In its yearly update on fiscal transparency, the Oxford Analytica 2006 report stated that the Philippines overall score of "Compliance in Progress" remained unchanged from prior years. Progress toward increasing transparency practices and the availability of data, and enhanced efforts to tackle corruption and increase the efficiency of revenue collection have been made, but there has been a deterioration of transparency in some areas, particularly with regard to the Government Owned and/or Controlled Corporations (GOCCs). Of specific concern is the continued reliance on obligations-based budget reporting and less than fully harmonized methods of data compilation across national and local government agencies as well as for the GOCCs. In recent years, there have been movements toward improving tax collection procedures, modernizing and computerizing fiscal data reporting, and improvements in the estimation of revenues. The Philippines is a subscriber to the International Monetary Fund's Special Data Dissemination Standard and meets requirements for coverage, periodicity, and timeliness, but the International Monetary Fund's 2006 Article IV Consultation (published in 2007) suggests that more improvement in this area would be welcome.

General Overview

Oxford Analytica (OA), in its 2006 report on Fiscal Transparency in the Philippines, assesses overall compliance with this standard as "Compliance in Progress," unchanged from the previous year. Nonetheless, the report did find that Philippine fiscal transparency has, in fact, deteriorated to some degree. The problems include the failure of congress to pass the 2006 budget, resulting in a situation wherein the prior year's budget was ostensibly used, but effectively rendering 2006 spending almost completely non-transparent, since 2005's "earmarked" funds were on spent on other things this time around, with no government guidelines for or accounting of their expenditure. An Executive Order, (EO no. 558), attempted to grant broad rights to Government Owned/Controlled Corporations (GOCCs) and non-financial government agencies to enter the lending market despite a lack of clearly formulated rules governing their extension of credit, and only strong opposition by the Department of Finance (DoF) and an outcry in the international financial community succeeded in amending the original order to limit the effects of the EO. Additional concerns have been raised over the lack of transparency in the privatization of government-owned assets, with unequal access to necessary information being granted to bidders for those assets. Reflecting some of the problems identified by the OA report, the International Budget Project's 2006 "Open Budget Index," compiled for the Philippines by V.M. Datinguinoo and A. M. Olarte, issued a rating of 51 out of 100 percent, evaluating the degree to which the Philippines succeeds in providing public access to seven key budget documents. The IBP website noted that the Philippines does not provide either a pre-budget statement nor a citizen's budget, but does provide an Executive Budget Report, In-year Reports, Mid-year Review, Year-end Report, and Auditor Report.

The 2006 OA report notes that attempts at reform have been made, including a proposed Constitutional amendment initiated by the president in 2006 that would replace the current bicameral structure of congress to a unicameral legislature, in hopes of breaking legislative gridlock. This effort has, thus far, been unsuccessful. There have been some small improvements, however, according to the OA report. These include enhanced transparency in the procurement process and the implementation of better performance-monitoring of GOCC activities. In the area of data reporting, subsidies to the GOCCs have, to date, tended to be handled off-budget, but there is a move toward including these monies in the regular budget. Progress toward a balanced budget, previously targeted for 2010, is proceeding more quickly than expected, and the achievement of budget balance is now forecast for 2008. According to the OA report, "the government is developing a Medium-Term Expenditure Framework, i.e. a three-year rolling budget that will allow the tracking of the funding requirements of ongoing agency programs and projects for the next three years" (p. 382).

Data compilation and reporting has been enhanced through the government's efforts to reconcile its methodology to the Government Finance Statistics Manual 2001 (GFSM 2001) of the International Monetary Fund (IMF). Reforms aimed at streamlining the fiscal incentive framework, currently deemed inefficient by the OA 2006 report commentators, are currently under congressional debate. Other legislation, including legislation geared toward simplifying the Philippine tax code, are pending. According to the OA report, one such bill, the Fiscal Responsibility Bill "would limit the number of tax bills to be issued" and "end the government's automatic guarantee of obligations incurred by GOCCs" (p. 382).

