General Appropriations Act: How the PH Budget is Made (2025)

Imagine following the government’s plan to spend billions yearly—money that goes to roads, schools, health, and public services. Understanding how this vast budget is determined and approved is crucial for law students, journalists, and finance or legal practitioners in the Philippines.

The 2025 budget season has sparked controversy with legislative inquiries into alleged budget insertions, flood control project fund allocation issues, and reports of phantom or "ghost" projects raising questions about transparency and fiscal accountability. 

Meanwhile, the PHP 6.35 trillion budget reflects big government ambitions with a 5.3 percent GDP deficit target, increased personnel spending, and tightened capital outlay amid economic headwinds.

These challenges make it more important than ever to understand the General Appropriations Act (GAA) and the Philippine budget process in detail. Keep reading for a step-by-step guide on how the PH budget is crafted, approved, and executed in 2025.

TL;DR

The General Appropriations Act (GAA) is the national budget law passed annually by Congress and signed by the President, defining government spending for the fiscal year. The Philippine budget process unfolds in four main stages: executive preparation, legislative review, enactment into law, and execution plus audit. If Congress does not approve a new budget on time, a previous budget is automatically reenacted to keep the government running.

What is the General Appropriations Act?

The General Appropriations Act (GAA) is the yearly law that officially allocates the national government’s funds for the upcoming fiscal year. It details total government spending and distributes appropriations across agencies, programs, and projects, ensuring resources align with national priorities.

The GAA legally formalizes budget allocations and is grounded in constitutional and statutory provisions. 

Article VI, Section 29 of the 1987 Philippine Constitution states, “No money shall be paid by the Treasury except in pursuance of an appropriation made by law.” This anchors the annual budget process and safeguards fiscal legality. 

The Department of Budget and Management (DBM) guides the preparation, while the Congress of the Philippines passes it into law.

Who issues the GAA?

The GAA involves several key institutions:

• Department of Budget and Management (DBM): Prepares the proposed national budget and coordinates agency submissions.

• President: Submits the proposed budget (the National Expenditure Program) to Congress and signs the final GAA.

• Congress (House of Representatives and Senate): Reviews, debates, amends, and approves the budget bill.

• Commission on Audit (COA): Oversees government spending after the budget enactment to ensure funds are appropriately used.

How the Philippine Budget Process Works

The Philippine budget process is a series of four ordered phases that transition from planning to legal approval and finally to fiscal execution with audit oversight:

1. Executive preparation

2. Legislative review

3. Enactment into law

4. Execution and audit

This procedural structure ensures transparency, checks and balances, and proper allocation of government resources.

Step-by-step: 4 Phases of the Budget Process in the Philippines

Phase 1 - Executive preparation

The DBM kicks off the budget cycle by issuing the Budget Call and setting budget ceilings and guidelines for government agencies. Each agency submits its budget proposals based on priorities aligned with the national development plans and the Medium-term Public Investment Program (MTPIP). 

The DBM consolidates these submissions into a comprehensive document called the National Expenditure Program (NEP), which the President reviews and approves before forwarding to Congress.

For 2025, government spending plans reflect cautious calibration in a challenging economic environment. The PHP 6.35 trillion budget targets a 5.3 percent deficit, higher than previous years, primarily to accommodate expanded personnel costs due to salary hikes for public servants and military personnel. 

Capital outlays, critical for infrastructure investments, are being slightly adjusted downward to align with fiscal sustainability concerns amid a weaker peso and rising borrowing costs.

Timeline: This phase generally begins in June, with agency proposals due by September.

Documents you’ll see:

Phase 2 - Legislative Review

Upon receiving the NEP, the House Committee on Appropriations and the Senate Committee on Finance conduct hearings to scrutinize proposed budgets. Agencies defend their proposals during public hearings. Legislators may propose amendments to align appropriations with policy goals. 

Once each chamber finalizes its version, a bicameral conference committee reconciles differences and drafts a final budget bill for approval by both chambers.

In 2025, this stage has been under the spotlight with lawmakers probing alleged budget insertions—fund allocations inserted outside the usual process—while concerns about flood control projects and ghost projects have raised questions about transparency and allocations' legitimacy. 

These debates underscore the budget process's importance and the need for scrutiny at the legislative level.

Timeline: This typically occurs from October to December.

Documents you’ll see:

Phase 3 - Enactment into Law

After bicameral approval, Congress passes the reconciled budget bill, which the President must sign into law. The signed document becomes the General Appropriations Act for the fiscal year. The GAA is then published in the Official Gazette for public access.

For the 2025 fiscal year, the GAA enables the government to fund personnel costs as a clear priority, accounting for seven percent of GDP in salary outlays. 

