Additional benefits/Extra Cash Gift for LGUs

The long wait is over. The DBM has just issued Local Budget Memorandum No. 54 authorizing the grant of additional benefits cum extra cash gift to LGU personnel. The LBM does not specify minimum or maximum amount but that it is charged to savings and subject to PS cap.

Sorry, folks our site is down so I have to post the LBM here. Just right click the image below and save in your PC or download a copy from the DBM CO site. Merry Christmas!

Guidelines on Performance bonus

For the benefit of the NGAs, a copy of Budget Circular No. 2007-4, the Guidelines on the Grant of P10,000 Performance Bonus (PerB) can be downloaded here.

Sex and politics do not make Filipinos happy!

The National Statistical Coordination Board (NSCB) has recently unveiled the results of the Philippines Happiness Index (HPI). The NSCB study is a local version of the Happy Planet Index launched in 2006 by the New Economics Foundation based in Great Britain where the Philippines ranked 17th among 178 countries surveyed.

The local HPI as published in the NSCB website qualifies that "In the formulation of the Philippine Happiness Index (PHI), we were guided by the following premises: economic progress and happiness are not synonymous, Philippine progress should capture the happiness of the (individual) Filipinos, the PHI should not be normative and the PHI should recognize individual differences in terms of the sources or domains of happiness and the importance attached to each domain.

Here goes the statistics. The study ranks Family with an index of 88.46; followed by friends (83.57); religious/spiritual work (79.81); love life (79.37); and health (78.02) - as the top five sources or domain of happiness of Filipinos. Surprisingly sex life only ranks 7th with an index of 72.57, while politics is at the bottom with 25.49. Is this proof that people are fed up with politicians?

Other findings. The study also showed that (a) pinoys are happier with domains within their control; (b) six (6) out of ten (10) believe that progress is synonymous with happiness; (c) women are happier than men; and (d) happiness rises with income.

Announcing the good news: 2nd Quarter GDP at 7.5%

It's in every major daily's (Aug. 31st) frontpage. Philippine Daily Inquirer: "Surprise! 7.5% growth". Manila Bulletin: "GDP grows 7.5% in 2nd quarter, highest in 20 years". Business Mirror: "GDP surges to 7.5% in 2nd qtr". Business World has a more modest yet prospective headline: "RP on track to meeting growth goal".

The National Statistical Coordination Board (NSCB) attributed the unprecedented growth to "continued favorable economic conditions such as stable interest rates and strong peso, resilient agriculture sector, vibrant industry and services sectors, plus election-related spending and intensified infrastructure investments". The just-released figure is a full 2% over the 2006 2nd quarter GDP (5.5%).

What the skeptics say. Private think tank IBON Foundation particularly singled out the "sustainable election-related expenses by both candidates and the government as the major contributor to the surge of the 2nd quarter GDP. IBON estimates that some P30 B to P50 B were spent by candidates during the May elections while P 51.4 B was spent by the government during the first semester allegedly in support of administration candidates.

I agree with IBON that the P30 B-P50 B the candidates spent during the election period have contributed to the increase in GDP, but the sweeping generalization that the P51.4 B first semester government spending was election-related to favor administration-backed candidates is not at all true.

For one, the government was operating on a 2005 re-enacted budget for the whole year of 2006. While spending for the 1st quarter of 2007 was based on the same re-enacted budget, this was augmented by the P46.9 B supplemented budget (RA 9358), which was mostly unloaded during the said quarter. The 2007 GAA took effect April 2007 and fund releases were correspondingly adjusted during the second quarter based on the new expenditure program, hence a higher government spending.

13 municipalities set to join ranks of cities.

Official information from the National Statistical Cooordination Board (NSCB) revealed that 13 of the more than 20 municipalities which have applied for cityhood and approved by the 13th Congress have completed the ratification process in a plebiscite as of June 30, 2007.

The ascension of these 13 municipalities to cityhood will increase the number of cities to 131 from 118, and consequently, bring down the number of municipalities from 1,510 to 1,497. The 13 new cities include: two (2) from NCR - San Juan and Navotas; NCR; two (2) from Northern Luzon - Tabuk, Kalinga and Batac, Ilocos Norte; four (4) from the Visayas - Bogo, Cebu; Baybay, Leyte; Catbalogan, Western Samar; and Borongan, Eastern Samar; and five (5) from Mindanao - El Salvador, Misamis Oriental; Mati, Davao Oriental; Lamitan Basilan; Bayugan, Agusan del Sur; Tandag, Surigao del Sur.

The old cities have reason to be wary and apprehensive about the addition of the lucky 13 to their ranks as the latter will partake of the 23% IRA alloted to cities pursuant to Section 284 of the 1991 Local Government Code - making their projected IRA adjustment smaller. On the other hand, the remaining 1,497 municipalities stand to benefit from this conversion in terms of increased IRA share since the newly converted cities will leave behind their respective IRA shares to the ranks of the municipailties.

