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117. the DBM likewise seeks to bring the budget closer to the people. Previously a mass of numbers and line items without a clear story on where funds are going. the DBM introduced performance-informed budgeting (PIB) which required government agencies to strengthen the link between planning and budgeting and to simplify the presentation of the budget. Cognizant of its vital role in national development. the Department of Budget and Management (DBM) under the Aquino Administration has sought to ensure that public resources are managed more efficiently and with the greatest degree of discipline. It is crucial not only to channel resources on programs that accelerate economic growth.Introduction The National Budget is the financial blueprint of a country’s development plan. the government is changing the face of the budget. to re-direct funds to programs that would be responsive to the needs of the people especially those in regions beset by poverty. Thus. The new face of the Budget therefore represents the continuing shift away from the dominance of patronage politics and clientelistic relationships towards a more responsive. With the adoption of the PIB as a budgeting scheme. in the preparation of the proposed National Budget for fiscal year 2014. The Aquino Administration’s commitment to promote inclusive development necessitated reforms in the way that the DBM must carry out its mandate. transparent and accountable public expenditure management system. . but more importantly. Through National Budget Memorandum (NBM) No. the National Expenditure Plan and the General Appropriations Act beginning in FY2014 will show the link between the funds allocated for government programs and the projected results and outcomes of these. As the administration pledges to promote peoplecentred growth. the DBM pushed for the adoption of a new approach to budgeting.

usually expressed in terms of money or people • Outputs – products or services delivered by a program or an organizational entity. 3 . and provides a framework for more informed resource allocation and management. International Monetary Fund Fiscal Affairs Department. occurrences or changes in conditions related to the achievement of policy objectives. It links funding to results. indirect link Planning and/or accountabilty. According to the Organisation for Economic Cooperation and Development (OECD). usually expressed in general society terms or at a level more immediate to the organization in question TYPES OF PERFORMANCE BUDGETING Link Between Performance Indicators and Funding Main Purpose in Budgeting Process Type PRESENTATIONAL No Link DIRECT OR FORMULA PERFORMANCE BUDGETING Tight. Sandeep. quality and cost • Outcomes – events. A Basic Model of Performance-Based Budgeting. which provides the context for the programs. activities and projects pursued by the different agencies of government.What is the Performance-Informed Budgeting? Performance-informed budgeting (PIB)1 is a budgeting approach that uses performance information to assist in deciding where the funds will go. direct link Accountability Resource allocation and accountability PERFORMANCE-INFORMED BUDGETING Loose. Performance information typically include the following: • The purpose for the funds required • The outputs that would be produced or the services that would be rendered • The outcomes that would be achieved by the outputs and/or services • The cost of the programs and activities proposed to achieve the objectives Performance information can be used as a signalling device. April 2013. Performance-informed budgeting differs from the traditional line item-based budgeting in that it focuses more on outputs and outcomes and places less emphasis on the inputs. Marc and Duncan Last. The Philippines: A Strengthening Performance Budgeting. 2 • Inputs – amount of resources used to produce outputs. Bruce Stacey and Martin Bowen. usually expressed in terms of quantity. Resource allocation 1 Robinson. 2 Saxena. Performance information—both financial and non-financial information—are presented in the appropriations document. the most common response to low performance is holding constant the level of future funding and/or subjecting future allocations conditional to improved performance. Low performance or a decline in performance can serve as an alarm bell that ought to trigger a closer look into the reasons behind low performance.

directing the payment of goods and services out of government funds under specified conditions or for specified purposes. but a budget that presents performance information aligned to planned resources that promises to be understandable and accessible to the people. financial data Long line description of activities. programs and activities of the National Government. social security contributions. 2013-1 4The major current operating expenditures a) Personal Services (PS) like salaries and wages. rent. These are divided into New Appropriations3 and Current Operating Expenditures4 of the various agencies and units.. b) Maintenance and Other Operating Expenditures (MOOE) such as traveling expenses. supplies and materials. projects. etc.Changing the Face of the Budget The GAA then: Focus on numbers. d) Allotments to Local Government Units (ALGU). overtime pay. illumination and power services. COA-DBM Joint Circular No. Traditionally. The appropriations are further divided into three components: • Personnel Services. 3An appropriation is an authorization made by law or other legislative enactment. and • Capital Outlays. inputs The new face of the National Budget will no longer contain an excessively detailed line item document. e) Subsidies to government-owned and controlled corporations (GOCCs) 4 THE NEW FACE OF THE NATIONAL BUDGET . c) Interest payments. • Maintenance and Other Operating Expenses. the GAA contains all the appropriation assigned to different components. etc. water.

