Two Tier Budget Approach (2TBA) Guide

• This guide concerns the Two Tier Budget Approach (2TBA), and is designed to improve effectiveness and transparency of public spending
• It is structured as a response to budget department and agency requests for assistance preparing budget submissions under the 2TBA
• It is designed to support agencies in crafting affordable, sustainable budgets that prioritize social and economic needs while improving public service efficiency

Two Tier Budgeting

• Two-tiered budgeting separates the deliberation of existing activities from new spending proposals, including expansions of current activities
• It enhances the government's ability to strategically allocate spending, involving the President and Cabinet in directing unallocated resources
• It also bolsters the accountability of departments and agencies in executing existing activities, strengthening overall fiscal discipline

Financial Management Reform

• The guide outlines financial management reforms implemented by the Government of the Philippines (GoP) and explains their objectives
• It also presents the overall budget cycle, beginning approximately 18 months before the budget year
• For example, the 2017 Budget preparation cycle started in August 2015 and ended in December 2016.

Ongoing Guide

• This document provides guidance for agencies' annual budget preparations and submissions
• Detailed forms, instructions, and timeframes may be updated yearly
• Budget memorandums, circulars, and information from the Department of Budget and Management (DBM) offer the latest requirements
• Agency feedback helps improve GoP budgeting processes continuously

Public Finance Reform

• The Government of the Philippines (GoP) initiated various budget process reforms to strengthen public expenditure management and planning
• These reforms are under the government's commitment.
• Spend within available means
• Align spending with socio-economic priorities outlined in the Philippine Development Plan (PDP)
• Provide public goods and services at reasonable costs
• Empower stakeholders through greater transparency and accountability

Modern Public Expenditure Management Tools

• These tools are used to achieve the government's objectives:
• Multi-Year Budgeting Approach (MTEF)
• Coordination in Planning, Budgeting and Program Implementation (PCB)
• Evaluation of Programs and Revamps (ZBB)
• Integrate Performance Information (PIB)
• Consider People's Needs (BuB)
• Estimates on Future Costs (FEs)

Unified Accounts Code Structure (UACS)

• UACS enables orderly, transparent, and auditable budgeting, providing timely, and accurate reporting, while securing the integrity of the Budget as enacted by Congress

Program Expenditure Classification (PREXC)

• Makes the PIB useful for program managers

Bottom-Up Budgeting (BuB)

• A demand-driven budget-planning process that institutionalizes people's participation in the budget process

Government Financial Management Cycle Phases

• Agency Planning and Priority Setting
• Administration Planning and Priority Setting
• Budget Preparation
• Budget Execution
• Reporting and Verification

Operational Plan

• Sets out the major tasks, targets and costs for each activity

Strategic Plan

• Sets out the strategic priorities for the agency over a 5- to 6-year period

Two Tier Budget Approach Process

• Agencies must follow Department protocols and will have budget processes
• Timeframe for budget preparation is planned in advanced

Budget Preparation Steps

• Development or Review of Agency Strategic Plan
• Review and update the Operational Plan for the next three fiscal years
• Assessment of ongoing Programs, Activities and Projects
• Submission of Infrastructure Proposals to NEDA
• Amendments to the Budget Structures
• Inter-Agency Coordination

The objective of the two-tiered budget preparation system

• To separate the consideration of ongoing funding requirements for activities and projects that have already been approved from decisions on new or expanded funding
• In Tier 1, the agency and DBM agree on the resources that will be required to continue existing activities, projects, and programs

Budget Estimates Computation Requirements

• Based on must recent budget utilization rate for the projects of programs
• The accomplishment report of the output and outcome targets of the programs

Tier 1 technical budget hearings

• Invite agencies for discussion calculating ongoing budgets

PREXC System

• Ongoing budgets will be calculated on the basis of programs and sub-programs

BPF

• Consistent with budget priorities
• Is delivered by agencies in an effective manor

BP Forms 202 and 203

• To provide guidance for completing the forms

A guide to the Two Tier Budget Approach (2TBA), designed to improve the effectiveness and transparency of public spending. It assists budget departments and agencies in preparing budget submissions under the 2TBA. It supports agencies in crafting affordable, sustainable budgets that prioritize social and economic needs.