On the macro perspective, conversion of municipalities to cities can be viewed as mechanism of redistributing or reallocating and democratizing government resources so that more funds are chanelled for service delivery and infrastructure facilities to the countrysides. On the average, the IRA shares of these new cities comes fiscal year 2008, would amount to more than a hundred million pesos each.

LGUs can't auction government properties to collect tax delinquency.

Here's a recent landmark decision by the Supreme Court affecting local government units' power of taxation.

Facts of the case. The Iloilo City government through the City Treasurer, attempted to sell at public auction the properties of the Iloilo Fishing Port Complex (IFPC) in order to collect the latter's unpaid real property tax amounting to Php 5.07 million. The Philippine Fisheries Development Authority (PFDA) under which the IFPC belongs, questioned the move and filed a case before the lower court - until it finally reached the Supreme Court.

The ruling. The Supreme Court ruled in favor of the PFDA stating that "the Authority should be classified as an instrumentality of the National Government which is liable to pay taxes only with respect to the portions of the property, the beneficial use of which were vested in private entities". In other words, the high court affirmed that subject property is taxable and the IFPC is liable to pay the tax. BUT . . . "Notwithstanding said tax delinquency on the leased portions of the IFPC, the latter or any part thereof, being a property of public domain cannot be sold at public auction". This means that the city government has to resort to other means to collect the tax obligation other than the sale at public auction.

Population Census important in allocation of govenment resources.

On August 1st, the National Statistics Office (NSO) commenced the Census of Population.

About 37,000 trained census-takers are being employed to conduct the house-to-house survey nationwide to make a complete count of the population. This will last for about 25 days and will cover 41,944 barangays thorughout the country.

The nationwide survey is the 12th to be undertaken since 1903, and will cover will cover all people living in the Philippines, including overseas Filipino workers and foreigners who intend to stay within one year.

Among the important uses of such census for the government is the accurate and timely formulation of policies, preparation of plans and programs concerning population such as the number of schools to be built, the number of teachers, number of policemen to be deployed, and number of public health workers needed in a province, city or municipality and even barangay.

For LGUs, the outcome of the census is vital as this will be the basis for (a) the allocation of the Internal Revenue Allotment (IRA) for fiscal year 2008; (b) creation of new LGUs; and (c) conversion of some LGUs to a higher level (i.e. from municicpality to city) - pursuant to the 1991 Local Government Code.

So we advise all LGUs to assist the NSO census takers in this undertaking.

Updates on the Rationalization program per EO 366.

Here's a status of compliance to Executive Order No. 366, or the government's rationalization program as culled from the June 2007 report of the OPIB (Organization and Productivity Improvement Bureau).

A total of 81 government entities comprising of 19 department/department level offices, 29 OEOs/other agencies, and 33 GOCCs have submitted their respective Rationalization Plans (RPs) to the DBM. This account for 72% of those covered by the rationalization program.

Of the 81 submitted RPs, 18 have already been approved. This include the Offices of the President and Vice President, CSC, CESB, NECDCC/CWC, HUDCC, NCRFW, NCMB, NHI, NM, PHILRACOM, PCSD, LWUA, NHMFC, NTA, PDA, PIDS, and TLRC. The implementation of these approved RPs entails the abolition of 2,584 positions translating into a P352.4 Million savings in personal services.

The Philippines' Open Budget Index rating

On October 18, 2006 civil society organizations from 59 countries around the world introduced the Open Budget Index OBI). The OBI, a project of the Internation Budget Project (IBP) is the first survey instrument used to rate countries on how open their budget books are to their citizens. It is intended to provide citizens, legislators, and civil society advocates with the comprehensive and practical information needed to gauge a government’s commitment to budget transparency and accountability.

The Open Budget Index 2006 was calculated by the IBP based on detailed questionnaires completed by local experts in 59 participating countries from every continent. The Index assesses the availability of key budget documents, the quantity of information they provide, and the timeliness of their dissemination to citizens in order to provide reliable information on each country’s commitment to open budgeting.

The results of that survey showed that only six (6) of the 159 countries — France, New Zealand, Slovenia, South Africa, the United Kingdom, and the United States — provide the extensive budget information necessary for government accountability.

The Philippines, with a rating of 51%, belong to the group of 32 countries which failed to make public all of the seven key budget reports they produce. These governments produce this information for their own internal use or for international donors, but do not make it available to their citizens.

More of this on my next post.

Silay Airport_runway

Runway of the New Bacolod-Silay Airport

Inaugurating the other airport of international standards

The New Bacolod-Silay Airport, the second airport of international standards built in Region VI is almost complete and ready for operation. But political leaders in Negros Occidental are at odds on the date of the airports formal inauguration and opening.

