensive) October-December of GAA
Throughout FY October-December of
and Throughout FY Prior FY December of Prior FY
Prior FY

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Conclusion • The Budget Cycle

A. BUDGET PREPARATION
1. Budget Call locations, and other guidelines that agencies must comply with
Jan of Prior Fiscal Year (FY) 1 in preparing their Tier 2 budget proposals.
Budget preparation starts with the Budget Call , which sets the
2

parameters and procedures to guide agencies in preparing their 8. Agency Tier 2 Proposals
respective proposed budgets. May of Prior FY
After undertaking further consultations with CSOs, RDCs,
2. Citizen Engagement and other agencies, agencies prepare their proposals for new
Before Tier 1 & 2 Proposals 3 programs and projects or the expansion of existing ones.
Agencies engage citizens as they prepare their proposed Agencies submit both their proposed Tier 1 and Tier 2 budgets
budgets, through the Budget Partnership Agreements with civil through the Online Submission of Budget Documents System.
society organizations (CSOs), Bottom-Up Budgeting (BUB), and
other participatory budgeting mechanisms. 9. Tier 2 Deliberations
June to July of Prior FY

3. RDC Consultations Like in Tier 1, the DBM conducts TBH and ERB to review the
Before Tier 1 & 2 Proposals 3 Tier 2 proposals of agencies. Other government bodies are also
Agencies consult with Regional Development Councils (RDCs) involved in reviewing such proposals: the NEDA Investment
to make sure that their respective budget proposals are aligned Coordination Committee (ICC) for capital projects costing
with the regions’ development needs and priorities. P1 billion or more and for PPP-related proposals; the DBCC
Subcommittee on Program & Project Appraisal (SC-PPA) for new
4. Program Convergence or expanded programs or projects costing P300 million to less
Before Tier 1 & 2 Proposals 3 than P1 billion; the NEDA Infrastructure Committee (InfraComm)
Lead and contributing agencies for each program priority of the for all infrastructure projects in line with the Three-Year Rolling
government (for example, tourism) meet and synergize their Infrastructure Program (TRIP); the GCG and DoF for the
proposed budgets to meet target outcomes. proposals of GOCCs; and the MITHI committee for ICT projects.

5. Agency Tier 1 Proposals 10. Presentation to the President and the Cabinet
February of Prior FY 4 July of Prior FY

Agencies prepare the forward estimates (FEs) or current costs of The DBM, DoF, and NEDA, with the BSP (as the DBCC) present
their ongoing programs and projects and submit these for the the proposed Budget before the President and the Cabinet for
“Tier 1” stage of 2TBA. discussion and approval.

6. Tier 1 Deliberations 11. Consolidation, Validation, and Confirmation

March of Prior FY July of Prior FY

Agencies prepare the forward estimates (FEs) or current costs of The DBM validates the approved budgets and consolidates
their ongoing programs and projects and submit these for the these into the Budget of Expenditures and Sources of Financing
“Tier 1” stage of 2TBA. (BESF) and other budget documents.

7. Budget Priorities Framework 12. The President’s Budget

April of Prior FY July to August of Prior FY5

This document spells out the economic forecasts and fiscal The 1987 Constitution mandates the President to submit the
targets for the budget year, the total cost of ongoing spending Proposed Budget to Congress within 30 days from the opening of
under Tier 1, and identifies the fiscal space: the available the regular session of Congress. The proposed Budgets for 2012 to
resources for new programs and projects or the expansion 2016 had been consistently submitted one working day after the
of existing ones. The Framework defines priority sectors and opening of the regular session. In addition, the comprehensiveness
and level of detail of the Proposed Budget had been improved.

1
A Fiscal Year is a period of twelve months for which a government plans its management of money.
2
The DBM issues the National Budget Call for NGAs, including SUCs; and the Corporate Budget Call for GOCCs.
3
Citizen engagement, consultation with RDCs, and Program Convergence Budgeting do not happen sequentially. Rather, these must be conducted before agencies
submit their proposals for Tier 1 (February) and Tier 2 (May).
4
Before the 2TBA was adopted, agencies submit their proposed budgets—both for ongoing programs as well as new or expanded expenditures—once.

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 The Budget Cycle • Conclusion