The GAA after adopting the PIB Structure: Each agency’s strategic objectives defined upfront Summary of financials presented in the GAA 5 A BRIEFER ON THE PERFORMANCE-INFORMED BUDGET STRUCTURE .

963 Households • Expanded CCT: 4. In the final NEP. These information were used by the DBM to evaluate department and agency proposals during the budget preparation process. the targets of the Pantawid Pamilyang Pilipino Program have been updated as follows: • Regular CCT: 4. activities and projects (PAPs). Instead of being immediately confronted with line-item after line-item.3 M Children Additional program/ project details in a separate volume The new.Budget for operations by Major Final Output presented Performance information presented with the financials Clarification: The sample DSWD budget used in this brochure is not yet the final budget entry in the National Expenditure Program (NEP) submitted to Congress. PAPs will be grouped according to the Major Final Outputs (MFOs) that department/agencies seek to achieve. 6 THE NEW FACE OF THE NATIONAL BUDGET .3 M Households • Modified CCT: 131. This way the budget that goes into a particular PAP is linked directly to the output it intends to achieve. revamped GAA will present non-financial performance information together with the allocated resources for the different programs.

the benefits of which extend beyond the fiscal year and which add to the assets of the government.The New Structure of the National Expenditure Program For each department and agency: OVERVIEW: Strategic Objectives Department or Agency Mandate. Vision and Mission Staffing Summary Total authorized and filled positions for fiscal years 2012. bank charges. 43) that the department or agency contributes to. These have been defined through the OPIF. contractual and casual employees of the government. MOOE. temporary. Financial Expenses (FinEx) – a new expense category. and disaggregated into allotment classes (PS. Key Result Areas Operations by MFO for 2014 Identification of the Key Result Areas (KRAs) of the Aquino Social Contract (as defined by Executive Order No. 2013 and 2014 As set by law or executive fiat and by the respective agencies’ Citizen’s Charters. FE and CO) Projects Sector Outcome Longer-term benefits for the sector from the initiatives or the department or agency. with corresponding Targets for 2014 • General Administration and Support • Support to Operations • Operations • Projects Presented for fiscal years 2012. Maintenance & Other Operating Expenditures (MOOE) – expenditures to support the operations of government agencies such as expenses for supplies. Organizational Outcome Short. this is for management supervision/trusteeship fees. etc. Capital Outlays (CO) – for the purchase of goods and services. 7 A BRIEFER ON THE PERFORMANCE-INFORMED BUDGET STRUCTURE . 2013 and 2014. SECTION 2: Expenditure Program by Central and Regional Allocation Divided into allotment classes (PS. and other financial medium-term benefits to clients and community as a result of the department’s or agency’s delivery of MFOs. interest expenses. FE and CO) SECTION 1: Expenditure Program Presentation of Agency Budget According to: SECTION 3: Special Provisions SECTION 4: Performance Information Identification of Performance Indicators under each MFO. utilities. Definitions of Expense Categories (PS. • Aggregate presentation of locally-funded and foreign assisted projects • Divided into allotment classes (PS. These have been defined through the Philippine Development Plan and the Organizational Performance Indicator Framework (OPIF). MOOE. MOOE. CO). MOOE. FinEX & CO) Personnel Services (PS) – for the payment of salaries. Divided into allotment classes (PS. FE. wages and other compensation of permanent. MOOE. FE and CO) Note: The detailed listing of PAPs is still presented but in a separate volume.

or spending on the right priorities. The ongoing PEM reforms led by DBM aims to strengthen the links between planning. and operational efficiency. Zero-based Budgeting (ZBB) • Involves the periodic review/evaluation of agencies’ major ongoing programs and projects in order to assess the relevance of these programs and projects and to determine whether the level of resources allocated should be kept. allocative efficiency. Bottom-Up Budgeting (BuB) • Local poverty reduction plans are formulated with strong participation of basic sector organizations and other civil society organizations to ensure that the services of departments/agencies/GOCCs are responsive to the needs of LGUs and communities. timeliness and cost that measures how efficiently a department or agency has delivered its MFOs. quantity.budgeting and implementation. adjusted or discontinued. Medium-Term Expenditure Framework (MTEF) • Facilitates the determination of available funds for allocation to the key programs of government. Organizational Performance Indicator Framework (OPIF) • Defines the outputs and outcomes that departments and agencies are supposed to achieve for the budgets they get. PUBLIC EXPENDITURE MANAGEMENT REFORM Public expenditure management (PEM) should achieve aggregate fiscal discipline.The new PIB structure follows the Results Framework or Logical Framework (LogFrame) established for each department and agency through the OPIF. activities and projects. or spending with maximum impact. What is a Performance Indicator? A performance indicator is a characteristic of performance such as quality. Aside from performance informed budgeting (PIB). the following budgeting schemes served as the tools for crafting the new National Budget. Program Budgeting (PB) • Focuses the allocation of the fiscal space or uncommitted resources on the keyprograms of the Aquino administration for a coordinated and holistic approach in programming of funds across departments and agencies. What is an MFO? A Major Final Output or MFO is a good or service that a department or agency is mandated to deliver to external clients through the implementation of programs. • Sets the appropriate indicators and targets to measure performance. or spending within government’s means. 8 THE NEW FACE OF THE NATIONAL BUDGET .