In last Friday's (July 13th) Central Philippines Projects Meeting in the new airport, the President repeatedly asked the elected officials who were around about their preferred date but no consensus was ever reached. The new Mayor of Silay City, Mayor Montelibano, would like to open the airport on that same day. Cong. Puentebella of Bacolod City proposed that the airport should not be opened until after the proposed additional 500 meters runway extension is implemented. Other local officials wanted the facility opened as soon as the access road and by-pass road leading to the airport are completed. The President jokingly quipped that the opening may as well be in 2010, the scheduled completion of the rest of the project components.

I remembered a few years back when the construction of the airport was being planned out, Negros officials were at odds where to construct the facility. Now that it is completed and operational, they are again at odds when to open it.

Meanwhile that the formal opening of the new airport is not yet decided upon, government is spending a lot of money for electricity and daily upkeep of the facility. And soon the government will start paying off part of the Php 756.671 Million borrowed from JBIC to construct the airport.

How do you solve a problem like the Iloilo Airport?

As a member of the Regional Project Monitoring Committee (RPMC), I take pride in having participated in several problem solving sessions during the construction of the New Iloilo Airport (NIA). The litany of problems are quite enormous - from the relocation of affected families, quarry sources, and right of way, which unduly setback the construction timetable to revision of scope of work and unprecedented price escalation.

Touted as the most modern and sophisticated airport in the country outside of Metro Manila, the NIA is only 15 days in operation as of this post but the problem of maintaining the new edifice, other facilities and grounds of this 188 hectare complex seems insurmountable.

ATO estimates that the monthly cost of the airport's upkeep would run to Php 10 M. The electricity alone with the sophisticated equipment in operation would cost between Php 2.3 M to Php 2.7 M per month. ATO Iloilo's budget for 2007 does not yet include the additional requirement for the new airport. It's MOOE is at the level of the maintenance cost of the old airport in Mandurriao. To add to its woes, no new personnel has been added to its work force as the staffing pattern will depend on the approval of the agency's rationalization plan pursuant to EO 366.

Big boost . . , Part 2

This is a continuation of my post yesterday (June 21st) on the implementation of the 10% salary adjustment effective July 1st. Here we will clarify and amplify some of the salient provisions of NBC 511 and LBC 86.

Basis of computation - the 10% adjustment shall be based on the basic monthly salary of incumbents as of June 30, 2007, inclusive of transition allowance. No adjustment shall be made on PERA, AdCom and RATA. But the year-end bonus, RLIP, PAG-IBIG, PHILHEALTH, and ECIP shall be correspondingly adjusted. Those receiving transition allowance, meaning that their basic salaries have exceeded the salary pertaining to the 8th step of the salary grade allocation of their position, are no longer entitled to the 10% adjustment but they will be allowed to receive such excess.

Funding source - the amount needed to implement the 10% adjustment of NG civilian personnel including the increase in subsistence and hazard pay of uniformed personnel shall be charged against the appropriate funds (Miscellaneous Personnel Benefits Fund/Compensation Adjustment Fund). The requirement for adjustment of non-permanent employees shall be taken from the lump-sum appropriation for salaries/wages of concerned NGAs. GOOCs, GFIs and LGUs shall defray the cost of implementing the salary adjustment out of their respective funds. If funds are insufficient, these entities may partially implement the said adjustment provided these shall be uniform and proportionate for all their personnel.

Specific for LGUs:

Adoption of Salary Schedule - in implementing EO 611, LGUs shall adopt the Salary Schedule (SS) prescribed under LBC 86 (Annexes "A1" to "A8") corresponding to their economic classification. Pursuant to RA 6758 (the original SSL), the salary levels of LGU personnel are pegged to a certain percentage of the national salary schedule depending on the income class of the LGU as categorized by the DOF/BLGF. Thus, the salary schedule of a first class province or city is equivalent to that of NGAs, while a second class one is 90% of the national SS. The SS of a 6th class municipality is only 65% of the national SS.
However, an earlier DBM issuance has given LGUs the flexibility to adopt the SS of their mother LGU, which means that a 5th class municipality can adopt the SS of its mother province provided it has the funds and has not exceeded the personal services limitation (45%-55%) prescribed under Section 325 of the 1991 Local Government Code.

Adopting a higher Salary Schedule - LGUs which have implemented the salary schedule of a higher income class LGU (i.e. the SS of a mother province), can adopt the revised SS pertaining to that of the higher income LGU. If funds are nor enough, the said LGU may opt to revert to the SS of its own income class.

PS cap waiver - the PS cost to implement the adjustment if the LGU is implementing the SS corresponding to its income class is exempt (or waived?) from the personal services limitation. However, the PS differential as a result of the adoption of the higher SS is subject to the said limitation.

