The role of blockchain in promoting trust and transparency in the national budget

IN BRIEF:

• Blockchain technology has gained prominence in public and policy discussions for its potential to enhance security, transparency, and operational efficiency.

• Legislative measures proposing the use of blockchain in managing the Philippine national budget have been filed in both chambers of Congress, led by Senator Paolo Benigno A. Aquino IV in the Senate and Representative Javier Miguel L. Benitez of Negros Occidental’s Third District in the House of Representatives. On Dec. 15, the Senate approved Senate Bill No. 1506 or the Cadena Bill.

• Aligned with the theme of Trust, Transformation, and Transparency, the 4^th SGV Tax Symposium held in October featured a presentation on blockchain, highlighting recent developments and practical government use cases aimed at improving transparency and efficiency in public-sector operations.

Blockchain technology, a decentralized digital ledger that enables secure, immutable record-keeping, has gained global prominence across multiple industries. By allowing transactions and data to be recorded transparently and verified by network participants without intermediaries, blockchain improves efficiency, streamlines processes, and reduces fraud risk. Industries such as finance, supply chain management, healthcare and public administration increasingly rely on blockchain to automate operations, ensure data integrity, and strengthen trust.

In the Philippines, blockchain adoption is steadily advancing as both the private sector and government explore its potential. Financial institutions and startups have begun integrating blockchain into payment and remittance systems, while the government is studying its use as a mechanism to combat corruption and promote transparency in public transactions. Pilot initiatives and consultations are underway to assess how blockchain technology can enhance government services, ensure accountability, and build public trust through tamper-resistant digital records.

BLOCKCHAIN AND THE NATIONAL BUDGET
These developments were highlighted during SGV’s 4^th Tax Symposium, where Armand N. Cajayon, SGV Principal under Technology Consulting, discussed the role of blockchain in public financial management, particularly in relation to the national budget. His discussion covered blockchain fundamentals, public-sector-use cases, and global examples demonstrating its impact.

Blockchain has also entered the legislative arena. Senate Bill No. 1330, written by Senator Paolo Benigno A. Aquino IV, and known as the “Blockchain the Budget Bill,” proposes placing the entire Philippine national budget on a blockchain-based system. The measure seeks to enhance transparency, accountability, and public trust by making government spending traceable and auditable in near real time through a public portal.

Under the proposal, the Department of Information and Communications Technology (DICT), the Department of Budget and Management (DBM) and the Commission on Audit (CoA) will jointly implement the National Budget Blockchain System. Access would be extended to citizens, journalists, and watchdog organizations. If the bill passes, the Philippines could become the first country to fully integrate its national budget into blockchain technology.

The Bill has since evolved and been substituted by Senate Bill No. 1506, otherwise known as the Citizen Access and Disclosure of Expenditures for National Accountability or CADENA Bill. The revised bill calls for the creation of a digital budget portal to serve as the official and publicly accessible portal for all public budget data, which should be in an open-source, interoperable, tamper-resistant and structured digital format. This substitute bill was introduced on Nov. 12 and was approved on its third and final reading on Dec. 12.

A counterpart measure, House Bill No. 4380, has also been filed by Representative Javier Miguel L. Benitez of Negros Occidental’s Third District.

At the Tax Symposium, Mr. Cajayon framed the discussion with a central question: Is blockchain a silver bullet for the Philippines’ governance challenge?

Blockchain is a distributed ledger technology in which all participants maintain synchronized copies of transaction records. Transactions are encrypted and validated through consensus mechanisms, making alterations extremely difficult. Unlike centralized systems, no single entity controls the ledger. Smart contracts, such as self-executing code embedded in the blockchain, enable automated, rules-based transactions that further reduce human intervention and operational risk.

Why use blockchain in public finance?

Applied to public financial management, and as discussed during the Tax Symposium, blockchain offers several advantages:

• Trust: Multiple validation points reduce reliance on single authorities.

• Transparency: Immutable records allow transactions to be traced end to end.

• Efficiency: Automation lowers administrative costs and minimizes fraud.

• Modernization: Integration with digital payment systems improves fund disbursement and control.

However, Mr. Cajayon pointed out that blockchain is not universally applicable as it does not always operate in real time, particularly in large networks where validation may take longer. Implementing blockchain also requires substantial investment, making careful evaluation essential.

As a framework for evaluating suitability, he outlined a five-point test focused on key conditions: the involvement of multiple parties; the importance of trust among participants; the management of finite resources; reliance on shared and complex business logic; and processes that operate across an extended business network.

Blockchain delivers clear value only when all these conditions are present.

IMPLEMENTATION CONSIDERATIONS
Even if enabling legislation is passed, nationwide implementation would be gradual. Mr. Cajayon outlined a phased roadmap beginning with a feasibility and alignment stage during which high-value cases would be identified and key stakeholders aligned, followed by a pilot development phase focused on building permissioned pilots with key agencies. The initiative would then move into expanding participation and adding smart contract pilots. The final phase would concentrate on governance and operations, with the formalization of governance structures and supporting legal frameworks.

A proposed governance model includes a National Budget Blockchain Governance council to oversee policy, compliance, and validation authority. An inter-agency working committee led by the DICT would manage technical standards, security protocols and overall project execution.

A REAL-WORLD EXAMPLE: TORONTO
To illustrate blockchain’s practical benefits, Mr. Cajayon cited the case of Toronto, which processed over two million interdivisional transactions in 2018, requiring extensive manual reconciliation, and delaying financial reporting.

The city implemented a pilot blockchain proof of concept, which consolidated data from multiple systems, digitized asset tracking, classified expenditures and automated reporting. The pilot focused on the Fleet Services division, which has the highest transaction volume.

The results were significant. Manual reconciliation time dropped from approximately 160 hours to nearly zero. Improved expenditure tracking increased forecast accuracy, enhanced transparency, and provided timely insights into asset utilization. By shifting from nominal to actual budget allocation, the city strengthened accountability and enabled staff to focus on higher-value activities.

While Mr. Cajayon concluded that blockchain is not a silver bullet that cannot, by itself, guarantee good governance, its effectiveness ultimately depends on how it is implemented and how citizens engage with it.

Technology can enable transparency, but accountability requires informed and vigilant stakeholders. For blockchain to meaningfully improve public financial management in the Philippines, it must be paired with active citizen participation, institutional discipline and sustained political will.

This article is for general information only and is not a substitute for professional advice where the facts and circumstances warrant. The views and opinions expressed above are those of the authors and do not necessarily represent the views of SGV & Co.

Earvin Darren Lee and Hazel Valerie Sy are global compliance and reporting (GCR) senior managers of SGV & Co.