Disbursement Acceleration Program
What is DAP?
The Aquino Administration introduced the Disbursement Acceleration Program (DAP) as a reform intervention to speed-up public spending and to boost economic growth. It is not a fund, but a mechanism to support high-impact and priority programs and projects using savings and unprogrammed funds. DAP also enabled the government to introduce greater speed, efficiency, and effectiveness in budget execution.
Why was DAP introduced?
When the Aquino Administration assumed office in 2010, it unearthed systemic inefficiencies in public spending. These included poorly-designed and questionable projects that need to be cancelled; the prevalence of lump sum funds; implementation bottlenecks; among others. Unfortunately, its efforts to plug leakages and reform the budget execution process had the effect of slowing down spending.
From January to September of 2011, government disbursements shrank by 7.3 percent year-on-year. Underspending was most severe in the case of infrastructure, which slumped by 51.3 percent. These, alongside the global economic slowdown, pulled down gross domestic product (GDP) growth to 3.6 percent in the first three quarters of 2011, from 7.6 percent in 2010. Clearly, the government could not have afforded to nothing.
How did the DAP work?
The DAP tapped the power of the president over a) the use of savings to augment deficient programs and projects; and b) the use of unprogrammed funds.
Savings are available portions or balances of items under the General Appropriations Act (GAA) which result from: a) the completion or final discontinuance or abandonment of a program, activity, or project; b) unpaid compensation for vacant or unfilled positions and leaves of absence without pay; or c) the implementation of efficiency measures that enable agencies to deliver services at lower cost. Such savings may then be used to augment funds for programs, activities, or projects which are included in the GAA (i.e. nonexistent budget items cannot be funded).
Unprogrammed funds are standby appropriations which are authorized by Congress in the annual GAA, and which may only be used when a) revenue collections exceed revenue targets; b) new revenues are collected from sources not included in the program; or c) newly-approved loans for foreign-assisted projects are secured. Such funds can be used for new programs, activities, or projects as long as these are consistent with the purposes listed in the GAA for the use of unprogrammed funds.
Previous administrations had used these authorities in the past to address urgencies they faced. Moreover, the Aquino Administration sharpened the application of such powers by prioritizing funding for programs and projects which are a) fast-moving or quick disbursing; b) urgent or priority in terms of social and economic development objectives; and c) performing well and could deliver more services with additional funds.
How much in programs and projects were funded through DAP?
From the inception of DAP in October 2011 to its termination in December 2013, a total of P167.06 billion in programs and projects have been proposed to the President for funding. Of this, P144.38 billion was approved by the President and eventually released.
A total of 116 programs and projects were approved to be funded through DAP. These included an additional P1.26 billion to the Sitio Electrification Program to fast-track the electrification of 33,000 sitios; P1.6 billion for the Training-for-Work Scholarship Program benefitting a total of 149,530 enrollees; and P4.08 billion to settle unremitted GSIS premium payments of public school teachers since 1997.
How did DAP benefit the economy?
With the introduction of DAP, government disbursements in the fourth quarter of 2011 grew by 32.5 percent. This pulled up full-year public spending to grow by 2.3 percent. With the sustained application of DAP, spending further grew to 14.1 percent in 2012 and 5.8 percent in 2013. The growth of infrastructure spending, in particular, improved from -28.7 percent in 2011, to 27.6 percent in 2012 and 21.6 percent in 2013.
The improved pace of public spending bolstered the growth of the country’s GDP. The World Bank in a 2012 report stated that DAP “was partially successful and contributed 1.3 percentage points to GDP in Q4 [of 2011] .” The country’s GDP growth further improved from 3.6 percent in 2011, to 6.8 percent in 2012 and 7.2 percent in 2013.
How did DAP support the budget reform agenda?
DAP provided the Aquino Administration with a strong platform to pursue major reforms that improve the pace, quality, and accountability of government spending for the long-term, including:
• GAA-as-Release Document – Beginning 2014, the GAA now serves as the release document, which means that the budgets of departments and agencies are considered released to them as soon as the GAA takes effect. This speeds up budget implementation and reduces the need to process and release special allotment release order (SAROs).
• Performance Informed Budgeting – Beginning 2014, the performance targets of all agencies are now included in the GAA alongside the budgetary allocations. This reform deepens the accountability of agencies to their committed performance targets, and enables them to better plan and design their programs in line with the government’s socioeconomic development goals.
• Electronic, Cashless and Checkless Regime – the completion of the Government Integrated Financial Management Information System by 2016 will significantly reduce inefficiencies in financial transactions brought about by manual processes. In line with this, government financial transactions will already be at least 80 percent cashless and 100 percent checkless by the end of 2014.
• Procurement Innovations – as the procurement process has been a major bottleneck to the budget execution process, the government introduced innovations such as: allowing departments and agencies to bid their projects out even before the enactment of the GAA, so that they can award contracts as early as day one of the new fiscal year; leveraging technology to enable electronic procurement; capacitating procurement staff and hiring permanent ones; among others.