Applicability to Barangays - the honoraria of barangay officials and employees maybe adjusted accordingly by adopting the new SS being implemented by the mother city or municipality. Under LBC 63 circa 1996, the maximum honoraria of Punong Barangays were pegged at the 1st step of Salary Grade 14 in the SS of the mother city or municipality, while that of the Sangguniang Barangay members, Treasurer and Secretary at the 1st step of Salary Grade 10. The said adjustment is exempt from the PS cap (55% limitation) prescribed under Section 331(b) of the 1991 Local Government Code. This exemption is still subject to clarification as this seems to contradict with Section 85, General Provisions of the 2007 General Appropriations Act, which provides that only the minimum honoraria (Php 1,000 for the Punong Barangay and Php 600 for the other officials) are waived from the PS cap.

A big boost to the morale of government personnel!

Looks like the long awaited salary adjustment will become a reality comes July 1st. The DBM has issued last June 18th, two (2) circulars to implement Executive Order No. 611, authorizing the grant of ten percent (10%) salary adjustment to government personnel as well as the adjustment in subsistence allowance and hazard pay of uniformed personnel.

Here's the gist of the two implementing circulars:

National Budget Circular No. 511 - applicable to National Government Personnel and covers the following compensation adjustment:

- 10% Salary Adjustment for Civilian Government Personnel whether permanent, contractual, casual, appointive or elective, on full-time or part-time basis. The adjustment shall be computed at 10% (rounded off) based on the incumbent personnel's basic pay as of June 30, 2007. To facilitate computation, the DBM has prescribed a new salary schedule. Those covered are personnel of National Government Agencies (NGAs), Government-owned and Controlled Corporations (GOCCs), and Government Financial Institutions (GFIs). For NGAs, the funding requirement shall be sourced from the 2007 General Appropriations Act, and the initial release shall cover the period July to September. For GOOCs and GFIs, the amount needed shall come from their own respective corporate funds.

- Subsistence Allowance and Hazard pay of military and uniformed personnel of the AFP, PNP, BFP, BJMP, Coast Guard, and NAMRIA. For subsistence allowance, the adjustment shall be from Php 60 to Php 90 per day while hazard pay will be increased from Php 120 to Php 240 per month.

Local Budget Circular No. 86 - Applicable to personnel of local government units including local elective officials. The DBM has prescribed separate salary schedules for each economic class of LGUs and the adjustment of each incumbent personnel shall correspond to the designated salary step in the salary grade allocation of their position as of June 20, 2007.

The last time that government personnel had their salary increase was five years ago in July 2001, and the this adjustment comes next month will certainly be a big boost to their already sagging morale.

1st Quarter GDP strongest ever in 17 years!

The President while on state visit in Australia Thursday revealed that our Gross Domestic Product (GDP) grew by an unprecedented 6.9% for the first quarter of 2007.

This level of growth was the strongest in over 17 years. The biggest quarterly economic growth we had experienced before was in 1989 when GDP was recorded at 7.4%. This reported economic figure puts the Philippines as the third best performer in Asia behind China (11.1%)and Vietnam (7.7%). What attribute to this remarkable growth performance? Economic officials cited the following: sustained gains in the country's fiscal position where we incurred a lower-than-targeted deficit in 2006 (from Php125 B to Php 64 B) - leading to a resurgence of investors confidence; more foreign direct investments (FDIs) pushing the stock market to a 80-year high; low inflation; strong peso as a result of FDIs, increased OFW remittances, and business process outsourcing (BPO) revenues; brisk exports despite the strong peso. Of course, not to be overlooked is increased consumer spending due to OFW remittances and election spending.

Barring all other unforeseen negative factors it seems that the 6.1%-6.7% full year GDP target for 2007 is unreachable.

Corruption in public procurement . .

While surfing the internet on my leisure time, I came across this Handbook on Curbing Corruption in Public Procurement, a publication of Transparency International.

Fiscal administration practitioners and government procurement officials may find this publication interesting. Here's an excerpt:

"An avoidable misuse and abuse of public funds results from corruption. Corruption in public contracting leads to a distortion of fair competition, the waste of scare resources and the neglect of basic needs, perpetuating poverty. Massive market inefficiencies can also arise from corruption and, in the extreme, lead to the destruction of development opportunities. If corruption in public contracting is not contained, it will grow. It is estimated that systemic corruption can add 20-25% to the costs of government procurement, and frequently results in inferior quality goods and services and unnecessary purchases."

Zeroing on the Philippines, Jose Luis Syquia, formerly Executive Director of the GPPB Support Office, cited an SWS survey in 2003 that 30%-50% of government funds are wasted due to corrupt practices in procurement of books, vehicles and equipment, and infrastructure projects. By his conservative estimate, this translates to roughly Php 21 B potential leakage in government funds.

Leave Benefits of Barangay Officials a waived item!

The long wait is over for barangay officials. The DBM has issued Local Budget Circular No. 85, prescribing the supplemental rules and regulations on the leave benefits of barangay officials.

