Secretary Rolando G. Andaya, Jr Department of Budget and Management March 8, 2007 SHARING RESPONSIBILITY IN SUSTAINING ECONOMIC HARVEST Fiscal Sector: Expenditure Accounts Philippines Development Forum

Presentation Outline 2007 Fiscal Program Setting the Foundations/Directions for the 2008 Budget Expected Results

2007 Fiscal Program

Policy Framework for 2007 Goal: Working towards sustainable budget by putting funds in the right place at the right time, managing resource allocation effectively, and ensuring our desired results through increased capability and accountability

2007 Fiscal Program Fiscal Program, Particulars 2005 Actual 2006 Actual 2007 Levels in PB Revenues ,118.8 Disbursements962.91,040.91,181.8 Deficit(146.8)(62.2)(63.0) Obligation Budget As percent of GDP ,053.31,136.6* Revenues Disbursements Deficit Obligation Budget (2.7) 17.5 (1.0) 17.5 (0.95) 17.2 * Includes P10B provision for Salary Adjustment  Deficit of P63 B or 0.97% of GDP  Revenue estimate that is conservative, consistent to the developments in the economy  Shift from input- based to output- based expenditures approach  Election will not result in breached spending limits

Sectoral Allocation of the 2007 Budget Focus on infrastructure and education … Particulars Levels in PBPercent Dist’n Growth (%) 2005 vs GAA 2007* Economic Services Social Services Defense General Public Services IP/Net Lending TOTAL918.61, * Net of the P10.3 billion provision for Salary Adjustment

Increase in all expense classes Budget Level by Expense Class, 2005 and 2007 Increases in departments are made possible due to lower share of interest payments in the total budget (32% or P340B in 2006 and 28% or P318B in 2007)—first in 8 years Nominally, first in 12 years

Higher infrastructure spending trend…

SONA Commitments: Infrastructure Spending for Super Regions (in billion pesos) * Releases

Educational Programs (1) (in million pesos)

Educational Programs (2) (in million pesos)

Health and Other Social Services Programs (in million pesos)

NG FAPs Budget by Department/SPF FY 2005 and2007 (in billion pesos)

NG FAPs Budget by Donor FY 2005 and 2007 (in billion pesos)

Top Five (5) Departments, 2005 and 2007 Particulars Levels (P billions) Increase/ (Decrease) Rank Amt% DepEd (incl. SBP) DPWH DND (incl. AFP Mod.) DILG DA (incl. AFMA)

Setting the Foundations/Directions for the 2008 Budget

Introduced in 2007 Budget and being strengthened for 2008 budget preparation Introduced in 2007 Budget and being strengthened for 2008 budget preparation Adoption of improved guidelines and templates for Forward Estimates (FEs) Adoption of improved guidelines and templates for Forward Estimates (FEs) Briefing of spending agencies on MTEF and FEs Briefing of spending agencies on MTEF and FEs Adding more depth to the Paper on Budget Strategy for presentation to Cabinet Adding more depth to the Paper on Budget Strategy for presentation to Cabinet Enhancing harmonization of planning and budgeting Enhancing harmonization of planning and budgeting Enhancing the FY 2008 Budget Call Enhancing the FY 2008 Budget Call Making the Medium-Term Expenditure Framework (MTEF) Irreversible

Cascading and Embedding the Organizational Performance Indicator Framework (OPIF) in the 2008 Budget Cascading the OPIF to bureaus and attached agencies of the 20 pilot departments, and introduction to OEOs Cascading the OPIF to bureaus and attached agencies of the 20 pilot departments, and introduction to OEOs Development of departments-wide log frames and Performance Indicators (PIs) Development of departments-wide log frames and Performance Indicators (PIs) Costing og Major Final Outputs (MFOs) to mainstream OPIF in budget Costing og Major Final Outputs (MFOs) to mainstream OPIF in budget Intensive capability building on OPIF methodologies Intensive capability building on OPIF methodologies Streamlining of fund releasing to support agency operational targets Streamlining of fund releasing to support agency operational targets Strengthening internal control systems Strengthening internal control systems

Expected Results

 Accelerated reduction of 2007 deficit from the planned 2 % of GDP to 0.9 %  More productive government expenditures, particularly in infra and social services  Balanced budget by 2008

Thank you