B. BUDGET LEGISLATION C. BUDGET EXECUTION

1. House Deliberations 1. Early Procurement Activities
August to October of Prior FY October to December of Prior FY
The Budget bill is tackled by Congress like any legislation. Agencies are required to prepare their Annual Procurement
Thus, the Committee on Appropriations of the House of Plans and other bid documents before the new fiscal year
Representatives holds public hearings on the proposed Budget. starts. Moreover, the government adopted a policy of allowing
The Committee then sponsors the recommended General agencies—such as the DPWH and others which implement
Appropriations Bill (GAB) before the House in plenary. Once infrastructure projects—to bid their projects before the GAA is
approved, the House transmits the GAB to the Senate. enacted. Early bidding allows agencies to award their approved
projects as soon as the new GAA takes effect.
2. Senate Deliberations
September to November of Prior FY 2. Budget Program
Unlike normal legislation, the Constitution first requires the October to December of Prior FY
House to approve the GAB before the Senate considers the Agencies submit Budget Execution Documents (BEDs) to
same. However, to expedite the process, the Senate Committee outline their financial plans and performance targets for the
on Finance usually starts hearings on the President’s Budget year. The DBM consolidates these plans into the budget
well before the House formally transmits the GAB. Like in the program, which breaks down the allotment and cash releases
House, the Committee on Finance sponsors the GAB in plenary, for each month of the year.
which then approves the Senate version of the GAB.
3. Allotment Release
3. Bicameral Deliberations January (Comprehensive) and Throughout FY
Nov-Dec of Prior FY The DBM issues allotments to agencies to authorize the latter
After the House and the Senate approve their versions of the to incur obligations. With the GAA-as-Release Document,
GAB, they each form a panel of lawmakers that will constitute the enacted Budget itself serves as the allotment release for
the Bicameral Conference Committee or Bicam. all budget items except those contained in a negative list that
are issued the Special Allotment Release Orders (SAROs) after
4. Ratification and Enrolment agencies comply with the documentary requirements.
December of Prior FY
The Harmonized or “Bicam” version of the GAB is then 4. Obligation
submitted back to both Houses, which then vote to ratify the Throughout FY
final GAB. Both Houses then submit or “enrol” the ratified GAB Agencies incur liabilities that the national government will
to the President. pay for, as they implement programs, activities, and projects.
Agencies incur obligations when they hire new staff or enter
5. Enactment into a contract with suppliers of goods and services that are
December of Prior FY subject to a transparent and competitive procurement process.
Budget legislation ends when the President signs the GAA
into law. Prior to this, the President may veto or set conditions 5. Cash Allocation
for implementation of certain items in the GAA, which are January (Comprehensive) and Throughout FY
then specified in the President’s Veto Message. Unlike other The DBM issues disbursement authorities, such as the Notice
legislation, the President may effect a “line item veto” of specific of Cash Allocation (NCA), to authorize an agency to pay the
provisions of the GAB. obligations it incurs. To ease budget execution, the DBM
issues comprehensive NCAs to cover the cash requirements of
If in case Congress fails to pass the GAB on time, the President agencies for the first semester.
may re-enact the previous year’s GAA until such time that the
fresh Budget is passed. The Budgets from 2011 to 2016 have all
been enacted on time.

The 2017 Proposed Budget is scheduled to be submitted to Congress just before the Constitutional deadline, or on August 24, 2016, in order to give the incoming
5

Duterte administration a chance to review the Proposed Budget which was prepared during the Aquino administration.

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Conclusion • The Budget Cycle

6. Disbursement
Throughout FY
Monies are paid out from the Treasury to settle obligations
that government incurred for the delivery of services to
citizens. To ease the payments process, the DBM introduced
checkless and cashless disbursement schemes. The DoF-BTr
also implemented the TSA to improve the management of the
government’s cash resources.

D. BUDGET ACCOUNTABILITY
1. Performance Targets 5. Performance Review
January of FY Throughout FY
Budget accountability starts with the setting of targets that The DBM reviews the financial and physical performance of
agencies are to be held accountable for. With the Performance- agencies against their targets. Review mechanisms include: the
Informed Budget, the GAA now contains the targeted ZBB, to evaluate the efficiency and effectiveness of programs;
outcomes, outputs and performance indicators of each agency. and the FTDUs, to closely monitor agencies’ performance and
These targets are also reflected in agencies’ BEDs (see “Budget address bottlenecks proactively.
Program” under Budget Execution), which effectively serve as
the agencies’ plans for the year. 6. In -Year Reports
Monthly and Quarterly
2. Citizen Engagement The DoF and the DBM regularly publish snapshots of the
Throughout FY government’s fiscal performance, revenue collections, debt, and
To empower citizens during Budget Accountability, the expenditures.
government ensures transparency--agencies disclose their
budgets, reports, and other relevant information through the 7. DBCC Mid-Year Report
Transparency Seal; and make available data in open format. In By September of FY
addition, the government also publishes the People’s Budget The DBCC publishes a comprehensive report on
along with other technical documents and reports. macroeconomic developments, the fiscal situation of the
national government, and the performance of key programs
Citizens participate formally in the monitoring of programs and projects. The Mid-Year Report also discusses any
and projects through BPAs, BUB, and other mechanisms. In adjustments that the DBCC makes to the government’s
addition, CSOs participate in the audit process through the economic projections and fiscal targets for the rest of the year.
COA’s Citizens’ Participatory Audit.
8. DBCC Year-End Report
3. Monitoring and Evaluation Within the Following FY
Throughout FY The DBCC publishes another comprehensive report covering
Agencies must set-up and implement monitoring and the full year. Compared to the Mid-Year Report, the Year-End
evaluation mechanisms to ascertain the effectiveness of the Report provides more discussions and details about actual
programs and projects on which they spend. Agencies must revenue and expenditure outturns against program, and the
have internal control mechanisms to ensure that public funds financial and physical performance of priority programs.
are spent and accounted for properly.
9. Audit
4. Agencies’ Accountability Reports Within the Following FY
Monthly and Quarterly The COA reviews the accounts of each agency to ascertain
Agencies submit Financial Accountability Reports on a monthly or if public funds are used properly, according to the law and
quarterly basis, as required by the DBM and the COA. These reports standards, and with value-for-money. The COA produces
are submitted online through the Unified Reporting System. audit reports for each agency; a whole-of-government Annual
Financial Report; as well as Special Audit Reports. The DBM
uses COA’s Audit Reports in confirming agency performance,
determining budgetary levels for agencies, and addressing
issues in fund usage.
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