Said circular was issued to ease the restrictions provided in the original guidelines - Joint Circular No. 2004-1 issued by the DBM and CSC in March 2004. The joint circular which implements Section 81 of the 1991 Local Government Code on the leave privileges of barangay officials, specifically provides that the leave credits earned by barangay officials shall be cumulated up to one year only and shall be commuted yearly (Section 3.2); that payment of said leave benefits shall be subject to the 55% limitations on personal services; and that the leave credits earned for the particular year shall be paid in full within the first quarter of the immediately succeeding fiscal year (Section 6).

With the said restrictions, many barangay officials have not availed of their monetized leave credits mainly because their barangays have either exceeded the 55% PS cap and or cannot meet the prescribed payment deadline (March 31st of the following year) for lack of funds.

LBC 85 seeks to resolve this predicament by requiring instead that leave credits "earned in a particular year may be monetized within the immediately succeeding fiscal year" (Section 2.0); and that said benefits is waived from the PS limitation pursuant to Item viii of Section 85, General Provisions of RA No. 9401.

While some of the contentious issues surrounding the implementation of the leave privileges of barangay officials still remain unresolved, LBC 85 will enable barangay officials to eventually received their leave benefits.

Clarification on fund releases during election ban.

Here's a clarification from the DBM's Legal and Legislative Service (LLS) on fund releases for the duration of the election ban.

As a general rule, releases, disbursement or expenditures of public funds for public works, social works and housing-related projects are prohibited beginning March 30, 2007 until May 14, 2007, except when these are specifically exempted by the COMELEC.

For the DBM in particular, the COMELEC has imposed on injunction per its Resolution No. 7785, enjoining the former not to release nor authorize the release of any appropriation that may directly or indirectly be used in violation of the prohibitions contained in the Omnibus Election Code. An exception to this is when the SARO or NCA is issued for generic purposes like the IRA or congressional allocations in which the DBM has no way of determining if the activities to be carried out by the agency or LGU fall under any of the prohibitions.

On matters of procurement, the GPPB has issued Resolution No. 01-2007 prescribing the guidelines on the procurement activities that can be carried out during the election ban. Details of this guidelines can be viewed here.

Saving mother earth from global warming.

Let me deviate from my usual subject matter this time to make this post about global warming. It certainly is a hot topic nowadays and shows no sign of cooling down. Almost every major international magazines and dailies have run stories and reports about the perils of global warming and what we, the planet's inhabitants can do to abate its carastrophic eventualities.

Time Magazine's March 29th cover story features the "Global Warming Survival Guide", and lists down 51 Things We can Do to Save the Environment.

Here's an alarming report from National Geographic: "There is little doubt that the planet is warming. Over the last century the average temperature has climbed about 1 degree Fahrenheit (0.6 of a degree Celsius) around the world. Rising temperatures have a dramatic impact on Arctic ice, which serves as a kind of "air conditioner" at the top of the world. Since 1978 Arctic sea ice area has shrunk by some 9 percent per decade, and thinned as well".

Not to be outdone, today's issue (April 11th) of the Philippine Daily Inquirer features Greenpeace's "laundry list of easy-to-do practices to help in the global effort to stop global warming" - ranging from buying local products so that we can reduce imports, and in the process, lessen the use of fuels, to resorting to walking, running or biking instead of using motor vehicles.

According to Greenpeace, in the latest assessment report of the Inter-Governmental Panel on Climate Change, many of the worst effects of global warming were "not locked into the future'' and that humans could adapt to future global warming threats by reducing greenhouse gas emissions.

So it's never too late. If we heed the advice of scientists and environmentalists now, we can still save mother earth.

Reflection for the Lenten season.

Prayer, fasting and almsgiving (the works of mercy) remain the classic Lenten practices. But are we really serious about carrying out these practices? According to Jesus, the Pharisee who prayed at the front of the Temple wasn’t really praying (see Luke 18:9-14). His “prayer” was more about praising himself than about being open to God’s grace.

The more we live in the truth about God, ourselves and others, the more genuine will our prayer, fasting and works of mercy be, the more they will represent who we truly are before God. That is the path to true freedom. Sin is always a counterfeit freedom.

We don’t have to wait until we see God face-to-face to arrive at that truth and to know deep down that God loves us profoundly and invites us to share in divine life forever.

Fiscaladspace joins everyone in the observance of the lenten season. Happy Easter!

EO 611: an exercise of Presidential prerogative!

This is an addendum to my post of March 19th on the impending 10% pay hike of government workers. I stated (quoting a Senate press release) that by March 23rd whether or not the President signs the bill authorizing the salary increase - it will just the same, become a law. Indeed, on March 23rd, all the major dailies carried a news item that the 10% salary increase was approved by the President.

Just to straighten things out. The President did not sign the bill into a law. Instead, she issued Executive Order No. 611 on March 14th, ten days earlier than the statutory deadline of March 23rd. In todays news from the Senate, re-electionist Senator Ralph Recto, the principal author of the bill noted that the EO is a "carbon copy" of the Congress-approved bill that was sent to Malacanang on February 22nd. In effect, with EO 611, the bill granting the same benefits to government workers was effectively vetoed.

