Public Financial Management
Competency Program (PFMCP)
Building PFM Understanding
PFM FOUNDATION TRACK
PFM Foundation Principles of Internal
Overview Control
Building PFM Using Data for
Understanding Decision-Making
Effective Collaboration
in the GOP
COMPETENCY: MAINTAINING
PFM UNDERSTANDING
DEFINITION:
• Gaining understanding of PFM as a whole system,
specifically the relationship between objectives, policies,
strategies, programs and projects, and the outcomes of the
PFM system, including sustainable social benefit.
COMPETENCY: MAINTAINING
PFM UNDERSTANDING
RATIONALE:
• PFM in the Philippines is conducted by PFM functional
practitioners: accountants, auditors, planners, program managers,
budget, cash management/treasury, and procurement staff.
• Each person needs to have some knowledge of the work of others,
and the inter-relationships with them.
• By using this knowledge to better inform the work that they do,
they will contribute to the overall efficiency of the PFM system and
be able to adapt effectively to support the PFM Reforms.
COURSE
BLUEPRINT
FT 1: Building PFM Understanding
1 PFM Essentials
2 PFM System in the GOP
PFM ESSENTIALS
What is Public Financial Management?
Public Financial Management (PFM) is the
system by which public financial resources are
planned, directed, and controlled to enable and
influence the efficient and effective delivery of
public service goals. (CIPFA, 2010)
3 KEY OBJECTIVES OF PFM
Fiscal Discipline Allocative Efficiency Operational Efficiency
spending within means or spending with maximum
spending money on the right
resource available to the results or obtaining the best
things or right priorities; and
government. value for the money or
resources available.
GOP PFM
STAKEHOLDERS
WHAT DOES PFM AS A SYSTEM MEAN?
• PFM, as a whole system, is comprised of interdependent elements that
include planning, budgeting, cash management, procurement, accounting,
audit, reporting and review, as well as resource generation (revenues and
borrowings), and expenditure management.
• The quality of PFM performance results from how all these elements
interact, and how stakeholders collaborate to meet public service goals.
COURSE
BLUEPRINT
FT 1: Building PFM Understanding
1 PFM Essentials
2 PFM System in the GOP
2 Whole-of-Government
Planning and Priority Setting
PFM CYCLE Top-down: Priority setting through the
medium-term fiscal strategy linked to the PDP 3 Budget Preparation
and Investment Plan which are annually updated and Legislation
through the Budget Priorities Framework (BPF).
Bottom-up: Spending agencies link their
respective strategic plan with their
operational plan and draft the budget
proposal accordingly. Link of new policy
2 initiatives to government priorities is
highlighted in the BPF.
1 Agency Planning 1 3
and Priority Setting
Agency priorities are derived from the
departmental mandate, the Administration’s
priorities and ongoing services for citizens.
5 Reporting 5 4 Budget
and Execution
4
Verification Budget execution and
service delivery to
Reporting, monitoring and evaluation
citizens through the
review, and internal and external audit,
PAPs, administered
provide verification of results and provide
through Allotments,
inputs back into the planning process.
NCAs, and SAROs.
1 Agency Planning
and Priority Setting
• Agency mandate defines the service it delivers.
• Planning integrates the Administration priorities with Agency priorities:
o Administration’s Strategic Priorities for the Agency over a 5 to 6-year period are reflected in the Agency
Strategic Plan.
o Core business or the day to day operations of the Agency are reflected in the Operational Plan.
• Agency Plans include the integration of citizens’ bottom-up requests.
• Agency Strategic Plan + Operational Plan should serve as basis for the Agency’s Budget
Requirements.
2 Whole-of-Government
Planning and Priority Setting
• The Administration defines its whole-of-government priorities at the beginning of its term through
the:
o Medium-Term Fiscal Plan (MTFP) and Medium-Term Expenditure Program (MTEP) linked to the
Philippine Development Plan (PDP) and Investment Plan (PIP).
• PDP and PIP are annually updated through the SONA and Budget Priorities Framework (BPF) which
provided the basis for the Budget Call.
• These take place in the context of a medium-term economic framework, usually a 3 to 5-year period.
