Public financial management concerns the effective administration of the collection and allocation of funds by the state. As per academic literature, “efficient public financial management is central to creating a relationship of mutual trust and shared consensus between government and citizens that is at the core of the development process.” Moreover, “all public resources must be used as efficiently as possible with a minimum of government wastage.”

The block grant is only one element, albeit a very important one, of a broader area of concern in the BARMM that is public finance.The institution of the block grant in the BOL represents a fundamental shift in the fiscal position of the regional government of the BARMM. The block grant shall be equivalent to 5% of national revenue collections and shall be automatically released to the Bangsamoro government subject to its full control. This is a significant departure from the current arrangement wherein the ARMM is treated similarly to a line agency of the national government.

Note that the BOL specifically provides, “The Parliament shall pass an annual appropriations law allocating the block grant to various agencies and programs according to the powers and functions of the Bangsamoro Government.” Clearly, the proper use of the block grant requires the prospective members of the Bangsamoro government to understand the details of this new fiscal arrangement.

Note as well that the BOL states, “The Parliament shall assign the highest budgetary priority to education, health, and social services as may be provided in its appropriations law.” The proper utilization of the block grant therefore demands the involvement in the budgetary process of academic institutions, policy and research centers and think-tanks based in the Bangsamoro territory. Accordingly, these groups and other civil society organizations in the Bangsamoro region must likewise undertake a thorough education of the mechanics of the block grant.

Fiscal autonomy as contemplated in Article XII of the BOL demands that the disposition of the block grant must not be seen in isolation. Inevitably, it has to be understood as part of the bigger public finance framework of the BARMM.

In sum, ensuring the correct disposition of the block grant necessarily includes the clear understanding of rules and regulations to hold the Bangsamoro government accountable. Fairness dictates that prospective members of the new regional government and the broader Bangsamoro community are unequivocally on the same page with regards to these rules and regulations.

Keeping in mind its development objectives, the BTA must likewise give prime attention to crucial public finance matters such as (1) natural resource wealth management policies, (2) budget making and monitoring, (3) debt management specially loans involving infrastructure projects.

MILESTONES

System for allocating and downloading the block grant

There are uncertainties around the block grant because it is determined by national government rules and procedures. National laws on Internal Revenue Allotment planning, programming and budgeting likewise remain applicable to the Bangsamoro Government. The whole fiscal architecture of the National Government may have to be re-examined in light of the financial burden and fiscal responsibility that is supposed to be turned over to the BARMM.

Implementation of Budgeting System

After the determination of the amount of Block Grants and how it will be sourced, the National Government will have to come up with rules and procedures to determine where accountability lies and that includes familiarizing the Bangsamoro Government on financial management and budgeting systems interface with the National Government.

Operationalizing Taxing Powers

The BOL provides for a limited number of national taxes that are to be transferred to the BARMM as long as all the taxable elements remain in the BARMM territory. However, operating these taxing powers requires a study and an implementation plan in order to have the least disruption to the business environment and the general tax-paying public. Towards this end the Intergovernmental Fiscal Policy Board created by the BOL can be operationalized.

EMERGING QUESTIONS

1

When approximately will block grant be released and what is the tentative figure?

2

What is the budgetary process that must be followed by the BTA to account for this maiden issuance of the block grant?

3

What will be required in order that the block grant can be allocated and downloaded to the BARMM?

4

What is the role of the Intergovernmental Fiscal Policy Board in this initial process?


SUGGESTED READING

GUIDELINES FOR PUBLIC FINANCIAL MANAGEMENT REFORM published by the Commonwealth Secretariat of the United Kingdom accessible here.