Is the President justified in jumping the gun on the Senate and the House? A closer look at the bill shows that it contains a provision repealing PD 1597 of the Marcos era, giving Presidents the authority to grant allowances. If she had approved the Congress version of the pay hike, that flexibility to give government employees additional benefits in the future would have been lost.

Anyway, as Senator Recto puts its: "The President can take the credit for as long as the government workers can have the cash".

10% salary increase to become law by March 23rd?

I've been trying to track down the proposed bill granting government workers a 10% salary increase since Congress adjourned for the May elections, and a March 15th press release from the Senate is the closest and the latest I got so far.

Here it is: the bill was transmitted to Malacanang on February 22nd. Under the Constitution, the President is given 30 days to act on the bill otherwise, it will lapse into law. Of course, the President would not allow the bill to become a law without her signature. In December last year, she made a pronouncement that the pay hike of government workers be given priority. As a matter of fact, a news item in the government portal lists the pay hike bill is one of those lined for signature of the President either on March 23rd or 24th.

It's almost certain that state workers including those in LGUs and GOCCs are assured of a windfall comes July 2007, the effectivity of the increase. We have yet to see though how the increase will eventually be implemented - whether it's exactly a 10% or a P1,000 a month increase. If we go by the appropriations cover of P10.3 billion, it's almost the same amount required to implement the P1,000 AdCom increase last year. Let's cross our finger.

11th PHILLBO National Convention slated April 11-13

The Philippine League of Local Budget Officers (PHILLBO) will hold its annual convention on April 11-13 at Island Cove Resort & Leisure Park in Kawit, Cavite.

Dubbed as the mother of all conventions-seminars for all local budget officers and their staff, this year's annual gathering carries the theme: "Local Budgeting in the Attainment of Millennium Development Goals". The following topics are lined up for this 3-day convention: "Millennium Development Goals", "Wage Bill", "Updates on IRA and Hazard Pay of Health Workers", Executive, Legislative Agenda as an Approach to Planning", and "Updates on Procurement Law".

Aside from Local Budget Officers and their staff, Accountants, Treasurers, Planning and Development Coordinators, and Sanggunian members are also invited.

In behalf of PHILLBO under the leadership of Roderick M. Millano, MBO of Pilar, Sorsogon, I encourage LGU personnel whose functions are related to fiscal administration to be part of this annual convention.

The BSP's Domestic Roadshow

Last Monday, March 5th, I had the opportunity to attend the Philippine Economic Briefing or the so-called Domestic Roadshow sponsored by the Bangko Sentral ng Pilipinas (BSP).

In addition to being a participant, I also served as panelist along with the RDs/ARDs of other regional offices but we have not responded to any issues and concerns raised by the participants from the private sector, mostly from the banking industry as the resource speakers/presentors took up the cudgels.

Among the speakers was our own Secretary, Rolando "Nonoy" Andaya. The others are his co-members/representative of the Economic Team: Secretary Teves of the DOF, Secretary Favila of DTI, Usec Ocampo of DOE, Director Amador of BSP, and Director Valero of NEDA Region VI.

The speakers took turns in presenting the state of the Philippine economy for the year ended 2006, the fiscal and monetary policies being pushed to sustain the economic momentum, and where we are headed in the medium term. More on this in the next post.

Fiscal deficit is down for fourth straight year!

Our economic managers have reason to rejoice with the national government’s fiscal deficit falling to P62.2 billion in 2006, way below the P125 billion original target and the P80 billion revised official estimate. As a ratio to GDP, the fiscal shortfall dipped to 1.0% from 2.7% in 2005. Many factors were attributed to the realization of this positive performance, among them, the fact that we operated on a re-enacted budget in 2006 which substantially curb government spending due to a lower expenditure program. This is the fourth straight year that the national government has managed to reduce the deficit.

To complete the fiscal performance: national government revenues reached P978.7 billion in 2006, up 19.9% from P816.2 billion in 2005 and 4.6% higher than the P974.1 billion target. Revenues raised by the Bureau of Customs, Bureau of the Treasury, and other offices rose above targets to P198.2 billion, P73.9 billion, and 54.8 billion, respectively, from P154.6 billion, P70.6 billion, and P48.3 billion, also respectively. However, the Bureau of Internal Revenue, which collects two-thirds of all revenues, raised only P651.9 billion, 23.4% short of its P675.4 billion target, but higher over a year ago by P109.2 billion. The BOC easily met its target because of increased fuel imports. On the other hand, the BIR fell short of its goal due to lower tax collection on interest income arising from lower interest rates and the lower volume of government securities offered.

