National government spending has picked up in July, indicating that disbursements are starting to normalize and accelerate in the second half of the fiscal year, disbursement data from the Department of Budget and Management show.

Disbursements in July grew by 3.4 percent, equivalent to P11.3 billion, from the same month last year, mainly due to increases in current operating expenditures, which grew by 10.6 percent.

Particularly, personnel services expenditures grew by 7.2 percent or P5.1 billion on account of higher base pay of government personnel and pension requirements of retired military and uniformed personnel.

Likewise, maintenance and other operating expenses grew by 10.5 percent or P4.8 billion largely because of the payment of liabilities incurred by the Department of Health last year for pneumococcal vaccines, which amounted to P3.4 billion.

Subsidies to government corporations increased by 17.9 percent or P5.8 billion, largely due to the release of P18.5 billion to the Land Bank of the Philippines as the conduit for the payout of first semester cash grants to beneficiaries of the unconditional cash transfer program. Releases to the National Irrigation Administration and the National Housing Authority amounting to P11.5 billion for payments of completed projects also bolstered national government spending.

The growth in government spending this July was weighed down by decreased levels of spending in capital outlays, particularly in infrastructure/other capital outlays, which shrank by 11 percent (P9.3 billion) relative to the same month last year.

The contraction in spending, recorded mostly from lower disbursements by the Department of Public Works and Highways, is attributable to the lingering effects of the delay in the passage of the FY 2019 national budget and the election ban on infrastructure spending, as well as the base effect of the large payments for accounts payable last year.