DBM Secretary Benjamin Diokno delivers his keynote speech during the National Governance Forum on Public Reforms and Innovations on February 21, 2018 in University of Makati.
On February 21, 2018, Department of Budget and Management (DBM) Secretary Benjamin Diokno outlined the key fiscal reforms of the Duterte Administration at the National Governance Forum on Public Reforms and Innovations.
Sec. Diokno detailed his personal reform experience to the participants at the University of Makati, composed of undergraduate students, graduate students, faculty, and representatives of the Philippine Councilors League (PCL). Having served the government for 50 years, Sec. Diokno narrated to the participants his involvement in previous public sector reforms like the 1986 Tax Reform Program, the 1991 Local Government Code, among other reforms in his three different stints at the DBM.
Sec. Diokno also shed light on the two game-changing fiscal reforms under the Duterte Administration, namely the Tax Reform for Acceleration and Inclusion (TRAIN) and the shift to an annual cash-based budget.
“Remarkably, these reforms are not triggered by a debt or economic crisis compared to reforms of the past,” the Budget Chief said. “Rather, these are proactive and forward-looking measures that are meant to further strengthen and sustain the country’s economic growth in the long run,” he added.
In the TRAIN discussion, Secretary Diokno emphasized that the incremental revenues from Tax Reform will finance the country’s development priorities, namely infrastructure development and social services.
More so, he assured the audience that TRAIN will not harm the informal sector and minimum wage earners despite the short-term increase in prices. “The government has already anticipated the potential increases in prices and has devised mitigating measures to cushion them,” he said, referring to the P200 per month cash grant to the poorest 50% of households in the Philippines. He also noted that the said cash grants will even be increased to P300 per month come 2019 and 2020.
Next, he explained the bureaucracy’s shift to an annual cash-based budget which will expedite public service delivery. He said that the old system, wherein appropriations are valid for two fiscal years, posed perverse incentives to bureaucrats. This was aggravated by an obligation-based system wherein funds are considered “spent” once the government enters into a contract or makes a “promise to pay” even if the goods and services have not yet been delivered.
“Now we are planning a radical reform in Philippine budgeting,” he stressed. “We are not only trying to limit the validity of appropriations to one year, but also trying to shift to cash-based budgeting,” he added. “This means that for the money to be considered ‘spent’, the goods and services must be delivered within the fiscal year.”
Secretary Diokno also noted that the DBM is pushing for a Budget Reform Bill (BRB), which will not only address efficiency gaps but also strengthen transparency and accountability in the budget process. The BRB is under deliberations in both the House of Representatives and the Senate.
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