National government disbursements rose by 1.4 percent this October on the back of higher Current Operating Expenditures on Personal Services (PS), subsidies to government-owned and -controlled corporations (GOCCs), and transfers to local government units (LGUs), data from the Department of Budget and Management (DBM) showed.
More particularly, government spending reached a total of Php310.8 billion in October 2019, up by Php4.2 billion from October 2018 level of Php306.6 billion.
PS expenditures grew by 6.9 percent to Php83.4 billion this October from Php78 billion last year, largely due to the fourth tranche implementation of the salary increase for civilian personnel, the second year of implementation of the base pay increase of military and uniformed personnel (MUP), and higher pension requirements of MUP due to the pension indexation to the current MUP base pay.
Meanwhile, subsidies to GOCCs increased to Php7.2 billion this October from Php1.6 billion last year, corresponding to a 366.7 percent increase. This growth was spurred by large releases to the Philippine Health Insurance Corporation for payments of the health premiums of indigent patients under the National Health Insurance Program and to the National Food Authority for the implementation of the Rice Buffer Stocking Program.
Transfers to LGUs also buoyed the growth in government spending this October. Allotment to LGUs under Current Operating Expenditures grew by 12.3 percent, from PhP35 billion in October last year to Php39.3 billion this year. Likewise, capital transfers to LGUs grew by 49.5 percent, from Php9.8 billion to Php14.6 billion. The growth in transfers to LGUs was fueled by higher Internal Revenue Allotment shares of LGUs and increased releases from the Local Government Support Fund for various infrastructure projects of LGUs.
The growth in government spending for the month was tempered by lower Infrastructure and Other Capital Outlays (CO) and Maintenance and Other Operating Expenses (MOOE). This October, the national government spent PhP82.2 billion in Infrastructure and Other CO, less by Php12.2 billion or 12.9 percent year-on-year, mainly from the base effects of the 83.4 percent growth recorded in the previous year and the accumulation of some Php12.7 billion* outstanding checks in the Department of Public Works and Highways (DPWH). The said amount once encashed by suppliers and contractors would increase infrastructure disbursements in the remaining months. Spending for MOOE was also lower by Php3.2 billion or 4.9 percent from last year's level of Php64.5 billion as payouts of cash grants to beneficiaries of the Conditional Cash Transfer Program were delayed to November as a result of the election ban.
The DBM remains optimistic that national government spending will continue to surge as line agencies complete their programs and projects and settle their payables before the end of the fiscal year. Initial Treasury data show that Notice of Cash Allocation disbursements for November 2019 grew by 25 percent, outpacing the 20.5 percent increase registered in November 2018.
*Based on the Report of MDS-Government Servicing Banks as of October 31, 2019.