Under Circular Letter 10-2016, the Department of Budget and Management lifted the 24-hour waiting period required before checks could be encashed or funds credited to contractors’ accounts. File
MANILA, Philippines — State contractors may get their payment earlier than usual beginning next month as the government aims to unload more funds before new budget obligations clog agencies.
Under Circular Letter 10-2016 dated November 14, the Department of Budget and Management (DBM) lifted the 24-hour waiting period required before checks could be encashed or funds credited to contractors’ accounts.
“(This is) in order to facilitate settlement of valid government payables within the current year and avoid spillover pressure of outstanding payables to the incoming year…,” the circular said.
If possible, agencies were even asked to pay their obligations by December 22, although they would still be allowed to issue checks until December 29.
“Agencies are encouraged to settle their due and demandable obligations as soon as possible,” the circular said.
Once obligated, funds for projects are deemed already under contract, and therefore, will be paid even once a new budget takes effect by January 1 of next year.
Under the budget process, obligated funds could be disbursed through the issuance of notices of cash allocation which allows agencies to secure checks from the Bureau of the Treasury.
The checks are governed by the modified disbursement system, which originally instructs agencies to deposit them to their payee’s accounts “not earlier than 24 hours after due date.”
The latest order, which had also been issued in prior years, removes that requirement.
In a budget hearing at the Senate last Tuesday, DBM said a total of P150 million in funds last year were not obligated, and thus ended up being not utilized to contribute to economic growth.
Sen. Ralph Recto, however, disagreed, saying that based on Commission on Audit data, around P1 trillion was left unobligated.
Budget Secretary Benjamin Diokno, however, explained that broken down, unspent funds actually come from those used for special purpose.
“For instance, the pension funds. I cannot really spend them for any other purpose than just that, hence, if there are anything remaining there, it reflects,” Diokno told reporters.
He, however, reiterated that come 2017, there “will be pressure” on agencies to spend considering the Duterte administration’s thrust to pump prime the economy with more infrastructure.
“Of course, I won’t spend for spending’s sake. We will make sure that they are funneled to the right purpose,” Diokno said.
