DBM piloting AI, blockchain amid corruption scandal

Upgrade to High-Speed Internet for only ₱1499/month!

Enjoy up to 100 Mbps fiber broadband, perfect for browsing, streaming, and gaming.

Visit Suniway.ph to learn

MANILA, Philippines —  The country continues to face economic easing in the wake of the flood control scandal, which led to the resignation of senior Cabinet members and the filing of cases against several public officials.

Concerned about how to effectively manage and track public funds, the Department of Budget and Management (DBM) is piloting a blockchain system to prevent misuse and support ongoing investigations into public spending.

Budget Undersecretary Maria Francesca del Rosario told The STAR that the DBM is integrating blockchain into the action document release system (ARDS) to verify the authenticity of budget releases, through the creation of an unalterable digital record of funds.

“It’s not the only technological solution to track corruption. Right now, I’m talking with blockchain experts because I want them to review our system,” she said. “I’m thinking we might have to go back to the drawing board and redo the architecture.”

President Marcos recently directed Congress to prioritize the passage of the Citizens Access and Disclosure of Expenditure for National Accountability, also known as the CADENA Act, which was filed by Sen. Bam Aquino.

Del Rosario said the blockchain system aims to ensure that public funds reach their intended projects, particularly in cases involving the courts or audits.

“We can use it to create a token,” the DBM official said. “And then, it serves as proof that this is our authentic copy coming from ADRS. So basically, that’s the use case we have. In all of our digitalization projects, it has to address a specific problem.”

How does it work?

Del Rosario said that the bedrock architecture developed with the World Bank already includes a blockchain component, mainly applied to transactions such as tier-one budgets, which cover the annual operational funds agencies need to run their activities efficiently and tier-two on new projects.

“For example, tier one, you put it on the chain. Tier two, you will also put it on the chain. After that, once it’s in the National Expenditure Program (NEP), you can chain it there,” she said.

The bill needed to explicitly authorize the chaining of figures of the General Appropriations Bill and the Senate, Del Rosario explained, noting that its work is limited to the NEP and the subsequent General Appropriations Act.

Under the Cadena Act, all government agencies shall record and publish all documents. The publication requirement for infrastructure and procurement-related documents shall apply only to projects or contracts with an approved cost exceeding P2 million.

It further provides that all records, data and transactions stored are considered admissible provided that they bear a timestamp, are cryptographically signed and have not been altered without authorization.

While the blockchain of the DBM is still in its pilot phase, the budget official said that the project represents a cautious yet innovative step toward utilizing emerging technologies to enhance transparency and accountability in government spending.

“The bill of Senator Bam, it’s OK. The idea is really, really commendable. It is a big undertaking. That is why we started very small, just baby steps, especially when dealing with new technology,” she said.

What’s next?

Analysts urge caution while acknowledging blockchain’s potential to enhance budget systems by increasing transparency and accountability, reducing leakages and bolstering public trust in government spending.

John Paolo Rivera, senior research fellow at the Philippine Institute for Development Studies, said that a blockchain model could bolster confidence, reduce perceived governance risks and support economic stability, but stressed that gains hinge on effective enforcement and public access, not on technology alone.

“From a macro perspective, blockchain can help improve spending efficiency, reduce waste and strengthen fiscal discipline, which supports sustainable growth,” he said.

While noting that the measure is not a direct driver of economic growth, Rivera said blockchain could serve as an enabler by ensuring public spending is converted more consistently and efficiently into real economic activity across the broader economy.

If implemented effectively, Rivera said blockchain could enhance transparency and credibility, reassuring investors that public funds are monitored in real time and leakages are being curtailed.

“If poorly designed, blockchain systems risk becoming costly, underused or vulnerable to manipulation at the data-entry stage,” he said.

Meanwhile, Rizal Commercial Banking Corp. chief economist Michael Ricafort said that the technology could further strengthen fiscal performance through more disciplined government spending.

“Greater transparency and accountability, as part of anti-corruption measures and reforms to prioritize further improvement in good governance standards, to better align with global best practices,” he said.

Ricafort said that it could further strengthen fiscal performance by enforcing tighter spending discipline, enhancing anti-wastage and anti-leakage safeguards and ramping up tax revenue generation.

“All of these would help boost investor sentiment and confidence,” the economist said.

Del Rosario stated that the project incurs an annual cost of P1 billion but noted that it is an investment designed to enhance transparency and ensure the efficient use of public funds.

“What the team is doing is that we’ve loaded all the GAA data there, the project. So now, we already have a universe. These are the ones we need to monitor. And then, we’re linking it with the Department of Public Works and Highways,” the DBM official said.

In August, the budget department launched the Digital Information for Monitoring and Evaluation (DIME) project, which aims to track the progress of infrastructure projects in the country following an investigation into anomalies related to ghost projects on flood control.

Project DIME utilizes satellites, drones and geotagging to closely monitor the progress and implementation of major national government flood control and infrastructure initiatives.

“The data from the Budget and Treasury Management System (BTMS) can be put into a chain, allowing people to track it, so that’s possible. We’re currently designing the architecture for this, based on consultations with the World Bank, International Monetary Fund and Asian Development Bank,” she said.

The BTMS is a government resource planning tool that connects budget execution, treasury management and fiscal reporting, aiming to enhance efficiency, accountability and transparency in the national government’s use of public funds.

While DBM is not at the center of the corruption scandal, former budget secretary Amenah Pangandaman resigned from her post after being tagged by former Ako-Bicol Partylist representative Elizaldy Co in connection with the issue of insertion in the bicameral conference committee.

The budget department has consistently denied involvement, citing that it is a legislative matter.