Merging DOF + DBM + NEDA

The Department of Finance (DOF) is in charge mainly of looking for revenues -- through the Bureau of Internal Revenue (BIR), the Bureau of Customs (BOC), the Bureau of Treasury (BTr), privatization. It is also in charge of borrowing from local or foreign sources when there is budget deficit (revenues are lower than expenditures). The DOF makes revenue projections based on macro-economic growth projections, both national (GDP growth, inflation rate, interest rates, exchange rate, level of exports and imports, among others) and international (world interest rates, oil prices, and so on). The DOF also incorporates some micro-economic development, like which sectors are fast growing (like telecoms industry and cell phone texting) and hence, large revenue can be collected.

The Department of Budget and Management (DBM) is in charge of making initial budget estimates based on the following:
agency requests + LGUs’ share of tax collections (internal revenue allotment or IRA)
+ legislators and the President's pork barrel + subsidies to government corporations
+ automatic appropriations for interest payment (local and foreign debts) and agrarian reform fund (among others).

Then DBM consolidates those numbers in coordination with various agencies, including revenue projections and potential borrowings prepared by the DOF, then present the budget to Congress through the President. After Congress has discussed and enacted the annual General Appropriations Act (GAA), DBM disburses the money as allocated by Congress and as automatically appropriated.

The National Economic Development Authority (NEDA) is in charge of macro-economic planning based on development in the external/foreign environment and the domestic environment like pump-priming in certain sectors, the level of budget deficit. It is also tasked with socio-economic planning, "fighting poverty", preparing the medium-term economic plans and targets, and so on.

Very often, NEDA and the national economists who constitute its bureaucracy create the impression that they indeed plan the economy and make the economic policies. So, many people blame the economists for ruining the economy; they blame the agency for mis-planning the economy.

These 3 agencies are all planners. DOF plans the revenues, the taxes to be raised and new taxes to be created. DBM plans the expenditures, the subsidies and pork barrel that each agency and political unit (from LGUs to legislators to the President) will receive, the interest payment to be made. NEDA plans "poverty-reducing" social and economic programs that will be carried out by various other departments and agencies.

These 3 agencies' functions are often intertwined, so they meet regularly in various inter-agency bodies, like the Development Budget Coordinating Council (DBCC), along with the Bangko Sentral ng Pilipinas (BSP). Hey, you may wonder what an "independent monetary authority" is doing sitting with top bureaucracy of the Executive branch planning many things?

The DBCC is an important inter-agency body as it is the one presenting the budget and sources of financing to Congress. Former DBM Sec. Boncodin announced that they themselves are in favor of integrating and merging these 3 departments into a single department.

So, merging these 3 agencies into a Department of Finance and Economy (DFE) or whatever mongrel agency, taxpayers, especially those in the private sector, will be relieved of the high operating costs of the 3 offices: their (i) office maintenance (office rental/depreciation + lights & water + office supplies + communication and transportation), and their (ii) personnel expenditures (salaries + allowances/bonuses + travels and trainings + pension and retirement). In addition, In a number of developed economies, these 3 functions are done by a single agency, their Ministry of Finance. Finally, the new department's work will be simpler and more coordinated. After all, it's only the 3 of them that will need merger and consolidation, but many other departments. In another paper and posting.