On the other hand, public spending rose to P1.04 trillion, below the P1.1 trillion ceiling, but above last year’s P962.9 billion. Local government units received P174.7 billion from the national government, when its programmed ceiling was only P134.1 billion. Interest payments on government debt amounted to P310.1 billion only, below the P340.0 billion program, due to lower domestic interest rates and a strong peso-dollar rate.

With this favorable fiscal situation, there is enough optimism that that the target deficit can be held down to P63.0 billion in 2007, and en route to a balanced budget by 2008.

Happy Valentine's Day from Fiscaladspace!

This is irrelevant to the subject matter that's been filling this Blog. But since everyone's heart and mind are filled with celebrating this special occasion, I might as well join the fray.

Most of us simply see Valentine's Day as a chance to show our loved one's how much we care with a bunch of flowers, an expensive gift, a heart shaped chocolate or a special message of love. I started mine this morning with a card and a couple of hand picked chocolate for my wife. But the day itself has a lot more sinister origin.

Valentine's Day originated from St. Valentine, a Roman who was martyred for refusing to give up Christianity. He died February 14, 269 A.D., the same day that being devoted to "love lotteries". Legend also says that St. Valentine left a farewell note for the jailer's daughter, who had become his friend, and signed it "From your Valentine".

Just to add more spice, birthdayalaram.com has posted this Valentine's trivia:

- Teachers will receive the most Valentine's Day cards, followed by children, mothers, wives, and then, sweethearts.
- More than 50% of cards are sold the week of the holiday, with the largest and most elaborate Valentine cards sold 48 hours before February 14.
- 70% of those celebrating the holiday give a card, followed by a telephone call (49%), gift (48%), special dinner (37%), candy (33%) restaurant meal (30%), and flowers (19%).

Interesting huh, here's some Valentine's superstitions: To be awoken by a kiss on Valentine's Day is considered lucky. Seeing different animals on Valentine's Day can result in different ways; seeing a goldfinch, you will marry a millionaire; seeing a robin you will marry a crime fighter; seeing a dove, you will have a happy peaceful marriage. (Maybe it's a good day to go to the zoo!)

HAPPY VALENTINE'S!

The waiting is over: DBM to pay deficiency in GSIS premiums.

The bureaucratic volleyball between the DBM and GSIS on how to resolve the issue of unremitted government share in premium of national government employees from July 1997 to December 1998 may be over.

To recall, the national government owed the GSIS a sizeable amount corresponding to the deficiency in the government share on the premiums contributions of national government employees from July 1997 to December 1998. Such deficiency was due to the increase in contributions from 9.5% to 12% as mandated in the GSIS Act. After a series of reconciliation, the deficiency was finally established and negotiations between the two agencies went on for quite sometime.

The first option to settle the obligation was for the Bureau of the Treasury to issue a fixed rate treasury bond redeemable over a period of six years. Despite the MOA executed between the GSIS, DOF and DBM during Isidro Camacho's stint with the DOF, the agreed settlement never pushed through. The second option was the "debt-to-equity" swap in which national government-owned land be turned over to the GSIS as payment of the "utang". But this never materialize as well. The third and more practical option was for GSIS to request for an appropriation cover equivalent to the reconciled unpaid premiums.

Finally, in October last year, Congress passed a supplemental appropriations (RA 9358) setting aside among others, the amount of Php 3,299,791,000 to cover payment of said deficiencies. Last month this year, the DBM and the GSIS issued Joint Memorandum Circular No. 2007-1 implementing the said supplemental appropriation.

The joint circular prescribes that the DBM shall release to GSIS the appropriated amount and post in its website the amount to be paid broken down by agency or office.

Here are the other salient provisions of the joint circular:

- the amount paid the GSIS shall cover only the principal; the interest due thereon shall be resolved separately by the DBM and GSIS;
- NGA personnel who already availed of retirement benefits from the time GSIS began deducting increase premiums shalll be entitled to corresponding benefits;
- deductions made by GSIS and applied as payment of premium deficiency shall be refunded to the employees.

Ensuring transparency in the 2007 Budget

The scheduled signing by the President of the 2007 General Appropriations Act has not been set yet, hopefully before the end of February. I bet it's going to be on February 14th, and expectedly in a more solemn ceremony. The Chief Executive has not done this for the past two years since we have been operating on a re-enacted budget.

Sans the approval yet, certain innovations on the 2007 GAA are being publicized - among them the insertion of a special provision that mandates full disclosure of the use of public funds by each and every government agency, allowing the public careful scrutiny of government funds, including the way pork barrel funds are spent. Senator Franklin Drilon, Chair of the Senate Finance committee who is credited for this innovation said that with this provision, "any citizen can now insist on their constitutional right to know".

I will dwell on the salient features of the 2007 GAA once it is enacted into law.

And the Winners are . . .

The Regional Awards Committee (RAC) composed of the DILG (Chair), Philippine Councilors League (PCL), DBM, DA, and DSWD has just completed its validation of the regional nominees to the Local Legislative Awards for Region VI.

