There is no debate about the cash-based budgeting system being a reform measure to make the disbursement of public funds more efficient and that it is for agencies and branches of government to make adjustments to it.

The irony is that “reform-minded” legislators, as earlier termed by the Palace after the House passed the Budget Reform bill, are now ganging up on the Department of Budget and Management (DBM) initiative and demanding a return to the obligation-based multi-year system that has been the source of underspending and corrupt practices.

Both chambers have suspended hearing on President Rodrigo Duterte’s 2019 P3.757 trillion budget after the House Appropriations Committee returned the budget to the Executive which is not even allowed under the Constitution.

Worse, the House is now recalling the Budget Reform bill which it has approved and transmitted to the Senate as the appropriations panel simply said legislators have changed their mind over the bill.

Presidential spokesman Harry Roque was wondering what happened between now and then at the House since what he can only recall was the change in leadership with the Speaker now being Gloria Macapagal-Arroyo, who is a “very close ally.”

Both Roque and Budget Secretary Benjamin Diokno said the Executive is not backing down and is preparing for a reenacted budget if the House insisted on the return to the old budget system.

The target of the new scheme is the elimination of underspending which has plagued the previous administration of President Noynoy Aquino and which had limited the economy’s growth potential.

cash-based budget will result in faster and improved delivery of public services as the one-year limit on the use of funds will push heads of government agencies to plan ahead, conduct early procurement and regularly monitor implementation.

The cash-based budgeting which will be institutionalized under the Budget Reform Law will remove weaknesses in the management of public finances.

The World Bank’s Public Expenditure and Financial Accountability report identified weaknesses in the Philippine budget system as being the credibility, reliability, accounting and reporting of the yearly appropriations.

A transparency measure that is included in cash-based budgeting are performance reviews based on actual disbursements which is a deterrent to irregularities in government projects.

Diokno said the system is already being implemented through an agreement with agency heads despite the pending bill in Congress.

He said from last year, appropriations started to have a one-year validity to address government underspending which in 2014 reached 13 percent of gross domestic product and 12 percent in 2015. In all, Diokno estimated that the administration of Noynoy underspent P1 trillion of the budget resulting in the economy to underperform due to low public spending.

“We have to modernize the budget system. BAU or business as usual will mean failure,” he said.

The strongest argument in favor of cash-based budgeting is its potential as a tool for inclusive growth which is a key goal of Rody.

“Sizeable investments in infrastructure and human development will only be felt by all, if our budgeting system is open, effective and efficient,” Diokno said.

Legislators have banded against the new scheme as a result of the huge slash in appropriations to agencies where legislators can propose local projects.

The wasteful nature of the obligation-based system was very glaring in the Health Facilities Enhancement Program (HFEP) which in 2019 will be allotted only P50 million from its P30 billion allocation in the 2018 budget and P24 billion in 2017.

The project was appropriated P138 billion since 2008 but as of last March, total disbursements for HFEP only reached around P13.5 billion or less than 10 percent of the total.

The government in effect has suspended the program for review which Diokno said explains the P50 million allocation for it.

Based on Department of Health (DoH) figures, the unliquidated obligation for the project remains at P57.5 billion while the unobligated allotment is P27.4 billion, or a total of P84.8 billion still available for the project.

Diokno said the amount is bigger than the total budget of the DoH for 2019 which makes it a total waste of effort and resources.

The paradox is that Rody and the economic managers stand for change while their House allies appear backsliding on the budget dispute.