A Senate Perspective on Mitigating the Risks of a Reenacted Budget for Fiscal Year 2025

DDG Ma. Victoria C. Francia
Alma M. Encarnacion
Lucia G. Facultad
Xandra Yvette Z. Villanueva
Atty. Joana Maries V. Narvaez
Atty. Jaye Loren A. Rondal
Atty. Romel C. Patacsil

Senate of the Philippines
Appropriations and Finance – Managers Track
Course on Risk Management in Public Finance
2024

Abstract

While both Houses of Congress persevere to smooth out differences in perspectives and priorities, there have been times when a political deadlock ensues, resulting in the non-passage or delay in enacting the General Appropriations Bill (GAB). Fortunately for the Philippines, Section 25(7), Article VI of the 1987 Constitution provides that should Congress fail to pass the GAB for the ensuing year, the budget of the previous year is deemed reenacted.

From a risk management perspective, a reenacted budget is deemed unlikely but has a foreseeably major impact. This raises concern in the face of disagreements in charter change discussions and leadership changes in Congress. A reenacted budget may dampen economic activity and adversely affect the implementation of national government programs and projects, leading to lower growth outturns and fewer opportunities to improve the quality of life of Filipinos. In addition, this gives the President sole discretion to declare the same or a portion of it as savings and use the same as he or she deems fit, which runs counter to the so-called Legislative Power of the Purse.

This paper views the risks as unavoidable and, therefore, must be mitigated further. As fail-safe measures, it may be beneficial to strengthen existing risk controls and treatments, legislative oversight, and monitoring and evaluation of budget implementation. Given the weight of the risk and consequences, enacting a supplemental budget, contingency planning, and additional reforms may give leeway for emergency response. Ultimately, legislators should make conscious efforts and be accountable for settling provisions under contention and ensuring timely budget passage.