PHILIPPINE
DEVELOPMENT
PLAN FRAMEWORK
IMPROVED
TRANSPORTATION
FOOD HEALTH
SECURITY CARE
SOUND FISCAL
MANAGEMENT
8-Point
Socioeconomic Agenda
AFFORDABLE &
CLEAN ENERGY
SOCIAL
PROTECTION EDUCATION
BUREAUCRATIC
EFFICIENCY
3 Budget Preparation and
Legislation
3 Budget Preparation and
Legislation
Two-tier Approach: More Focused Budgeting
• Separates the discussions and deliberations for ongoing/existing programs/projects (TIER 1) and
entirely new spending measures/proposals, including the expansion of the ongoing/existing (TIER 2).
3 Main Objectives:
o Streamlines the budget preparation process.
o Enhances the accountability of departments/agencies to prioritize and manage spending.
o Engages the President and the Cabinet in setting the strategic direction and distribution of the
unallocated fiscal place.
Budget of
Expenditures and
Sources of
Financing
(BESF)
Staffing Summary
National Expenditure Program
(NEP)
THE NATIONAL BUDGET
4 Budget Execution
• Once the Congress approves the Budget, the Government can begin execution.
• DBM issues allotment to authorize agencies to incur obligations.
• Agencies incur obligations through procurement.
• Agencies pay their obligations to deliver programs and projects.
• BTr manages cash, revenues, borrowings, assets and liabilities of the Government.
PROCUREMENT PLANNING
AND BUDGET LINKAGE
5 Reporting
and Verification
PFM AND UNDERSPENDING
Sample: Full-Year Disbursement Performance
(in billion pesos)
UNDERSPENDING
YEAR PROGRAM ACTUAL
AMOUNT %
2011 1,711.3 1,557.7 (153.6) -9.0%
2012 1,839.7 1,777.8 (61.9) -3.4%
2013 1,983.9 1,880.2 (103.7) -5.2%
2014 2,284.3 1,981.6 (302.7) -13.3%
2015 2,558.9 2,230.6 (328.3) -12.8%
2016 2,645.6 2,549.3 (96.3) -3.6%
THE PROBLEM
Low disbursement means three (3) things:
1. Delivery of public service is delayed.
2. Involved additional/unnecessary cost of borrowing by BTr.
3. A drag to the GDP growth.
ENTRY POINTS
TO SOLVE THE
PROBLEM
2 Whole-of-Government
Planning and Priority Setting
PFM CYCLE Top-down: Priority setting through the
medium-term fiscal strategy linked to the PDP 3 Budget Preparation
and Investment Plan which are annually updated and Legislation
through the Budget Priorities Framework (BPF).
Bottom-up: Spending agencies link their
respective strategic plan with their
operational plan and draft the budget
proposal accordingly. Link of new policy
2 initiatives to government priorities is
highlighted in the BPF.
1 Agency Planning 1 3
and Priority Setting
Agency priorities are derived from the
departmental mandate, the Administration’s
priorities and ongoing services for citizens.
5 Reporting 5 4 Budget
and Execution
4
Verification Budget execution and
service delivery to
Reporting, monitoring and evaluation
citizens through the
review, and internal and external audit,
PAPs, administered
provide verification of results and provide
through Allotments,
inputs back into the planning process.
NCAs, and SAROs.
WHAT COMES TO MIND WHEN YOU
HEAR THE WORD PUBLIC INTEREST?
Accountability Allocative Efficiency Integrity Fiscal Responsibility
is the willingness to be questioned and is being open to stakeholders and the is Palabra de Honor and being true in is making sure we abide with the fiscal
held liable for one’s decisions and public in planning, contract awarding action to your words and principles. targets we set and explaining deviations
actions. and implementation of transaction. from it and the plan to get back on track.
Result & Orientation Efficiency Effectiveness Honesty
is about exerting our best efforts to is about doing more with less inputs. is accomplishing the right output to is being true and fair to all
focus on the right things (as laid out in respond to the client’s needs. stakeholders.
strategic and operational plans) and
doing them with measurable impact.
Intolerance for Trust
Corruption is what we aspire for with all their
values and principles.
is about putting in systems and
procedures which will help deter, if not
reduce, corruption and bribery.
THE P IN PFM AND VALUES
Public Interest
• Accountability • Efficiency
• Transparency • Effectiveness
• Integrity • Honesty
• Fiscal Responsibility • Intolerance for Corruption
• Results and Orientation • Trust
3 KEY OBJECTIVES OF PFM
Fiscal Discipline Allocative Efficiency Operational Efficiency
spending within means or spending with maximum
spending money on the right
resource available to the results or obtaining the best
things or right priorities; and
government. value for the money or
resources available.
