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TO:	Heads of Ministries, Bureaus, Offices or agencies, including Government-Owned or Controlled Corporations and Other Political Subdivisions, Governors, City Mayors, Municipal Mayors, including Local School Boards, and Presidents of State Universities and Colleges
	The Chairman, Commission on Audit
SUBJECT:	Adopting Policies and Procedures for the Effective Imposition of Budgetary Reserves and Economy Measures in Government Operations for CY 1981

WHEREAS, world-wide inflation and recession caused by the continuing energy crisis have wrought tremendous pressures on government expenditures brooking economy-wide disruptions;

WHEREAS, it is necessary to observe proper and reasonable restraint in the utilization of the country's overall assets and resources to attain the development goals of the country;

WHEREAS, utmost economy and efficiency in government operations must be encouraged for the attainement of the desired goals of the national development plan;

WHEREAS, rationalization of policies and procedures must be established for the effective allocation of scarce resources following the established scale of priorities in the prosecution of vital government projects under Batas Pambansa Blg. 80;

WHEREAS, budgetary reserves in the magnitude of P5.1 billion have been imposed on agency programs of expenditure for CY 1981, as amount, which may ultimately prove even minimal.

NOW, THEREFORE, I, FERDINAND E.  MARCOS, President of the Philippines, by virtue of the powers vested in me by law, do hereby order the observance of the mandatory reserve's under B.1.1.3 herein and the prescribed economy measures in government as a means of generating contingency savings in addition to such mandatory budgetary reserves.


1.1 All national government entities, including state universities and colleges, government corporations and local government units, and other political subdivisions shall institute eternal economy measures and budgetary restraint.  They shall likewise review office procedures and decentralize operation er feasible to eliminate unnecessary reports, requirements, and in general, red tape and unnecessary expenditure, agency heads institute necessary measures to optimize the use or rental, utilities, supplies and materials.

1.2 All entities shall identify and reassess their organizational objectives and functions to determine duplicatory, overlapping, non-essential and non-productive activities which may be eliminated, postponed or rescheduled to generate reserves.

1.3 Work simplification techniques shall be vigorously applied to increase office productivity without adding personnel or equipment, thereby reducing operating costs.

1.4  Heads of agencies shall pursue more vigorously the implementation of their Management Audit and Improvement Program as called for under Letter of Instructions No. 802.

1.5  billing of positions shall not be allowed in entities which are in the process of reorganization and where the final staffing pattern/compensation scheme has not been duly approved.

1.6 Full implementation of the New Performance Appraisal System of the Civil Service Commission shall be effected.

1.7 The restrictions on the purchase of motor vehicles, teaching aids, books, and other items contained in LOImp. No. 29 and LOI No. 1043 are hereby reiterated,  Any and all exemptions issued on behalf of specific agencies of government, including state universities and colleges, are hereby revoked.

1.8 The Philippines shall as much as possible be represented in international conferences by qualified embassy personnels assigned abroad, nearest to where the conferences are to be held or conducted, as provided in Memorandum Circular No. 355 dated fey 19, 1970.


1.0 General Policies for National Government Agencies, including State Universities and Colleges

National Government agencies shall re-examine their respective operating budgets to identify additional savings and shall strictly conform to the following financial guidelines:

1. For new positions.itemized in the Personal Servicts itemization Document and lump sum items for creation of new positions, fifty percent (50%) of the programmed appropriations;
   
   
2. For emergency laborers, including contractual employees and consultancy services, except for vocational schools and hospitals, twenty five percent (25%)
   
   
3. For maintenance and other operating expenses.  On traveling expenses, fifty percet (50%)  or more; on intelligence and extraordinary expenses, thirty percent (30%); on supplies and materials, ten to fifteen percent (10 to 15%); and on other maintance and other operating expenditures, ten percent (10%);
   
   
4. For equipment outlays, fifty percent (50%) or more;
   
   
5. For capital outlays, without prejudice td the completion of on-going projects, twenty percent (20%);
   
   
6. On Special Accounts of the General rund except Oil Equalization Fund and state universities and colleges under certain exceptions, ten percent (10%)

2.0 Specific Policies for National Government Agencies

2.1 Existing vacant positions, including unfilled new Positions in CY 1980, may be filled by agencies without the need for authority from the Personnel Effectiveness Review Committee (PERC) only in the following cases:


2.2 Existing vacant and new positions not covered by Section. 2.1 may be filled only upon approval by the Personnel Effectiveness Review Committee (PERC)

2.3 Lump Sum Appropriations.  Hiring of casuals/emergency employees including consultants, experts and other contractual employees in agencies where appropriations for such purposes appear, is authorized within the net programmed amount subject to submission of the required reports under the Ministry of the Budget Circular Letter No. 80-8 dated May 10, 1980.