In it's 2004 Update of a 2002 Fiscal Transparency Report on the Observance of Standards and Codes (ROSC), the IMF welcomed improvements in a range of fiscal policy areas, including procurement, accounting, cash management, internal audits, and the projection of revenues. However, the ROSC Update also noted that data quality, timeliness, and coverage could stand further improvement, and that independent assurances of data integrity could well be enhanced. One problem, initially identified in the IMF's 2005 Article IV Consultation and reiterated in the 2006 Consultation (published in 2006 and 2007, respectively), is the continued practice of using an obligations basis for budget reporting, in contrast to the use of cash-basis accounting when reporting on the deficit. This makes it difficult to compare budgets and outcomes. In addition, the 2005 Consultation cautioned that the Philippines generally does not make available consolidated fiscal outturns beyond the fiscal balance, and the 2006 Consultation noted that this problem had yet to be remedied.

The 2006 Consultation noted that the publication of annual budget data for the central government alone is done through the Government Financial Statistics Yearbook, whereas the monthly figures for this budget data appears in the International Financial Statistics. The Consultation also applauded the Department of Finance's creation of a specialist unit for bringing government procedures for compiling financial statistics into line with the standards of the Government Financial Statistics Manual of 2001. Finally, the 2006 Consultation welcomed two further developments: "the introduction of a standardized chart of accounts, and the electronic New Government Accounting System (NGAS)" (p. 50). These are both seen to have enhanced the compilation processes for annual financial statements at the national and local government levels, as well as for the GOCCs. The report went on to note that "the [IMF] mission worked with the authorities to revise classifications in the chart of accounts, in order to allow for the consolidation of data for the nonfinancial public sector as a whole" (p. 51) and recommended that GOCCs distinguish between market and non-market activities to enable the compilation of consolidated data for the general government sector.

The Principles

Clarity of roles and responsibilities.

EN

Oxford Analytica (OA), in its 2006 Report on Fiscal Transparency in the Philippines, rates the Philippines' compliance with this principle as "Enacted," unchanged from the previous year. The Constitution of the Republic of the Philippines (1987) and the Administrative Code (1987) provide clear legislative underpinnings for the structure of government and allocates to the various branches their functions, and responsibilities. There are two levels of government that bear fiscal responsibilities: the national level and the local government units (LGUs) comprised of provincial, municipal, and independent urban centers, as well as smaller units (barangay, roughly equivalent to a ward or district) and the Autonomous Region of Muslim Mindanao (ARMM). Also implicated in the fiscal policy process are the GOCCs, the central bank (BSP), and other agencies. According to the OA 2006 report, the Philippines is in the process of decentralizing, which calls for the delegation of certain fiscal responsibilities to the local level. This has necessitated the establishment, via legislation, of new, clearly stated relationships between the national government and the LGUs. The OA 2006 report lists the Local Government Code (Republic Act 7160) of 1991, Executive Order 507, and the Organic Act for Muslim Mindanao (R.A. 6734) of 1989 as examples of such clarifying legislation (p. 383). The ARMM constitutes a special case as, by law, it enjoys greater independence in development planning and greater administrative autonomy, as well as the right to retain national tax revenues collected within its confines, in contrast to the conditions governing the non-ARMM LGUs.

