Every road repaired, classroom built, or flood-control dike dredged begins as a line in the national budget.
For all its technical language ‘appropriations,’ ‘obligations,’ ‘allotments’ the budget is, at its core, the story of how a government decides whose lives improve, and whose are left waiting.
In the Philippines, this story unfolds in an annual cycle that repeats, overlaps, and rarely escapes controversy. Each year, the Department of Budget and Management (DBM) coordinates one of the most consequential exercises in governance: turning public priorities into peso allocations.
Yet alongside the process comes a persistent debate over transparency, insertions, and how ‘public funds’ can quietly become political favors.
Phase 1: Budget preparation
The budget cycle begins long before debates erupt in Congress. It starts with the Development Budget Coordination Committee (DBCC) the inter-agency body that determines the country’s economic and fiscal direction for the year ahead.
According to the Department of Budget and Management (DBM), ‘The preparation of the annual budget involves a series of steps that begins with the determination of the overall economic targets, expenditure levels, revenue projection, and the financing plan by the Development Budget Coordinating Committee (DBCC).’
The DBCC is chaired by the Budget Secretary and includes the Secretary of Finance, the Director-General of the National Economic and Development Authority (NEDA), and the Governor of the Bangko Sentral ng Pilipinas (BSP), with a representative from the Office of the President providing general oversight.
It is here that the government decides how much it expects to earn, how much it can responsibly borrow, and where those resources should go. These assumptions form the framework for the Budget Call the DBM’s formal instruction to all agencies to prepare their proposals within defined ceilings and national priorities.
As the DBM further notes, agencies must ‘justify details of their proposed budgets before technical review panels,’ after which the DBM consolidates all proposals into the National Expenditure Program (NEP) the President’s official budget proposal.
It is submitted to Congress with the Budget of Expenditures and Sources of Financing (BESF) and the President’s Budget Message explaining the government’s fiscal priorities for the year.
Phase 2: Budget legislation
Once the NEP reaches Congress, the political stage begins. The House of Representatives initiates deliberations, with its Appropriations Committee holding weeks of hearings where agencies defend their allocations. The Senate conducts parallel reviews through its Finance Committee.
The DBM explains: ‘The President submits his/her proposed annual budget in the form of a Budget of Expenditures and Sources of Financing (BESF) supported by details of proposed expenditures in the form of a National Expenditure Program (NEP).’
Each chamber may amend the proposal to reflect its policy priorities and constituency needs. Once both Houses finalize their versions, a Bicameral Conference Committee reconciles the differences to produce a unified General Appropriations Bill (GAB).
Then the GAB is transmitted to the President. If there are items with which the President disagrees, he or she may exercise line-item veto power, as provided under Article VI, Section 27 of the 1987 Constitution. This allows the President to veto specific appropriations, revenue, or tariff provisions without rejecting the entire budget bill.
‘The President can veto particular line items in the budget, but he cannot introduce new items or bring back items that have already been deleted by Congress,’ former Budget Secretary Benjamin Diokno explained.
However, the Constitution also provides a safeguard: Congress may override the veto by a two-thirds vote of all its members.
Once signed or once the vetoed items are resolved the measure becomes the General Appropriations Act (GAA), the country’s spending blueprint for the fiscal year.
As the DBM describes:
‘The General Appropriations Act (GAA) is the legislative authorization that contains the new appropriations in terms of specific amounts for salaries, wages and other personnel benefits; maintenance and other operating expenses; and capital outlays authorized to be spent for the implementation of various programs, projects, and activities of all departments, bureaus, and offices of the government for a given year.’
The Constitution enshrines the rule: ‘No money shall be paid out of the Treasury except in pursuance of an appropriation made by law.’ This ensures that public funds cannot move without legislative approval.
Phase 3: Budget execution
Once the GAA is enacted, the focus shifts from approval to implementation. Funds are released through a complex but standardized system meant to prevent misuse while ensuring agility.
According to the DBM, ‘Budget implementation starts with the release of funds to the agencies. To accelerate the implementation of government programs and projects and ensure the judicious use of budgeted government funds, the government adopted the Simplified Fund Release System (SFRS).’
Graphics by Ed Lustan/Inquirer.net
Under the SFRS, agencies receive Allotment Release Orders either General (GARO) or Special (SARO) that authorize them to incur obligations.
The DBM also issues Notices of Cash Allocation (NCAs), which specify the maximum amount an agency can withdraw from government banks. These releases are based on Agency Budget Matrices (ABMs) and cash programs, ensuring that disbursements match priorities and available revenue.
Adjustments can still occur midyear, often due to new laws, revised macroeconomic assumptions, or unexpected changes in revenue. This is where discretion can become contentious, as shifting allotments can alter which regions or programs receive priority funding.
Phase 4: Accountability
The cycle closes and restarts with accountability. The Commission on Audit (COA) steps in to verify whether agencies used funds as authorized.
As the DBM explained, even the largest budgets will fail to deliver results if agencies spend inefficiently or waste funds. That’s why ‘systems and procedures are set in place to monitor and evaluate the performance and cost effectiveness of agencies,’ ensuring that every peso is used effectively.
These activities fall under the fourth and final phase of the budget process: the budget accountability phase.
Agencies submit quarterly and annual reports comparing actual performance with targets. COA auditors assigned to each office examine records, flagging irregular or excessive spending. Their findings feed into audit reports and, when necessary, graft and plunder investigations.
