MANILA, Philippines - The Department of Budget and Management (DBM) has shortened the period for agencies and departments to utilize their budget allocations to one year from the previous two-year lapse period.
Previously, departments and agencies enjoyed a two-year lapse period for their budget allocations. This allowed them to carry over their unused appropriations to the following year.
However, Budget Secretary Florencio Abad said this would drastically change starting this year to force state agencies to improve their absorptive capacities.
“One of the major reform measures we aim to enforce in 2013 is the one-year lapse period for all budget allocations. I you don’t use or obligate the budget allotted to you within the year, you lose it,” Abad said.
However, he clarified that the two-year lapse period would still be maintained for Maintenance and Other Operating Expenditures (MOOE) and Capital Outlay as these projects take time.
Abad expressed optimism that the reform would result in faster implementation of projects across the country and would also prompt agencies to achieve their tragets by yearend.
“This reform ought to induce better planning of programs and projects across the bureaucracy,” Abad said.
With all departments making the most of their yearly allocations, Abad said state spending is expected to exceed 2012 levels and support economic growth to hit the official target range of six percent to seven percent this year.
The shortened lapse period for budget allocations is a preparatory move for the “GAA-as-Release-Document” regime, which the Administration aims to roll out by 2014, Abad said.
Under this proposed reform measure, the General Appropriations Act (GAA) will automatically serve as a budget release document.
This seeks to further expedite the release of yearly appropriations to departments and agencies.
“At the moment, the process of releasing allotments to agencies can be elaborate and time-consuming. With the GAA standing as the overall release document, the release of allotments will be faster,” Abad said.
The reforms also aim to make the budget process more transparent.