Provisions in law make explicit the particular functions allocated to LGUs, but the legislation adds a degree of ambiguity by permitting the central government to retain rights to delegate further, unspecified, responsibilities at its discretion. According to the 2006 OA report, "central government agencies use [the Local Government Code] to transfer unfunded mandates, such as implementation of the salary standard law and budgetary support, to certain central government agencies (e.g. police, law courts, fire rescue services) operating at the local level" (p. 383). The Local Government Code also asserts the LGUs taxation rights, clearly distinguishing which can be collected by local authorities and which are the province of the central government, as well as specifying what federal allotments are due from the national government. LGUs are allocated proportionally calculated shares of the federal government's income tax receipts, according to governmental level (e.g., provincial, municipal, ward). In addition, LGUs are due federal funds for particular development projects that are included in the national government's budget. However, the mechanisms behind this second source of funds has caused some concern. According to the 2006 OA report, one source of such funds is the Priority Development Assistance Fund (PDAF), which "is made up of funds appropriated in the GAA to help individual legislators fund projects that voters will be identify with them personally" (p. 383). The difficulty arises when these funds are used to camouflage illicit activities on the part of legislators, such as the taking of bribes or kickbacks from contractors working on the projects for which the monies are intended. According to the OA report, there are efforts being made to reduce this type of abuse. In addition, local government accounting procedures are being modernized through the introduction of computerized accounting. The DoF offers guidance to local governments and issues procedural manuals, as well as financial assistance for the acquisition of computers and other modernization efforts. A department within the DoF, the Bureau of Local Government Finance (BLGF) has been set up as the direct DoF outreach arm to local governments, and it has begun performance monitoring for LGU financial activities. The president's 2006 introduction of a constitutional amendment to replace the chronically gridlocked bicameral legislature with a unicameral system enjoyed great popular support but was rejected by the Supreme Court, but the OA 2006 report notes that the chief executive is considering bringing the issue up again.

According to the 2006 OA report, the cabinet-level Development Budget Coordinating Committee (DBCC) sets forth coordination and management tools to be employed in the budget process. The membership of the DBCC is drawn from the Office of the President, the Department of Budget Management (DBM), the National Economic and Development Authority (NEDA), the DoF, and the BSP. It is co-chaired by the heads of the DBM and the NEDA. By law, the DoF has the responsibility for formulating and managing national fiscal policy, overseeing the fiscal operations of the LGUs, managing public sector debt and contingent liabilities, and supervising the privatization of government assets, including GOCCs. The role of the DBM is that of drafting and implementing the national budget and overseeing accountability of national government agencies. NEDA is responsible for coordinating development planning and overseeing current development projects.

The New Central Bank Act (1993) delineates the relationship between the national government and the BSP, granting the latter autonomy in formulating monetary policy. In prior years, there has been a problem in the amount of credit extended by the BSP to the government, and the 1993 legislation was intended, in part, to address this issue by setting credit limits on these loans, among other things. Other legislation addresses the relationships between the national government and public sector agencies such as the GOCCs. According to the 2006 OA report, the GOCCs "are required by law to submit annual audited financial statements to the secretary of the department under whose jurisdiction they fall (pp. 384-385). The OA report notes that there have been complaints of inconsistency in the budget documentation of certain government loans to large GOCCs, and that the treatment of such items as off-budget has led to distortions in the final budget. The Securities and Exchange Commission (SEC) provides financial information on the GOCCs, and the Commission on Audit (CoA) conducts audits of GOCC financial statements.

The 2006 OA report raised concerns regarding GOCC fiscal performance. According to the report, GOCC deficits have undermined governmental attempts to achieve fiscal consolidation in recent years, and constitute an important fiscal risk. The report notes that a proposed Fiscal Responsibility Bill, intended to reduce this risk by eliminating the government's obligation to guarantee GOCC performance, has yet to be passed. The report does note that performance-monitoring of the more problematic GOCCs had been implemented in 2006, and that there was some evidence of reduced GOCC deficits, but that this has not eliminated the fundamental problems underlying those deficits. Government-allocated funds are still subject to misuse or abuse. Still, the report noted that the governments increasing inclusion of subsidies to the GOCCs in the regular budget, as opposed to the previous treatment of them as off-budget items, has effectively improved transparency and clarity in the budget process. If the government continues to push for performance contracts for the GOCCs, the 2006 OA report suggests that "this may pave the way for setting up monitorable targets for the larger public enterprises" (p. 385).

According to the 2006 OA report, concerns were raised in 2006 within the DoF and the international financial community when Executive Order (EO) 558 was passed, the provisions of which were believed dangerous to continued fiscal stability (it permitted GOCCs and non-financial government agencies to participate in the lending market). These fears were eased, but not eliminated, when amendment EO 558-A was passed to limit the size of such loans. Further clarifying amendments are being contemplated, but the OA commentators suggest that the whole process raises doubts as to the efficacy of the government's decision-making processes. The OA report deemed the Philippines privatization efforts to be conducted openly, with appropriate inclusion of the proceeds of the process within the budget and national accounts. The bidding process is generally transparent, although the OA commentators note that this is not the case for certain large assets, such as those in the power generation and transmission sectors. In those cases, the OA report noted that "the bidding strategy changed during the process, and not all potential bidders were granted access to the necessary documents" (p. 385).