In theory, the accountability phase is designed to ensure that every peso is properly monitored and reported. In practice, however, this is often where the system falters: unliquidated funds linger for years, audit reports pile up, and the same agencies repeatedly surface in COA findings.
How budget insertions happen
While the four phases of budgeting are clearly defined, political realities often complicate them. Budget ‘insertions’ or additional items added outside the original agency proposals usually emerge between the preparation and legislation stages.
An earlier Inquirer report bared that some lawmakers have coordinated early with agencies to insert favored projects into the NEP even before the budget is formally submitted to Congress.
In a Senate hearing, former Public Works Secretary Manuel Bonoan confirmed that his department used what he called a ‘leadership fund’ to accommodate project requests from legislators at the budget preparation stage.
Sen. Panfilo ‘Ping’ Lacson questioned this practice, noting that lawmakers were able to influence the President’s proposed budget before the legislative phase began.
‘The NEP is the President’s budget proposal to be transmitted to the House and eventually to the Senate. Why are there insertions in the NEP? That I cannot really understand for the life of me,’ Lacson told Bonoan in a mix of English and Filipino.
‘You did not want to call it an insertion, so you called it a ‘leadership fund.’ Why are you accommodating lawmakers’ proposals?’ said Lacson, who chairs the blue ribbon panel.
‘We call it a leadership fund in order that if there are actually priority projects requested by members of the Senate, this is where we’re hoping to include [the requests] into the [NEP],’ Bonoan explained.
According to Bonoan, they use the term ‘consolidation’ instead of ‘insertion.’
‘This is consolidating all the requests from all sectors, like in the Senate, Congress, and everything . this is where the list of projects is all incorporated into the NEP,’ he explained.
IBON Foundation and other watchdog groups have long warned that opaque revisions to the budget undermine accountability. While some additional allocations may address genuine local needs, numerous reports have tied certain bicameral insertions to ghost projects or unexplained post-enactment allocations.
When transparency breaks down
The current debate over the 2025 national budget underscores how cracks in the process persist.
Investigations into the ?142.7-billion ‘bicam insertions’ exposed the murky space where final allocations are tacked on during the bicameral reconciliation often without full public disclosure or justification.
And in the DPWH budget, media reporting flagged a wave of insertions beyond flood control: projects that emerged suddenly, without clear planning, raising questions about political whims over strategic design.
In this climate of doubt, Lacson recently revealed that senators themselves introduced around ?100 billion in amendments to the 2025 budget proposal, while the House allegedly added ‘much, much more.’
He likened the several-page list of House members who made insertions in favor of the Department of Public Works and Highways (DPWH) in last year’s General Appropriations Act to ‘a roll call.’
Even as he acknowledged that insertions or amendments are not necessarily illegal, Lacson said they are questionable, especially when individual insertions reach P5 billion or even P9 billion.
‘Introducing insertions is not illegal. It is our mandate as lawmakers to review the National Expenditure Program and introduce amendments. The problem is that many lawmakers abused this mandate,’ he added. ‘I hope that in 2026, we will practice self-restraint. The people are angry, so we must reform the way we pass the budget.’
‘Not all insertions are bad’
Senate President Vicente Sotto III maintained that the individual and institutional amendments introduced during the Senate’s budget deliberations are part of the regular legislative process.
‘Amendments, insertions, or whatever you want to call it whether individual or institutional are part of the deliberations in the Senate,’ Sotto said in a statement.
‘It is within the mandate of senators to amend and determine government spending allocation. This serves as a crucial check-and-balance mechanism to ensure that public funds are spent in accordance with the law,’ he added.
He explained that many of these requests originate from local government units (LGUs) provinces, municipalities, and even barangays whose proposed projects may have been excluded from regional planning councils.
‘It is unfortunate that the issue on ghost projects and failed flood control projects affect and generalized all amendments as illegal or improper,’ Sotto said.
He explained that some of the changes made by lawmakers in the 2025 national budget were meant to fund projects such as classrooms, farm-to-market roads, and bridges initiatives he said would directly benefit communities, especially in far-flung areas.
‘Some of [these] were never funded and were tagged ‘for later release’ (FLR),’ he added, noting that most amendments are legitimate and not improper. Asked if only a few might be questionable, the Senate chief replied: ‘That’s right. Not all of them. They’re usually individual amendments.’
Sen. JV Ejercito shared the same view, emphasizing that amendments are part of lawmakers’ duty to improve programs and projects. ‘Not all amendments are bad, especially those which help agencies and departments,’ he said.
Lawyer and former House Deputy Speaker Lorenzo ‘Erin’ Tañada III offered a distinction between the two concepts often conflated in budget debates.
‘There is a difference between amendments and insertion,’ he explained. ‘Amendments are approved in plenary after following the regular process of legislation. Amendments may be approved or rejected. Insertions are done outside the regular process of legislation. It is not approved in plenary.’
The cycle turns again
The Philippine budget process is both meticulous and fragile. On paper, it is a cycle of planning, authorization, execution, and accountability a model of fiscal discipline. In practice, it is also a mirror: reflecting the priorities, power plays, and persistent struggles of governance.
Every peso in the budget tells a story. Some build roads. Others build influence. And each year, as the cycle turns, the nation must ask again: whose story does the budget truly serve?