National government spending on salaries and pension payments, social investment and protection programs, and local government aid sped up this June to temper the slowdown in overall first semester government expenditures, data from the Department of Budget and Management (DBM) showed.

Particularly, first semester spending on Personnel Services for this year increased by 9.3 percent (equivalent to PhP42.8 billion) relative to last year due to the implementation of the fourth tranche of salary increases for civilian employees, the second year of implementation of the base pay increase for active military and uniformed personnel (MUP), and adjustments in pension payments for retired MUP.

Meanwhile, the payouts of cash grants to beneficiaries of the Pantawid Pamilyang Pilipino Program and payments of prior year’s accounts payables for educational subsidies under the Government Assistance to Students and Teachers in Private Education of the Department of Education, and the Universal Access to Quality Tertiary Education Program of the Commission on Higher Education enabled the national government to maintain roughly the same level of first semester spending on Maintenance and Other Operating Expenses in 2019 as it did in the same period in 2018.

Spending for Allocations to Local Government Units also increased by 9.3 percent (PhP19.6 billion) during the first half of the year owing to the higher share of local government units in the proceeds of national taxes.

The upsurges in spending for the aforementioned items offset the slowdown in total government expenditures for the first half of 2019, moderating the fall to only a 0.8 percent decline (equivalent to PhP13.4 billion) relative to the same period in 2018.

The decrease in first semester government spending is largely attributed to lower levels of spending on Capital Outlays (CO), which fell by 15.7 percent (PhP70.1 billion) in the first half of 2019 relative to the same period in 2018. For June 2019 alone, CO spending decreased by 33.2 percent (PhP27.7 billion) as compared to June 2018. This is largely due to the delayed implementation of various infrastructure projects following the late approval of the FY 2019 General Appropriations Act and the election ban.

It is expected that bulk of disbursements, especially on Infrastructure and Other Capital Outlays, will be heavily concentrated in the second semester of the year. For instance, the Department of Public Works and Highways anticipates that their spending will pick up in the third quarter and peak in the fourth, barring any other significant delays, such as weather disturbances and other implementation bottlenecks. 

The DBM is keen on monitoring the implementing agencies who committed to upsurge their spending for the latter half of the year in order to achieve the government’s economic growth target of 6.0 to 7.0 percent for 2019.