According to the IMF's 2004 Update of its 2002 Report on the Observance of Standards and Codes, "the clear separation of fiscal and public enterprise management has been reduced somewhat by the rising losses of the National Power Corporation (NPC), which have been funded in part by the purchase of NPC-issued bonds by the national government (approximately P 40 billion in 2003) and shown as investments below the line" (p. 2). This practice has introduced distortions in the national government's accounts.

The laws governing the government's participation in the private sector include Memorandum Order No. 266 (1989), Executive Order No. 40 (2001), and Republic Act No. 9184 (2003), along with Executive Order No. 109A, and the Build, Operate, and Transfer Law (1994), as well as the individual Republic Acts that established each of the GOCCs. The OA 2006 report noted that the Social Security System (SSS) and Government Service Insurance System (GSIS), both of which are public funds, were previously vulnerable to political pressures that have been eased, somewhat, by legislation that requires they undergo greater oversight. This oversight is provided via CoA annual audits. As a result, according to the 2006 OA report, "in 2005-2006, the SSS was in surplus for the first time in seven years, with member contributions exceeding benefit payments" (p. 386). The previous SSS deficits had, in the opinion of the OA report, undermined governmental efforts toward fiscal consolidation.

The Constitution requires the president to submit to congress an annual budget proposal, which is formulated after consultation with the DBCC, which formulates a medium-term fiscal plan and sets the desirable debt and expenditure levels. Individual departments and agencies of the government, and the GOCCs, submit their own budget estimates to the DBM. These estimates constitute a part of the budget that the president submits to congress. According to the OA 2006 report, "the Bureau of the Treasury ensures that disbursements authorized by the DBM are fully backed by revenues" (p. 386). Upon congressional approval of the budget, it goes back to the president for signing.

The government's tax options are legally established through the provisions of the Constitution and the National Internal Revenue Code, Tax Reform Act of 1997, and other tax reform legislation (tobacco and alcohol excise taxes, the VAT). By law, national taxes are collected by the Bureau of Internal Revenue (BIR), which is authorized to interpret tax law, arbitrate tax disputes, and conduct tax audits. The 2006 OA report notes that there has been a historic tax-evasion problem in the Philippines, to address which, reform efforts have been initiated. Public perceptions of BIR corruption has contributed heavily to tax evasion, because there appeared to be little enforcement of tax violations in a number of high-profile cases. To address this, in 2005, the government initiated a new Run After Tax Evaders Program (the RATE Program) under the supervision of the DoF, but the program is not seen as effective. Other proposed reform measures include the elimination of numerous tax exemptions, improvements in BIR and Bureau of Customs functionality, and further revisions of the tax code. To improve the tax adjudication process, Republic Act No. 9282 of 2004 effectively reorganized the Court of Tax Appeals and expanded its jurisdiction. The OA report does note that, despite ongoing reforms of the government's use of "special incentives" to encourage investment and other desirable results, much remains to be done. According to the report, "the list of special incentives remains long, and tax concessions are widely applied and not time-bound. In addition, the authorities are now facing pressure to grant income-tax incentives to the bio-fuels industry" (p. 387). The report notes that, as of 2006, there were eight new tax-reform bills before the congress.

There are both legislative and regulatory documents governing ethics in government. The government itself has issues a Code of Conduct, the terms of which are broadly disseminated to the public. The Constitution, the Ombudsman Act (1989), the Code of Conduct and Ethical Standards (1989) and the Anti-graft and Corrupt Practices Act (1960) all contribute to clear ethical standards to which public officials are to be held, and set specific sanctions in the case of ethical violations. The current administration has also set out whistle-blowing procedures and has created commissions specifically charged with investigating accusations leveled against political appointees and officials within the DoF. However, the OA 2006 report notes that there have been several high-profile corruption charges that have been ignored by the system, which has seriously damaged the credibility of the government's anti-corruption commitment. According to the OA report, " the Office of the Ombudsman lacked sufficient funds and personnel to contribute to a successful anti-graft campaign" (p. 387), and its head resigned in 2006 after launching an initiative to crack down on corrupt activities. This, again, has damaged the credibility of reform efforts targeting well-connected officials.

