Presentation of DBM Sec. Florencio B. Abad to the Senate Committee on Finance
on the Disbursement Acceleration Program (DAP).
The Disbursement Acceleration Program (DAP) is a spending reform measure to speed up
public expenditure and catalyze economic growth.
What is DAP?
The Aquino Administration introduced the Disbursement Acceleration
Program (DAP) as a reform intervention to speed-up public spending and
to boost economic growth. It is not a fund, but a mechanism to support
high-impact and priority programs and projects using savings and
unprogrammed funds. DAP also enabled the government to introduce greater
speed, efficiency, and effectiveness in budget execution.
Why was DAP introduced?
When the Aquino Administration assumed office in 2010, it unearthed
systemic inefficiencies in public spending. These included
poorly-designed and questionable projects that need to be cancelled; the
prevalence of lump sum funds; implementation bottlenecks; among others.
Unfortunately, its efforts to plug leakages and reform the budget
execution process had the effect of slowing down spending.
From January to September of 2011, government disbursements shrank by
7.3 percent year-on-year. Underspending was most severe in the case of
infrastructure, which slumped by 51.3 percent. These, alongside the
global economic slowdown, pulled down gross domestic product (GDP)
growth to 3.6 percent in the first three quarters of 2011, from 7.6
percent in 2010. Clearly, the government could not have afforded to
nothing.
How did the DAP work?
The DAP tapped the power of the president over a) the use of savings to
augment deficient programs and projects; and b) the use of unprogrammed
funds.
Savings are available portions or balances
of items under the General Appropriations Act (GAA) which result from:
a) the completion or final discontinuance or abandonment of a program,
activity, or project; b) unpaid compensation for vacant or unfilled
positions and leaves of absence without pay; or c) the implementation of
efficiency measures that enable agencies to deliver services at lower
cost. Such savings may then be used to augment funds for programs,
activities, or projects which are included in the GAA (i.e. nonexistent
budget items cannot be funded).
Unprogrammed funds are standby
appropriations which are authorized by Congress in the annual GAA, and
which may only be used when a) revenue collections exceed revenue
targets; b) new revenues are collected from sources not included in the
program; or c) newly-approved loans for foreign-assisted projects are
secured. Such funds can be used for new programs, activities, or
projects as long as these are consistent with the purposes listed in the
GAA for the use of unprogrammed funds.
Previous administrations had used these authorities in the past to
address urgencies they faced. Moreover, the Aquino Administration
sharpened the application of such powers by prioritizing funding for
programs and projects which are a) fast-moving or quick disbursing; b)
urgent or priority in terms of social and economic development
objectives; and c) performing well and could deliver more services with
additional funds.
How much in programs and projects were funded through DAP?
From the inception of DAP in October 2011 to its termination in December
2013, a total of P167.06 billion in programs and projects have been
proposed to the President for funding. Of this, P144.38 billion was
approved by the President and eventually released.
A total of 116 programs and projects were approved to be funded
through DAP. These included an additional P1.26 billion to the Sitio
Electrification Program to fast-track the electrification of 33,000
sitios; P1.6 billion for the Training-for-Work Scholarship Program
benefitting a total of 149,530 enrollees; and P4.08 billion to settle
unremitted GSIS premium payments of public school teachers since 1997.
How did DAP benefit the economy?
With the introduction of DAP, government disbursements in the fourth
quarter of 2011 grew by 32.5 percent. This pulled up full-year public
spending to grow by 2.3 percent. With the sustained application of DAP,
spending further grew to 14.1 percent in 2012 and 5.8 percent in 2013.
The growth of infrastructure spending, in particular, improved from
-28.7 percent in 2011, to 27.6 percent in 2012 and 21.6 percent in 2013.
The improved pace of public spending bolstered the growth of the
country’s GDP. The World Bank in a 2012 report stated that DAP “was
partially successful and contributed 1.3 percentage points to GDP in Q4
[of 2011] .” The country’s GDP growth further improved from 3.6 percent in 2011, to 6.8 percent in 2012 and 7.2 percent in 2013.
How did DAP support the budget reform agenda?
DAP provided the Aquino Administration with a strong platform to pursue
major reforms that improve the pace, quality, and accountability of
government spending for the long-term, including:
- GAA-as-Release Document
– Beginning 2014, the GAA now serves as the release document, which
means that the budgets of departments and agencies are considered
released to them as soon as the GAA takes effect. This speeds up budget
implementation and reduces the need to process and release special
allotment release order (SAROs).
- Performance Informed Budgeting
– Beginning 2014, the performance targets of all agencies are now
included in the GAA alongside the budgetary allocations. This reform
deepens the accountability of agencies to their committed performance
targets, and enables them to better plan and design their programs in
line with the government’s socioeconomic development goals.
- Electronic, Cashless and Checkless Regime
– the completion of the Government Integrated Financial Management
Information System by 2016 will significantly reduce inefficiencies in
financial transactions brought about by manual processes. In line with
this, government financial transactions will already be at least 80
percent cashless and 100 percent checkless by the end of 2014.
- Procurement Innovations
– as the procurement process has been a major bottleneck to the budget
execution process, the government introduced innovations such as:
allowing departments and agencies to bid their projects out even before
the enactment of the GAA, so that they can award contracts as early as
day one of the new fiscal year; leveraging technology to enable
electronic procurement; capacitating procurement staff and hiring
permanent ones; among others.
Why did the Aquino Administration terminate DAP?
With the marked improvement in the speed, quality, and accountability of
government spending, DAP as a policy intervention has clearly achieved
its purpose. Moreover, the roll-out of major budgeting reforms described
above sustain the improved efficiency and effectiveness of budget
execution in the longer-term.
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