Budget Reform Decree of 1977

Law Summary

Definitions (Section 2)

Budget: must comply with Section 16(1), Article VIII of the Constitution
Government: includes Executive, Legislative, Judicial branches, and Constitutional Commissions
Department/Agency: includes all government bodies, state colleges, universities, etc.
Current Operating Expenditures: expenses consumed within the fiscal year
Capital Outlays: expenses extending benefits beyond one fiscal year, including investments in government corporations
Expected Results: expected public services or benefits measured by performance targets
Government-Owned or Controlled Corporations: state agencies created by law, performing proprietary functions
Continuing Appropriations: funds available beyond the budget year for specific projects
Appropriation: legislative authorization for government payments
Allotments: budget commission’s authorization to incur obligations within appropriation limits
Obligations: commitments binding government to pay money
Program: major functions/activities of a government entity
Project: components of a program resulting in identifiable outputs
Commissioner: Commissioner of the Budget

Budget Policy and Approach (Sections 3-11)

State policy: budget must align with explicit national objectives and development plans
Budget linked to planning and programming to achieve macroeconomic targets
National Resource Budget: integrates revenues, expenditures, and debts of national, local governments, and government corporations
Regional budgeting: regional goals and plans must influence national agency budgets
Long-term budgeting: annual budget integral to long-term economic and development plans
Development Projects: major projects must consider fiscal, monetary, debt and payment constraints
Performance and Financial Review: agencies must develop info systems to monitor budget implementation and cost-efficiency
Compensation and classification must align with constitutional mandate for a single compensation scheme
Contingent liabilities of government evaluated within budget process

Budget Preparation (Sections 12-25)

Fiscal year: January 1 to December 31 annually
President submits national government budget within 30 days from session opening for General Appropriations Act preparation
Budget includes expenditure proposals for all branches and constitutional bodies, subject to similar evaluation
President may submit supplemental/deficiency appropriations under specified conditions
Budget form/content includes budget message, summarized financial statements of receipts, expenditures, appropriations, treasury conditions, indebtedness, etc.
Budget levels set by agencies in coordination with key fiscal and economic bodies ensuring expenditures do not exceed ordinary income unless supported by additional fund sources
Agencies submit detailed budget estimates including objectives, linkage to development plans, financial sources, contingent liabilities, staffing and salary plans
Regional budgets must originate at regional levels; Commissioner identifies regional expenditure distribution
Budget evaluation based on zero-base budgeting, agency capability, plan alignment, and complementarities
Foreign-assisted project budgets must consider loan and project cash flow implications
Organizational and coordinating agency budget proposals must be approved and limited to assigned functions
Government-owned or controlled corporations submit budgets and may require government support budgets with review
Tax and duty exemptions replaced by equivalent subsidies recorded as revenue and expenditure
Personal services appropriations included as lump sums, itemization prepared by Commissioner
Legislative proposals involving appropriations require approval by department heads and President

Budget Authorization (Sections 26-36)

National Assembly’s role focused on policy and budgetary levels; detailed expenditures left to Executive branch
Budget debate limited to 7–18 consecutive session days
National Assembly cannot increase appropriations over President’s proposal; reductions require corresponding total appropriation decreases
No addition of special provisions earmarking appropriations beyond President’s proposal
General Appropriations Act presented by programs/projects with appropriations; no itemization of personal services included
Automatic appropriations include retirement premiums, interest on debt, and guarantee obligations but require allotment release
Supplemental appropriations after budget submission restricted unless supported by new revenue sources
Unexpended appropriations revert to General Fund surplus except capital outlays and specified continuing appropriations
Loan proceeds require special budget release
Agencies must report contingent liabilities regarding government guarantees
Unauthorized revisions of budget documents during printing are criminalized with penalties

Budget Execution (Sections 37-48)

Funds used solely for specified budget purposes
Appropriations allotted quarterly or as prescribed; Commissioner approves requests considering amount, purpose and future needs
Agencies report quarterly on appropriation status and may request allotment adjustments
Funds released to regional offices as per approved regional distribution
Commissioner may reduce allotments on revenue shortfalls with Presidential approval
Budget Commissioner maintains detailed control records on appropriations, allotments, obligations, and balances
Expenditure programs approved by President based on authorized appropriations
Lump-sum appropriations require special budgets approved by President with job/position details
Establishment of reserves against appropriations for contingencies by Commissioner
President may suspend expenditure of allotments except personal services appropriations
President can transfer funds and augment appropriations within the Executive Department
Savings may be used to cover deficits within appropriations with restrictions on salary and position increases
Certification of fund availability by agency accounting officials required before disbursement
Prohibition on incurring obligations exceeding allotments; responsible parties held liable
Appropriation adjustments authorized for reorganizations approved by President
Illegal expenditures or obligations void; officials liable and subject to dismissal
Revenues government agencies earn generally accrue to General Fund unless specified as special trust or fiduciary funds

Budget Accountability and Monitoring (Sections 57-63)

Continuous evaluation of agency performance based on quantitative and qualitative indicators
Commissioner prescribes information requirements, reporting systems and accounting rules for budget monitoring
Expenditures classified by agency, program, object, region and other categories to track use
Development and use of standard costs for comparing actual against expected expenditures
Ongoing review and modification of budget programs and projects
Semi-annual performance and financial reports required from agencies
Noncompliance with reporting causes suspension of salaries and other disciplinary actions

Expenditure of Appropriated Funds (Sections 64-88)

Agencies may contract out specific services not executable by regular staff, subject to guidelines and cost control
Concurrent service appointments may receive additional compensation as prescribed
Salary increases restricted unless authorized by law
Merit increases provided from lump sums approved, governed by civil service and budget commission
Temporary acting appointments funded from salary savings
No payment of salaries to striking officials/employees
Overtime compensation authorized from salary appropriations for approved overtime work
Reappointed pensioners choose between salary or pension but not both
Voluntary service compensated only with Presidential approval except in specified exceptions
Additional pay for teaching loads allowed
Laundry allowance for government employees required to wear uniforms
Hazard pay allowed for employees in dangerous or isolated assignments
Subsistence allowances regulated and limited to specific categories and conditions
Per diems for travel and allowances administered with rules and periodic rate reviews
Family transportation on transfers covered by government travel appropriations
Purchase and use of motor vehicles restricted and regulated for official use
Rental of motor vehicles limited to 15 days unless authorized
Supplies stock limited to normal three-month requirements unless approved otherwise
Preference for locally manufactured products mandated unless unavailable or cost-excessive
Building rental appropriations released only with department head approval; may be used for lease or loan amortization
Misuse of funds and property penalized under law
President empowered to amend expenditure provisions and rates; Budget Commission conducts continuous improvement studies

Final Provisions (Sections 89-92)

Budget Commission authorized to issue implementing rules and regulations
Prior inconsistent laws, decrees, orders and rules repealed or modified
Separability clause maintaining validity of unaffected provisions if any part declared unconstitutional
Immediate effectivity of the decree upon issuance