Open budget processes

CP

The 2006 Oxford Analytica Report on Fiscal Transparency in the Philippines rates the Philippines' compliance with this principle as "Compliance in Progress," unchanged from the previous year. Philippine law requires the president to present to congress an annual budget proposal that includes a statement of upcoming year's budgetary focus and fiscal objectives, as well as a forecast of the effect of the budget on development programs. The Medium-Term Philippine Development Program (MTPDP) provides the framework against which the budget's development-oriented goals may be assessed. The current MTPDP, covering the years 2004 through 2010, establish five central development themes, listed by the 2006 OA report as: "economic growth and job creation, energy, social justice and basic needs, education and youth opportunity, and anti-corruption and good governance" (p. 391). To facilitate the alignment of the budget process with the goals of the MTPDP, the government has adopted a Medium-Term Expenditure Framework (MTEF) which is concerned with resources, public investment, and performance-based monitoring of government agencies. According to the 2006 OA report, there are two tools available to the MTEF: Sector Effectiveness and Efficiency Reviews and the Organizational Performance Indicator Framework, both of which are aimed at improving accountability for agencies seeking budget resources. In addition, the DBM conducts performance reviews of all executive branch government agencies. Whereas the MTPDP deals with medium-term macroeconomic projections, longer-term assumptions are incorporated in the Budget of Expenditures of Sources of Financing (BESF). Explanations of the methodologies employed by the BESF are not routinely offered to the public, but according to the OA 2006 report, both the DoF and DBM have made assurances that they can be accessed upon the specific request of interested parties.

Risk analysis is conducted by several government departments, but are not included in the budget, according to the OA report. The budget submitted to the congress does, however, contain a sensitivity analysis regarding the key macroeconomic assumptions contained therein, according to the 2006 OA report. The proposed Fiscal Responsibility Bill would address certain other fiscal risks, such as those deriving from the government's responsibility to guarantee GOCC loans, the imposition of a debt cap, budget balancing measures linking new expenditures to cuts elsewhere in the budget, and improvements in the collection of taxes. Provisions in the budget are made to deal with unanticipated situations requiring government expenditures.

The fiscal performance of LGUs has been uneven, with some achieving what the 2006 OA report terms "excellence" and others performing at rather less than optimal levels. The DoF has been working to encourage improvements in fiscal management practices with some success. However, the OA report does caution that the current plan to upgrade several LGUs to the status of independent cities may constitute a potential fiscal risk, because they will then become entitled to proportionately larger fund allocations from the national government's coffers.

The government is required by law to provide an analysis of fiscal sustainability. The 2006 OA report notes that both the DBM and NDA conduct efficiency reviews of government expenditures on a program-by-program basis, and that this has had a positive impact on fiscal discipline. Quarterly CoA audits identify excessive spending on the part of government agencies, which are reported semi-annually. The DoF is working with the Asia Development Bank to enhance its efforts in debt and risk management. Nonetheless, the 2006 OA report notes that there remain significant problems in quantifying as well as controlling government debt, due largely to the national government's guarantee of GOCC and government financial institution loans. For these and other reasons, according to the OA report, "formal fiscal sustainability analysis is not yet available" (p. 392).

