Government to go completely cashless, checkless by yearend

President Aquino graces the opening of the Good Governance Summit at the PICC on Wednesday, Jan. 15, 2014. MALACANANG PHOTO BUREAU means BUSINESS

MANILA - The government will completely do away with issuing checks and using petty cash or cash advances to procure goods and services by the end of the year, the Department of Budget and Management (DBM) said on Tuesday.

In a briefing late Tuesday, Budget Secretary Florencio Abad said the Aquino administration will start the digitization process for public procurements in March. By yearend, all agencies and offices of the government should no longer be issuing checks or giving cash advances.

President Benigno Aquino III hailed the initiative, dubbed Cashless Purchase Card, at the opening of the Good Governance Summit on Wednesday morning.

For his part, Abad told reporters late Tuesday, by way of explaining the shift: "The government spends P8 per single check issued and we issue millions of checks a year." The move should save the Aquino administration funds that could then be diverted to other items, such as rehabilitation and reconstruction of areas hit by calamities. This would go a long way for a government that promised to not impose new tax measures  until 2016.

Meanwhile, another reform that the government is implementing is the Treasury Single Account (TSA), which could, for example, yield the government P1 billion to P1.5 billion in savings during tax payment season.

Under the TSA, transactions would be done bank-to-bank to save on time and various fees as government agencies' bank accounts "are all over the place."

"The TSA ultimately is a single account for the government," Abad said, adding that the the Bangko Sentral ng Pilipinas (BSP) has been negotiating with the private banks in setting the processing fees when dealing under the TSA.

Prior to digitization, the DBM Secretary said about 45 percent of all transactions of the government are done through issuing cash advances, which is one avenue for public funds leakage.

A study by Diagnostics Research, only one percent of purchases and financial transactions in the country are done electronically, 54 percent of which was attributed to government-initiated payments, including government-to-government and government-to-person transactions.

Abad has launched the Cashless Purchase Card System - which would allow the government to shift to cashless and checkless transactions - during the Good Governance Summit on Wednesday. These cards would function like corporate credit cards and will be linked to an online system that controls and monitors actual spending in real time.

This would be piloted across the DBM, the Department of National Defense and the Armed Forces of the Philippines in the first quarter. Citibank has officially turned over to the Philippine government the said cards during the summit.

Eligible card purchases during the pilot implementation of the system will cover the purchase of medical supplies, meals, transportation of official documents, airline tickets and construction supplies for minor repairs.

"The implementation of the Cashless Purchase Card System will be critical in this respect, as the electronic purchase cards will significantly reduce human intervention and error in tracking and monitoring government purchases," Abad said.