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Local Planning and Budgeting Linkage

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Local Planning and Budgeting Linkage

  1. 1. Local Planning and Budgeting Linkage
  2. 2.  Legal Basis of Plan-Budget Linkage  Harmonizing Plans with the Budget • Development Plan for Provinces and Highly-Urbanized Cities • Development Plan for Cities and Municipalities • Local Development Investment Program • Annual Investment Program • Policy Guides on a Plan-Budget Linkage • Synchronizing the Plan-Budget Calendar  The Plan-Budget Cycle
  3. 3. LEGAL BASIS There are four basic principles provided in the Local Code of 1991: 1. Local budget plans and goals shall, as far as practicable, be harmonized with national development plans, goals and strategies in order to optimize the utilization of resources and to avoid duplication in the use of fiscal and physical resources (Section 305 h); 2. Local budgets shall operationalize approved local development plans (Section 305 i); 3. Local governments shall formulate sound financial plans. The local budgets shall be based on functions, projects and activities in terms of expected results (Section 305 g); 4. Budgets of LGUs shall include a brief description of the functions, projects and activities for the ensuing fiscal year; expected results for each function, project and activity; and the nature of work to be performed, including the objects of expenditure for each function, project and activity (Section 317b 3). LEGAL BASIS
  4. 4. HARMONIZING PLANS WITH THE BUDGET The purpose of harmonizing local plans with budgets is clearly provided in DBM-NEDA-DILG-DOF JMC No. 1, Series of 2007 dated 08 March 2007. It will set a common direction in the implementation and achievement of local endeavors in harmony with national development goals and objectives. It will strengthen the interface and complementation between LGUs, national government agencies (NGAs), among all LGUs in all levels (vertically and horizontally), and funding institutions and donor agencies in the planning, investment programming, budgeting and expenditure management, and revenue administration. The harmonization of local plans with national development goals is essential in achieving efficiency and effectiveness in the allocation of resources. It will starts with the preparation of a development plan at least for 6 years for provinces.
  5. 5. Development Plan for Provinces and Highly- Urbanized Cities The Provincial Development and Physical Framework Plan (PDPFP)- is a six-year plan that merges the traditionally separate provincial physical framework plan and provincial development plan to address the disconnection between spatial and sectoral factors and between medium-and long- term concerns. The PDPFP contains the long-term vision of the province, and identifies development goals, strategies, objectives/targets and corresponding PPAs which serve as primary inputs to provincial investment programming and subsequent budgeting and plan implementation (DBM- NEDA-DILG-DOF JMC No. 1, series of 2007).
  6. 6. Development Plan for Cities and Municipalities The long-term development plan for cities and municipalities is called the Comprehensive Development Plan (CDP). The CDP is a multi-sectoral plan formulated at the city/municipal level embodying the vision, sectoral goals, objectives development strategies, and policies within the term of LGU officials and the medium-term. It contains corresponding PPAs which serve as primary inputs to investment programming and subsequent budgeting and implementation of projects for the growth and development of local government territories (DBM-NEDA-DILG-DOF JMC No. 01, Series of 2007)
  7. 7. Local Development Investment Program Section 305 (i) of R.A. No. 7160 explicitly provides that local budgets shall operationalize approved local development plans. This implies that the preparation of local plans shall precede the preparation of local budgets. On the basis, therefore, of the approved PDPFP for provinces and CDP for cities and municipalities, a programming document called the Local Development Investment Program (LDIP) shall be prepared. Investment programming covers 3 to 6 years. The LDIP at the provincial level is a six-year rolling program coincide with the time frame of the PDPFP.
  8. 8. Local Development Investment Program (cont’d) The LDIP is a basic document linking the local plan to the budget. It contains a prioritized list of PPAs which are derived from the CDP in the case of cities and municipalities, and the PDPFP in the case of cities and provinces, matched with financing resources, and to be implemented annually within a three to six-year period. The first three (3) years of the LDIP shall be firmed up along with the priorities of the incumbent LCEs (DBM-NEDA-DILG-DOF JMC No. 01, Series of 2007).