As a subscriber to the IMF's SDDS, the Philippines meets the requirements for periodicity, coverage and timeliness. The data presented in the budget include consolidated figures relating to central government operations, broken down into revenue, expenditure, balance of payments, and financing, with expenditures broken down further into economic, functional, and administrative categories. According to the 2006 OA report, government debt data (both foreign and domestic, treated separately) are categorized according to short-, medium-, and long-term liabilities, and are differentiated according to the originating agency. The CPSFP financing data are differentiated according to whether or not the source is domestic or foreign. According to the 2006 OA report, "the CPSFP presents the most accurate picture of the fiscal activity of the Philippine public sector, and accuracy has been improved through the quantification and inclusion of many government contingent liabilities in the balance" (p. 392) The 2006 OA report applauded the progress made thus far by the Philippine government in adopting performance-based budgeting. Performance reviews of government agencies are conducted by the DBM, and agencies are required to include performance targets in their budget estimates. The government has attempted to assist the DBM in its tasks by implementing an e-budget system, which has been in place since October 2005. According to the 2006 OA report, this system should help "strengthen the DBM's expenditure management capability, streamline budget-release procedures and improve front-line service, improve budget administration and accountability, update budget analysis and decision making and minimize the fabrication of documents and the opportunities for 'fixers' promising to arrange funds for agencies" (p. 392).

Accounting practice in the Philippines has been enhanced by the CoA's 2002 introduction of the new Government Accounting System (NGAS). The system is intended to simplify and render more efficient the government accounting and performance oversight processes, as well as to enhance fiscal transparency. In addition, as the 2006 OA report notes, it "shifts from cash- to accrual-based accounting and introduces modifications to the obligation-accounting techniques. It also mandates the introduction of valuation accounting for receivables and fixed assets, and envisages the full computerization of government accounting, as well as the development of viable internal control systems within government agencies over the medium term" (p. 392).

Legislation was passed in 2003 to improve the government procurement process, resulting in improved transparency as well. The Government Procurement Reform Act (GPRA) improved the transparency of the procurement process, increasing competition. National government procurement is now conducted electronically, and the procedures employed in manual procurement processes conducted at the LGU level have been reformed as well. According to the 2006 OA report, the Government Procurement Policy Board (GPPB) oversees all public procurement activities, to ensure that they are consistent with the national interest, and makes recommendations for further improvements in the system when such are determined to be desirable. Moving the procurement process online (including the bidding and payment processes), according to the OA report, "has led to clear efficiency gains, savings through competition and reduced costs, and has reduced the scope for corruption" (p. 394). The OA report did note, however, that defense procurement remains non-transparent.

By law, reporting on the implementation of the budget occurs at quarterly intervals. All government departments and agencies are required to provide the House Committee on Appropriations, the Senate Finance Committee, the CoA, and the DBM with quarterly updates on their budget-related activities. According to the 2006 OA report, "these financial reports must include cumulative allotments, obligations incurred or liquidated, total disbursements, unspent balances, and the results of expended appropriations" (p. 394). The DBM also reports quarterly to the House and Senate, and the government makes regular postings regarding its fiscal position in the Investor Relations Office website, as well as providing briefings and press conferences on the subject.

Public availability of information.

CP

Oxford Analytica (OA), in its 2006 Report on Fiscal Transparency in the Philippines, rates the Philippines' performance on this principle as "Compliance in Progress," which is unchanged from the previous year. The Philippines is a subscriber of the IMF's Special Data Dissemination Standard (SDDS), and observes SDDS standards of coverage, timeliness, and periodicity. According to the SDDS website, central government operations data are disseminated monthly, within three weeks of the end of the reference month. The consolidated data provided includes both budgetary and extra-budgetary activities, including revenues, expenditures, and balance of payments. Financing data is broken out into foreign and domestic categories. The Philippines provides advance release notice of data release, issued four weeks ahead of the actual date of release. The National Statistical Coordination Board (NCSB) issues the advance release calendar on its website. It also publishes data on national economic and fiscal activities. The 2006 OA report notes that initial data releases are preliminary, with a five-week window after the reference month in which revisions may be made. On the National Economic Development Authority website, the "Economic Indicators Online" offers data regarding government fiscal performance and borrowing activities. These are provided monthly (with a 3-month lag).

The 2006 OA report notes that the compilation of data on the Consolidated Public Sector Financial Position (CPSFP) is the responsibility of the DoF. This data is made available quarterly. The CPSFP includes data on central government activities, but also reports on the GOCCs, the Social Security funds, the BSP, the LGUs, and updates on the effects of the ongoing program of BSP restructuring. On initial release, data are preliminary, and the DoF is permitted to review them annually for three years following initial issuance. The DoF website makes available to the public 6 years worth of prior CFSFP outturns. DoF data is issued in both consolidated and sectoral format, and includes the financial statements of the LGUs and GOCCs.

