The Philippines has made significant improvements in budget preparation processes and transparency in the past six years, according to the Public Expenditure and Financial Accountability (PEFA) performance assessment report. From only scoring a good performance in 8 indicators in 2010, the country is now satisfactory in 19 out of the 31 indicators in the 2016 assessment.
The indicators are based on the 7 public financial management (PFM) pillars, 3 of which—transparency, policy-based budgeting, and asset and liability management— the country scored high in the latest report.
“The results show that the public financial management system of the country obtained a good performance rating in 19 out of 31 indicators of PEFA. The report also acknowledged that the reform program of the Aquino administration has been successful in strengthening the capacity of central agencies, especially the Department of Budget and Management in budget development and transparency,” said Budget Secretary Florencio B. Abad.
PEFA is a partnership between seven donor agencies and international financial institutions to assess the condition of country public expenditure and procurement and financial accountability systems, as well as develop a practical sequence for reform and capacity-building measures. These donor agencies and international financial institutions are the European Commission, French Ministry of Foreign Affairs, International Monetary Fund, Norwegian Ministry of Foreign Affairs, Swiss State Secretariat for Economic Affairs, UK's Department for International Development, and the World Bank. The Australian Department of Foreign Affairs and Trade provided assistance to the Philippines for the country assessment.
“The PEFA performance assessment measures how effectively the Public Financial Management system of a country achieves the desirable budget outcomes of aggregate fiscal discipline, strategic allocation of resources, and efficient service delivery. The assessment was conducted through consultations between the PFM Committee and a World Bank cross-sectoral team. A similar assessment was published in 2010. This most recent assessment begun in mid-2015 but under a more stringent set of assessment criteria as the PEFA framework was updated by the PEFA Secretariat,” Abad explained.
The Secretary explained that under the improved Performance Framework, the government is strong in 3 out of the 7 PFM pillars, namely, transparency, policy-based budgeting, and asset and liability management.
“We performed very well in Transparency of Public Finances. This pertains to our budget preparation and budget management processes, which the PEFA rated highly in public policy and transparency,” he said.
“We also rated well in Policy-based Fiscal Strategy and Budgeting. We displayed satisfactory or good performance in all areas under this pillar, which reflects the many efforts such as performance- informed budgeting, zero-based budgeting, and the budget priorities framework, we made in the recent years to improve the budget formulation process.”
The report also shows that there have been some improvements in budget execution—contributed by the GAA-as-Release Document policy that provided predictability and helped agencies to spend their budgets immediately. However, a substantial scope for improvement in this area is also recommended particularly in monitoring and operational processes. It noted that the country needs to improve in terms of budget information reliability, legislative oversight, internal controls, and accounting and financial reporting.
“We need to improve further on these indicators in order to increase the ability of the budget to track and promote fiscal discipline, proper agency planning and proper internal controls in the agencies,” he said.
“It is clear from the results of this PEFA assessment that the reforms associated with technology need expansion in scope to enable oversight and line agencies to manage financial transactions in accord with regulations and budget intentions. Moreover, this will help in real-time financial reporting to maintain budget execution in line with service delivery requirements,” added Abad.
He said the improved accounting systems must enable agencies to produce annual accounts that are timely and free from audit qualifications. The performance of Electronic New Government Accounting System (eNGAS) developed by the Commission on Audit (COA) and current integrated financial IT development projects being pursued by DBM and the Bureau of the Treasury need to be benchmarked against international practices and in relation with the PEFA results to provide the PFM information and management systems needed.
The report recommends the development of an integrated management information system, the revision of the PFM legal framework to ensure clarity, control and comprehensiveness and the strengthening of congressional scrutiny or setting up of an independent scrutiny mechanism within the executive.
For more information on the PEFA 2016 Framework, you may visit: https://www.pefa.org/sites/
Note: Press Release written by DBM Media
Note: Press Release written by DBM Media