2.4 Other Forms of Compensation


2.5 Substitutionary Appointments.  Except for positions of school officials and teacngrs, no substitutionary appointments shall be issued to fill temporary vacancies of all other positions whose incumbents arc on an authorized attendance, on Official time, in a training, scholarship grant, seminar, or similar activity, or on official detail to another office or to a project or on official leave regardless of the period of time involved.

For this purpose, an employee duly designated by an appointing, authority to perform the duties and responsibilities of the said Roaitisns may be entitled to the regular allowances of the same positions on reimbursement basis, if any, PROVIDED that the regular incumbent is not collecting the same allowance for the same period.

2.6 Consultancy Services.  With the exception of contracts covenanted under foreign borrowings or grants, no contracts for services, including hiring of consulting firms for management systems improvement or review and feasibility studies can be entered into without approval by the Minister of the Budget.

2.7  Traveling Expenses


2.8 Transportation Services and Use of Government Vehicles


2.9 Seminars/Workshops/Conventions/Other Similar Activities


2.10  Merit Increase.  Whenever a position the incumbent of which has been awarded merit increase becomes vacant, the agency concerned shall notify the Ministry of the Budget of the effective date of said vacancy in their quarterly reports on merit increases.

2.11 Contributions, Contributions are considered as non-essential expenses.  No contributions shall be made unless approved, by the Minister concerned.

2.12 Inter-Agency Committees.  The creation of new Inter-Agency Committees shall be allowed provided no provision for compensation to members and/or technical and support stalf shall be authorized/incurred.

2.13 Equipment



1.0 Government-owned and/or controlled corporations

1.1 Government-owned and/or controlled corporations shall review and reassess their budgets to take them more flexible and consistently supportive of the main thrusts of the government.  They shall be subject to the same resreictions as that of the national governnent agencies, whenever applicable, specifically the reduction/elimination of redundant activities.

1.2 Self-sustaining institutions/corporations are enjoined to implement necessary conservation measures to effect reduction in the consumption of electric power, gasoline, water, etc, to effect desired savings in operations.

1.3 The Ministry of the Budget shall conduct a review of the peso counterpart requirements of foreign-assisted projects tiich are normally released to corporations as part of equity, with, the purpose of reducing same to the level as required by the covering loan agreements and/or actual drawdowns on foreign loan/grant proceeds.


1.0 Local Government units

1.1 Local government units shall likewise follow the rigid economy measures for national government agencies and reassess their budgetary requirements to be able to put up the necessary contingency reserve of at least 10% of its general and infrastructure fund regular income.  This contingency reserve shall only be made available for expenditures of local government units to cover their urgent needs, and as a last recourse, when no local funds are available, subject to local government budget review pursuant to P.D. No. 1375.

1.2  Hiring of contractual end consultancy services may be allowed only for special projects requiring special expertise not availble in-nouse and only for specified periods of time.  Casuel or emergency personnel may be hired when there are activities which are seasonal and intermittent in nature and whose peak loads occur regularly daring specific times of the year.

1.3  No local funds shall be appropriated to increase or salaries or wages of officials and employees of the national government assigned in the local government, except as may be expressly authorized by the President.

1.4 All live-in training programs sponsored by local governments shall be suspended except those that may be jointly proved by the Chairman of the Civil Service Commission and tho list  of the Budget.

1.5 The purchase of equipment shall be suspended except for urgently needed items which shall not exceed twenty thousand pesos per unit, supplementing restrictions in A.1.7.

1.6 Accounts payable and unliquidated obligations not covered by perfected contracts and against which, no administrative or judicial claims have been filed, as well as prior years savings, shall be reverted to the unappropriated surplus of the General or Infrastructure Fund of local government units, as the case may be.

REPEALING CLAUSE

All Instructions, Rules and Administrative issuances and Executive Orders which are inconsistent with these instructions are hereby repealed, amended and/or modified accordingly.

Done in the City of Manila, this 5th day of January, in year of Our Lord, nineteen hundred and eighty-one.