The NEDA publishes the Medium-Term Philippine Development Plan (MTPDP) and Medium Term Philippine Investment Program (MTPIP), which contain recommendations from the DBCC covering a 6-year period. According to the 2006 OA report, "government agencies and corporations are required to include the flows of contingent liabilities in their annual budget estimates, and to report periodically to the secretary of finance on the status of their government-guaranteed obligations" (p. 389). Data is also reported for the government's Quasi-Fiscal Operations (QFOs), accrued debt, and contingent liabilities of the national government. The DoF attempts to achieve reasonable precision in quantifying the government's fiscal obligations even in the case of such difficult data categories and GOCC loan guarantees, the public pension system, bank deposit insurance, and others. According to the 2006 OA report, the GOCC debt guarantees are of particular concern. According to the report, "the Congressional Planning and Budget Department, which acts as a think-tank for Congress, has raised the importance of closely monitoring the performance of GOCCs with regard to excessive spending on, for example, salaries and allowances" (p. 390).

The IMF SDDS website shows that the central government's total outstanding and contingent debt (both budgetary and extrabudgetary) are reported monthly, and include liabilities for T-bills and T-bonds. Short-, medium-, and long-term debt is broken out of the total figures, and there is also a differentiation between foreign and domestic debt. The OA 2006 report further notes that monthly and annual data is provided on the original holder of debt currently assumed by the government. Data on the government's cash operations are provided monthly, including both tax and non-tax revenues (the latter including revenues deriving from the ongoing privatization program). As the OA report notes, "a comparison of annual outturns of the main fiscal aggregates is available for 1999-2004, together with monthly data for the current calendar year" (p. 390). The government has created an Investor Relations Office, drawing members from a variety of government agencies, which disseminates data on the government's fiscal position, cash operations, debt and debt service, and debt indicators. The NSCB and Treasury websites both offer advance release calendars that provide 4-weeks notice of the upcoming release of fiscal data.

The Constitution requires full public disclosure by the state of all its transactions involving the public interest (Sec 28, Article II). According to the 2002 IMF ROSC, the annual budget provides detailed coverage of the general government, at both the national and LGU level, and GOCC activities are appended thereto. The annual budget also contains a consolidated presentation of GOCC and LGU revenues and expenditures, which is included in the determination of borrowing requirements for the public sector. The IMF ROSC noted that "overseas development assistance is included in the budget framework for expenditures and financing" (p. 9). The ROSC also notes that deficit reporting employs cash-basis accounting, but this may change. Budget presentation is done on the basis of obligations, which the ROSC found to be difficult to interpret and vulnerable to yielding distorted budgetary policy. In addition, the ROSC noted that "treasury financing flows are difficult to reconcile with monetary data, due to nonbank financing excluded from the monetary survey, timing and definitional differences" (p. 12)

The IMF's 2004 ROSC update noted certain deficiencies in the amount of published information provided by the Philippine government, particularly on tax incentives for the private sector. The same report singled out the passage of a new procurement law in 2003 for special mention. This reform targeted improvements in fiscal transparency by moving the procurement process to a central online portal via which the public may learn of opportunities for bidding, as well as contracts awarded and the reasons for those awards. In addition, the new site provides centralized access to a catalog of goods and services and a directory of registered contractors, suppliers, and other such vendors. The law also provides for a more transparent process by which potential service or goods providers may become eligible to participate in the procurement system. According to the 2004 Update, "the law reduces agencies' discretion in choosing among bidders because contracts are awarded on criteria in the bid documents that are more objective criteria than before" (p. 2). The standard set by the new law is "lowest bidder" rather than depending upon floor prices, which were more amenable to manipulation and collusion between government agents and prospective contractors. Forms used in the process have been standardized, and penalties for corruption have been increased. The new law applies to all levels of government as well as military procurement.