However, capital outlays are planned at 19 percent lower than in 2024, signaling a cautious stance on infrastructure spending due to economic constraints, despite pushback from sectors calling for increased projects.

Timeline: Approval and signing must occur before the fiscal year begins on January 1.

Documents you’ll see:

Phase 4 - Execution & Audit

Once the GAA is law, the DBM distributes allotments to spending agencies, authorizing them to expend funds according to approved appropriations. 

Agencies use allotment releases and allotment codes to manage spending. Meanwhile, the COA conducts audits to verify that funds are properly utilized and that budgetary laws are being followed.

Given the size and scale of the 2025 budget, COA's role is critical in tracking the proper use of billions of pesos, especially amid concerns about irregular fund releases and ghost projects initially raised during the legislative phase.

Timeline: Year-round fiscal year implementation and oversight.

Documents you’ll see:

How long does each stage take?

The budget process follows a calendar roughly aligned with the government fiscal year (January 1 to December 31):

What is a reenacted budget, and when can the GAA be reenacted?

Suppose Congress fails to pass a new General Appropriations Act by the start of the fiscal year. In that case, the previous year's budget is automatically reenacted to fund government operations, preventing a government shutdown.

This automatic reenactment is mandated under Article VI, Section 25 of the 1987 Philippine Constitution: “If, by the end of any fiscal year, the Congress shall have failed to pass the general appropriations bill for the ensuing fiscal year, the general appropriations law for the preceding fiscal year shall be deemed re-enacted and shall remain in force and effect until the general appropriations bill is passed by the Congress.”

It ensures continued government function despite delays in budget passage and acts as a constitutional safeguard.

Reenacted budgets limit the government's spending to the identical amounts and programs as the prior year without approval for new initiatives or increased appropriations. 

The DBM controls these releases cautiously, and spending adjustments are constrained until a new budget is approved. COA continues oversight during this period to monitor adherence.

How to read GAA line items

The GAA is structured to categorize appropriations systematically:

Key takeaways

• The GAA is the principal law that authorizes government funds annually.

• The Philippine budget process consists of 4 phases: executive preparation, legislative review, enactment, and execution/audit.

• Key institutions include the Department of Budget and Management (DBM), the House of Representatives, the Senate, the President, and the Commission on Audit (COA).

• When Congress fails to pass a new GAA by the start of the fiscal year, the previous budget is reenacted as mandated by the Constitution.

• Knowing how the GAA works helps legal and finance professionals monitor government spending and enforce accountability.

Frequently Asked Questions

What happens if Congress is dissolved while GAA is pending?

If Congress is dissolved during budget deliberations, the prior year’s appropriations typically continue through reenactment, ensuring government operations don’t halt until a new GAA is ratified.

Can funds be transferred between line items?

Generally, funds must be spent as appropriated. Under the Constitution, no law shall be passed authorizing any transfer of appropriations; however, the President, the President of the Senate, the Speaker of the House of Representatives, the Chief Justice of the Supreme Court, and the heads of Constitutional Commissions may, by law, be authorized to augment any item in the general appropriations law for their respective offices from savings in other items of their respective appropriations.

Who enforces compliance?

The Commission on Audit (COA) audits government spending and reports irregularities. The Ombudsman investigates fraud or misuse of appropriated funds.

When is an appropriation considered “automatic” or “re-enacted”?

If a new GAA is not enacted by January 1, appropriations automatically carry over from the previous year under the principle of reenactment, ensuring government continuity.

What are the disadvantages of a reenacted budget?

A reenacted budget limits government agencies to the previous year’s appropriations, stifling new projects and adjustments, and potentially delaying urgently needed programs.

Who has the highest budget in the Philippines?

The Department of Education typically holds the largest budget, followed by the Department of Public Works and Highways and the Department of Health.

What sector should be prioritized in the Philippine budget under the Constitution?

The Constitution requires that “the State shall assign the highest budgetary priority to education and ensure that teaching will attract and retain its rightful share of the best available talents through adequate remuneration and other means of job satisfaction and fulfillment.”

Stay informed and empowered

Understanding the General Appropriations Act and the Philippine budget process gives legal students, journalists, and finance professionals a powerful tool for tracking government spending and ensuring accountability.

Also, explore the case law search engine, our advanced legal AI tool for drafting, and Supreme Court decisions through Digest PH for in-depth legal research and analysis.

Subscribe to Digest PH for comprehensive, up-to-date legal content, including detailed budget law analyses and Philippine statutes. Use promo code LEXDIGEST for exclusive discounts and deepen your expertise today!