The winners in each of the four (4) categories are: Bacolod City for highly urbanized cities; San Carlos City in Negros Occidental for component cities; San Jose de Buenavista in Antique for the 1st-3rd class municipalities; and Mina, Iloilo for the 4th- 6th class municipalities. The said LGUs will be officially honored and given cash awards during the PCL Assembly this February. The regional winners will be Region VI nominees to the national awards in March. This early, the RAC is very optimistic that San Carlos City with its IT-enabled legislative processes and tracking will make it as among the national winners.

The Legislative Awards is in its maiden search and an initiative of the DILG and the PCL to give due recognition to the best practices promoted by the Sanggunians of provinces, cities and municipalities.

RP ranks 6th in gender equality.

Here's an encouraging report taken from the December issue of the DBM Bulletin. In a survey conducted by the World Economic Forum (WEF) of 115 countries worldwide, the Philippines came out number 6 and the only Asian country on the top 10 - that have managed to achieve equality between the sexes.

Not surprisingly, Scandinavian countries topped the gender equality survey with Sweden at the number 1 spot followed by Norway, Finland and Iceland. Germany, another European country is at fifth place while powerful countries like Great Britain and the United States rank ninth and 22nd, respectively. On the other hand, two countries with biggest gender gaps are Yemen and Saudi Arabia.

The survey measured the countries using four categories: economic, educational, political and health. On the average, according to the WEF, the countries surveyed had closed about 90 percent of the gender gap in education and health, but only 50 percent in economic participation and opportunity, and 15 percent in political empowerment. Sweden, the topnotcher is the only country that has managed to close the overall gender gap by more than 80 percent.

IRA is no longer erratic, part 2

This is an addendum to my earlier post about the Internal Revenue Allotment of LGUs in which I wrote that with the passage of RA 9358 (Supplemental Budget for FY 2006), the IRA is treated as automatic appropriation, which means that even without the current national budget (GAA), the IRA will be computed and released to LGUs at the level that they are entitled to pursuant to the Local Government Code.

History repeats itself and we are starting the year with a reenacted budget - but not the IRA. The DBM has just released a computation of the LGUs' IRA based on the level of Php 183.938 B which is the figure reflected in the 2007 National Expenditures Program - equivalent to 40% of the national internal revenue collections of the third preceding fiscal year.

Thus the IRA releases starting January will now be made on the said computation and the LGUs are assured of the windfall.

Regional "BOMB" Trainors Training slated January 15-18

The DBMRO VI Trainors Team will conduct the Regional Trainors and Facilitators Training on the roll-out of the Budget Operations Manual for Barangays (BOMB) on January 15-16 and 17-18. Venue is at the Punta Villa Resort.

These series of two-day trainings will be participated by the City/Municipal Finance Committees members (Budget Officers, Treasurers and Planning and Development Coordinators) and Accountants. Pursuant to Local Budget Circular No. 82, the regional trainors and facilitators will assist the DBM Team in the conduct of simultaneous trainings and workshops for barangays officials right after the October 2007 barangay elections.

Reenacting the Reenacted in the Year of the Pig!

Today, January 2nd is the start of official working hours in the bureaucracy for fiscal year 2007. I don't know much about chinese astrology but year 2007 is universally considered as the "Year of the Fire Boar or Pig" (Ding Hai in Chinese)which according to Feng Shui experts, is characterized by clashing elements, fire and water that could mean conflict and even illness.

I don't mean to paint an unrosy picture at this start of the year - I'm no Madam Auring or Paul Ng - but we already experience the so-called clashing of the elements in the bureaucracy with Congress not coming to terms on whose preferences would prevail over the national budget even before the Year of the Pig unfolds. Thus we commence the fiscal year with a reenacted budget so as not to disrupt government operations and delivery of essential services.

The DBM has issued towards the last working day of December 2006, a guideline on the releases of funds for January 2007. Sad to say, we are again reverting to piece meal releases instead of the much desired comprehensive one that marks the so-called predictability of funding.

The releases are computed at one twelfth (1/12) of the total Personal Services excluding Productivity Incentive Benefits, Clothing Allowance, Year-end Benefits, and lump sums for creation of positions - based on the level of the agencies' budget in the 2007 National Expenditure Program (NEP). Maintenance and Other Operating Expenses are likewise computed at one-twelfth (1/12) of the agencies' budget level in the NEP. For retirement benefits, the DBM will continue to process and release the funds as submitted. In the case of the Internal Revenue Allotment (IRA) of LGUs, the January requirements shall be computed on the 2006 Reenacted Budget. We anticipate LGUs to howl on the amounts to be released as it has been widely publicized that with the passage of the 2006 supplemental budget last October, the IRA is now treated as automatic appropriation.

We expect that this reversion to the 2006 reenacted level of the IRA is just temporary and that the release of the LGUs share to the level that they should be receiving pursuant to the Local Government Code will be made in due time.