ADMINISTRATIVE ORDER NO.

ADMINISTRATIVE ORDER NO. 5 - ADOPTION OF FISCAL DISCIPLINE MEASURES IN THE PUBLIC SECTOR FOR FY 2001

WHEREAS, the government aims to restore fiscal discipline to sustain economic recovery and improv nvestor confidence in the country

WHEREAS, guarantee calls from BOT projects and larger interest payment and account payable obligation ave emerged, adding further pressure on the government's available resources

WHEREAS, the magnitude of the fiscal deficit problem necessitates intensive efforts on both the revenu eneration and expenditure reduction fronts, and calls for the concerted action of all public sector entitie ncluding government corporations and local governments

WHEREAS, all public sector entities will have to implement fiscal discipline measures and review the pending programs to improve operating efficiencies and enhance their capacity to raise income and rem unds promptly to the national treasury as mandated by laws and other issuances

WHEREAS, there is a need to review ongoing programs and projects in order to minimize the implementatio f ineffective and inappropriate programs/projects to improve the focusing of scarce resources on the priorit oncerns of poverty reduction, global competitiveness and effective governance;

OW, THEREFORE, I, GLORIA MACAPAGAL-ARROYO, President of the Republic of the Philippines, by virtu f the powers vested in me by law, do hereby order and direc

ECTION 1. All National Government Agencies (NGAs), Government-Owned and Controlled Corporation GOCCs), Government Financial Institutions (GFIs) and Local Government Units (LGUs) are directed to ful omply with laws and issuances requiring the prompt remittance of fees and other income, guarantee fees an ther obligations to the Bureau of Treasury, as well as the remittance of tax obligations to the Bureau o nternal Revenue and the Bureau of Customs. They shall also fully comply with the requirements of th ollowing:

1) Republic Act No. 7656 approved on November 9, 1993 which directs GOCCs and GFIs to remit dividend o the Treasury amounting to at least fifty percent (50%) of their annual earnings. The Department of Financ hall, however, exercise its authority to mandate larger dividend remittances in the form of cash dividend ased on its review of the financial conditions of said agencies Executive Order No. 338 issued on May 17, 1996;

2)

an

3)

Executive Order No. 197 issued on January 13, 2000.

ECTION 2. The Department of Finance (DOF) and the Department of Budget and Management (DBM), i oordination with NGAs, GOCCs, and GFIs concerned, shall review the legal basis/authority of existing Speci ccounts in the General Fund, Trust Liability Accounts and Authorizations to Use Income to determin hether or not the purpose for which such funds/authorizations were created has been realized an ccordingly recommend to the Office of the President those which may be abolished/discontinued

ECTION 3. All NGAs, GOCCs, and GFIs shall generate savings equivalent to at least ten percent (10%) o on-personal services expenditures based on the 2000 reenacted budget or corporate operating budge gencies under the social services sector, and those providing tourism and agrarian reform services sha owever, implement expenditure reduction measures equivalent to five percent (5%) of non-personal service udget.

ECTION 4. In generating the above savings target, all the above agencies shall endeavor to source th avings from the reduction of items which do not directly support the attainment of desired sector outcome hey may therefore consider reducing the following: donations, contributions, grants and

1)

gifts

2) expenditure for consultancy services regardless of fund source, except those directed towards th overnment's institutional reform effort

3)

expenditures for trainings/seminars/workshops. Those to be conducted by public entities shall be done i simple and cost effective manne volume of consumption of fuel, water, electricity and other

4)

utilities

5) expenditures for travelling, unless clearly beneficial to Philippine interests as may be determined by th resident of the Philippines in the case of foreign travel of government personne expenditures for advertisements, for publications office and related

6)

items

7)

expenditures

supplies;

an

8) expenditures for rents and leases. All NGAs, GOCCs, and GFIs owning buildings with extra office space hall share them with those presently renting office space from private owners. All NGAs, GOCCs, and GFIs shall suspend the following: construction of new buildings for government

ECTION 5.