The IMF's 2004 ROSC Update noted other areas of improvement in the Philippines fiscal policy, as it affects transparency. Changes have introduced greater flexibility in adjusting expenditures to revenues as needed to address developments as they arise. The implementation of the New Government Accounting System has moved forward, beginning with the national government and LGU annual reports in 2002, and extending to include GOCCs in 2004. Internal audit controls have also been strengthened, and the estimation of revenues have been brought more closely into line with actual experience, thanks to greater accuracy in the methods employed in developing those estimates. The 2004 ROSC suggested that these and other improvements would be enhanced by ongoing efforts to computerize accounts and disbursements, and the broader adoption of the pilot Electronic Linkage Project, through which the treasury databases can be shared with revenue and spending agencies. In addition, The Department of Finance has stepped up its investigation and prosecution of corruption among tax officials.

Independent assurances of integrity.

CP

Oxford Analytica, in its 2006 Report on Fiscal Transparency in the Philippines, rates the Philippines' compliance with this principle as "Compliance in Progress," unchanged from the previous year. The Philippines is a subscriber to the IMF SDDS, and meets its requirements for coverage, timeliness, and periodicity. Forecasting of revenues has historically been problematic for the DoF, which the OA commentators judged to be overly optimistic. The OA report attributes this improvement, in part, to the efforts of the NSCB, NEDA, and DBM. The DoF is making strides in reconciling its standards with those of the Government Finance Statistics Manual 2001. To this end, it has created an internal unit specifically tasked with the compilation of government finance statistics. Intra-government harmonization of statistical government, particularly at the level of the LGUs, is being moved forward through the efforts of a special, technical working group organized by the CoA, which handles central government operations data, and the Bureau of Local Government Finance (BLGF). The CoA follows the 1992 Government Accounting and Auditing Manual, while the NGAS provides the accounting rules for LGUs as well as the national government at the agency level. The Philippines posts the contact information of the official from whom copies of these regulations may be requested on the SDDS website.

The government, including its agencies and divisions, and the GOCCs are subject to audit by the CoA, according to the provisions of the Administrative Code. The CoA has the authority to employ additional measures, when needed, to address problems arising from inadequate internal agency controls. The CoA derives its autonomy from Article IX of the Constitution, which further grants the CoA final authority in determining the scope of and methods used for conducting its audits. The Article further specifies the composition of the CoA, whose commissioners and chair are appointed for seven year terms by the president. In thewords of the 2006 OA report, "the length of their terms, in contrast to the six-year term to which a president is limited by the constitution, and the asynchronous nature of their terms give the chairperson and commissioners a measure of independence from the executive" (p. 395). Per the Constitution, the CoA reports annually to the executive and legislative branches regarding the government's operations and financial condition. According to the OA report, this presentation also notes points of divergence between projections and performance. On the basis of this document, agencies, departments, and GOCCs that have fallen short must take corrective action, and within two months of the filing of the CoA's original report, such agencies must provide the CoA with copies to the DBM, House Appropriations Committee, and Senate Finance Committee, with an update as to improvements that have been made or are in process. The 2006 OA report notes that the auditing procedure followed by the CoA is currently undergoing a change from the use of resident auditors to the employment of roving auditor teams, to reduce the likelihood of over familiarity between auditors and their subjects, thus improving objectivity. The OA report further notes that "the CoA has also adopted a Participatory Audit Program that works with civil society organizations to improve the transparency of the government auditing process" (p. 396).

The integrity of national statistics is under the purview of the NSCB, created by Executive Order in 1987, which the 2006 OA report describes as "the country's independent economic development and planning agency" (p. 396). According to the controlling executive order, the NSCB has no explicit guarantee of independence, but it is explicitly given the final word on any decisions regarding statistical matters. The actual collection of statistical data is carried out by the National Statistics Office. The 2006 OA report characterizes the NCSB website as "the most sophisticated website of all Philippine government agencies" (p. 396). While there has been positive response to the NCSB's statistics, there have been concerns raised recently regarding transparency of data in the categories of unemployment, tax collection, inflation, GDP, and investment. The OA report of 2006 notes that these concerns have yet to be adequately addressed.