5Executive Order No. there is a need to integrate performance information with strategic planning. In this issuance. especially to the poor and marginalized. the DBM issued NBM 118 which sets the budget priorities for FY 2014 in line with the five Priority Areas (PAs) of President Aquino’s Social Contract with the Filipino People5. the DBM adopted the Budget Priorities Framework (BPF) to identify key priority programs and areas that should guide departments and agencies in strategically planning their respective activities for the year 2014. As such. on the right priorities. Effective public expenditure management should help address this challenge by ensuring that government spends within its means . defines the five KRAs of his Social Contract with the Filipino People. 9 A BRIEFER ON THE PERFORMANCE-INFORMED BUDGET STRUCTURE . he also organized his Cabinet into five Cabinet Clusters along these KRAs. and lastly. issued by President Aquino on May 13. 2011. immediate and substantial benefits to the people. The continued expansion of the Philippine economy comes with the challenge of achieving inclusive growth: to create more job opportunities and deliver direct. 43. together with NBM 117. with maximum impact . In line with our commitment to further optimize the allocation of public resources.Integrating PIB and Strategic Planning: The Budget Priorities Framework In a performance-informed budgeting system.

the new face of the Budget seeks to empower the people—directly and through civil society organizations. Ultimately. In striving to identify direct connections between the resources allocated to a government agency and the outputs and outcomes they intend on delivering. With the new face of the Budget and with other public financial management reforms. grassroots communities. Now with the information available to them. And after the Budget is approved. the people can be in a better position to demand a Budget that truly serves their needs. it is our hope that the PIB enables them to check each department and agency if these are delivering the results that they had committed to. With the PIB. the media. With the new face of the Budget. 10 THE NEW FACE OF THE NATIONAL BUDGET . and other citizen’s groups. we seek to strengthen the voice of the people in the allocation and use of scarce government resources. and how they can collaborate with other agencies in achieving common goals. accountability and citizen’s participation in budgeting. business groups. DBM hopes to help transform the face and character of the government itself: towards a government that accurately reflects and truly serves the people’s interests. the Aquino Government seeks to reinforce the meaning of accountability as a commitment to perform. Congress can now exercise its oversight function over the Budget more effectively. The new face of the Budget allows the Executive to ensure that each peso to be spent is tightly linked with its priority outcomes. the implementation of the Performance Informed Budget (PIB) structure— would bring about positive change through greater transparency. the DBM seeks to enable the public to hold the government accountable for how they spend public funds.The New Face of the Budget: Transforming the Face and Character of the Government It is the hope of the DBM under the current administration that the ongoing public expenditure management reforms—specifically. It likewise enables the Executive to reduce overlaps and eliminate duplicative or inefficient spending. By introducing the PIB. It enables individual agencies to see more clearly how their activities fit in the broader development plan. Legislators can now have better information that they can use in evaluating the proposals of each department and agency.

0 License 23 July 2013 Production Team: Office of the Secretary – Technical Staff and Public Information Unit Zy-za Nadine Suzara Nicholas Price Kurt Dale Tordesillas Francis Capistrano Design and Layout: Gianne Karla Gaoiran (OSEC) Lance Andrew Viado (OSEC) Infographics by Flux Design Labs With Support From: Public Financial Management (PFM) Project Management Unit Training and Information Service Budget Technical Service Fiscal Planning Bureau A People’s Budget Publication Paggugol na Matuwid sa Budget ng Bayan: Daan Tungo sa Kasaganaan Para sa Lahat .The New Face of the National Budget: A Briefer on the Performance-Informed Budget Structure Produced by the Philippine Department of Budget and Management Some Rights Reserved under Creative Commons BY-NC-SA 3.