1)

offices

2) purchase of furniture and fixtures, and motor vehicles not directly supportive of frontline services of th gency; an

3) conduct of celebrations, and cultural and sports activities not related to the core functions of th gency.

ECTION 6. Consistent with the streamlining of the bureaucracy and to assist in raising the targeted saving nder Section 5, all NGAs, GOCCs, and GFIs are prohibited from implementing the following activities unles overed by available funds and specifically authorized by the Office of the President, as recommended by th BM: operationalization expansion of organizational of units and/or new creation of

1)

agencies/offices positions;

2)

an

3)

creation of task forces, inter-agency committees and interim bodies.

ECTION 7. All NGAs, GOCCs, and GFIs are prohibited from undertaking the following to raise over an bove that mandated under Section 5: hiring key one of of positions a new (division kind position personnel, chiefs in except and the

1)

fo

a)

above

b)

agency

c) positions in schools under the Department of Education, Culture and Sports, Commission on Highe ducation, Technical Education and Skills Development Authority, Department of Science and Technology an tate Universities and Colleges (SUCs medical and information allied medical positions technology in

d)

hospitals

e)

positions

) uniformed personnel in the Department of National Defense, Department of the Interior and Loc overnment, the Philippine Coast Guard and the National Mapping and Resource Information Authority; an

g) positions in agencies whose staffing patterns have been streamlined and approved by the Department o udget and Management (DBM) beginning January 1, 2000, provided that only twenty percent (20%) of vacan dministrative positions as of the effectivity date of this Order may be filled by new hires

2) Filling of vacant positions in regional offices of NGAs whose functions have been devolved to Loc overnments; an

3) Grant of new/additional/increased allowances/benefits except for step increments based on length o ervice in accordance with Joint Senate-House of Representatives Resolution No. 1, s. 1994.

ECTION 8. Similarly, as an additional savings measure, low priority programs/activities/projects (PAPs hall be discontinued or scaled down. For this purpose, the National Economic and Development Authorit NEDA) and the DBM shall conduct Sector Effectiveness and Efficiency Reviews (SEER) in coordination wit gencies and departments concerned, in order to assess ongoing and proposed new major programs an rojects, more specifically:

1) n

Classify PAPs into three categories: high, medium, low priority in accordance with their appropriatenes meeting sector outcomes

2)

Determine which of the low and medium priority PAPs are to be deferred, scaled down or abolished; an

3) identify and adopt measures to address the implementation of on-going high priority projects that ar ncountering significant problems.

ECTION 9. All NGAs, GOCCs, and GFIs shall each submit to the Office of the President through the DBM ot later than fifteen (15) days after the issuance of this Order, the fiscal discipline measures it shall undertak uring the year and an estimate of the revenues and savings to be generated. For GOCCs and GFIs, th nformation shall be made in the context of the submission of their corporate operating budget. Thereafter, emestral report on the revenues and savings actually generated shall be submitted.

ECTION 10. Heads of NGAs and the Boards of Directors of GOCCs and GFIs shall be responsible for th trict implementation of this Order. Any violation thereof shall be dealt with accordingl

ECTION 11. The Legislative and Judicial Branches of Government as well as agencies vested with fisc utonomy and LGUs are enjoined to adopt the provisions of this Order. LGUs are reminded to adhere t rescribed limits on personal services expenditures in the Local Government Code and shall endeavor t maximize the utilization of twenty percent (20%) of their Internal Revenue Allotments for development project

ECTION 12. The DBM shall issue the necessary rules and regulations for the effective implementation o his Order. NEDA, in coordination with DBM, shall issue the specific guidelines on the conduct of SEER. 13. This Administrative Order shall take effect immediately upon its

ECTION

approval

one in the City of Manila, this 28th day of February, in the year of Our Lord, Two Thousand and One.