In 2015, 77.6 percent of national government disbursements were checkless—up from 70.7 percent in the previous year. This was made possible by the continued use of the expanded modified direct payment scheme, which was introduced in 2014 after undergoing pilot testing since 2004.
“The increase in checkless government transactions is a promising development for transparency and accountability in the use of public funds. Using the ExMDPS has cut through red tape considerably, and has allowed all agencies to adopt a uniform payment system,” Budget Secretary Florencio “Butch” Abad said.
Rather than making payments by issuing checks to suppliers and other creditors, the ExMDPS enables government servicing banks (GSBs) to credit payments directly from an agency’s account to that of the creditor. The system is currently used by national government agencies (NGAs) to pay suppliers, contractors, employees, and to cover insurance premium contributions. The system is also used by the national government to transfer internal revenue allotment entitlements and shares from national taxes to local government units.
“The ExMDPS has allowed government to significantly reduce the paper we use. According to our latest available data, we used almost 2 million fewer checks in 2015 than we did in 2014. With each check costing the government around 7 pesos, doing away with paper will result in substantial long term savings,” Secretary Abad said.
“This is one of the many public financial management reforms we’ve implemented since 2010. Combined with other initiatives such as the GAA-as-Release-Document regime, our still-expanding Bottom-up Budgeting program, and the measures we’ve introduced to hasten procurement processes, public funds are being used more transparency and accountability than ever before,” the Secretary added.
—From the Department of Budget and Management