  9. 9. Annual Investment Program Another document to be submitted by the LDC to the LFC as mandated under Article 410 of the IRR of R.A. No. 7160 is the AIP prepared and approved during the fiscal year before budget preparation. The AIP refers to the annual slice of the LDIP which constitutes the total resource requirements for all PPAs, consisting of the annual capital expenditure and regular operating requirements of the LGU. The AIP, therefore, is the yearly program of expenditures both for capital and current operating requirements of the LGU that will serve as basis for the preparation of Annual and Supplemental Budgets. As document reflecting the total resource requirements for the year, the AIP is a document that reinforces plan-budget linkage.
  10. 10. The Plan-Budget Link Model
  11. 11. The linkage between planning & budgeting takes place when the AIP, after having been reviewed & endorsed by the Sanggunian, is used by the LFC in the preparation of sectoral ceilings. PLAN BUDGET ANNUAL INVESTMENT PROGRAM
  12. 12. Policy Guides on a Plan-Budget Linkage Development planning shall not be limited to projects and activities to be funded by the 20% Development Fund. The entire annual/ supplemental budgets shall be dedicated to sustainable human development in order to achieve the twin goals of eliminating poverty and promoting economic growth. Development planning in general is medium-term and for provinces, covers a six-year period rolling plan.
  13. 13. Policy Guides on a Plan-Budget Linkage (cont’d) Local elective officials shall develop the capacity to mobilize resources and ensure program sustainability. It is their responsibility to develop the capabilities of their people in the long-term so that the well-being of present and future generations is not undermined.
  14. 14. Policy Guides on a Plan-Budget Linkage (cont’d) Local budgets shall be policy-driven and performance - based. Policy formulation shall include: • Explicit policy directions to eliminate poverty and unemployment; and • Policies on how the budget shall be financed in the medium-term and how it is shall be allocated among priority PPAs in the short-term. The LFC shall recommend to the LCE alternative sources of financing the budget and a rational criteria for allocating available resources.
  15. 15. Synchronizing the Plan-Budget Calendar (SUMMARIZED) Jan 1 - 15 Jan 16 - 31 Feb. 1 - 15 LCE issues Executive Order directing the updating of the LDIP & the AIP Review of all objectives and policies • Objective setting / Strategy formulation • Policy revision/ formulation • Prioritization of PPAs • Consolidation of revised objectives, strategies & prioritized PPAs Feb. 16 - 28 • Input review results in AIP forms • Multi-stakeholder consultation on draft AIP
  16. 16. March 1-15 • Match investment requirements with available resources. • Revise draft AIP if resources are inadequate; formulate needed policies • Finalize AIP for endorsement to Sanggunian • Sanggunian deliberates March 16-30 LFC elevates to higher LGU/ NGRO AIP – identified projects that cannot be financed by the concerned lower LGU. April 1- 30 Higher LDC deliberates on projects proposed by lower LGU for funding.
  17. 17. May 1- June 15 June 16-30 July 1-Aug. 15 LFC prepares profiles of PPAs to be funded from the General Fund of the LGU • LCE issues “Budget Call” based on AIP (done after the initial IRA share is released by DBM) • LFC finalizes spending ceiling by sector/ office • LFC conducts workshop / forum on the Budget Call Department Heads prepare & submit budget proposals Aug. 16–Sept. 15 LFC conducts technical budget hearings on proposals submitted by Department Heads
  18. 18. Sept. 16 - 30 Oct. 1 - 15 LFC consolidates budget proposals into a Local Expenditure Program (LEP) and prepares the Budget of Expenditure and Sources of Financing (BESF) LCE prepares Budget message & submits the same to the Sanggunian with the Executive Budget consisting of the LEP & BESF.
  20. 20. AIP Preparation THANK YOU