IV.

Expenditure Categories and their Economic

Importance
1. What are the major current The major current operating expenditures of the national government
operating expenditures of the are:
national government?
a. Personal services, like salaries and wages, social security
contributions, overtime pay, etc.;
b. Maintenance and other operating expenditures, such as travel
expenses, supplies and materials, water, illumination and power
services, rent, etc.;
c. Interest payments;
d. Allotments to Local Government Units;
e. Subsidies to Government Owned and/or Controlled Corporations.

2. What is the government s The government's policy regarding current operating expenditures may
policy regarding current be summarized as follows:
operating expenditures?
a. Limit the growth of current operating expenditures with provisions for
inflation adjustments;
b. Encourage cost reduction measures in operations, particularly
overhead expense items;
c. Provide adequate maintenance funds for infrastructure facilities; and,
d. Control the growth of spending for personal services within the level
that can be sustained by available resources.

3. What are the capital outlays The capital outlays of the national government are appropriations spent
of the national government? for the purchase of goods and services, the benefits of which extend
government assests beyond the fiscal year, and which add to the assets of the government.
They include investments in the capital stock of government owned
and/or controlled corporations and their subsidiaries.
The capital outlays of the national government may be broadly classified
as follows: infrastructure outlays, equity contributions to government
corporations, capital transfers to local government units, and other capital
outlays.
Capital expenditures, particularly those classified as capital goods or
durable goods to be used for non-military and productive purposes, such
as the construction of roads and bridges, dams, power and irrigation
works, schools and hospitals, are generally desirable. They wield a high
multiplier effect on the economy, i.e., they stimulate the growth and
expansion of economic activities of the private sector.

Breakdown of Current Operating Expenditures

Personal Services
Salaries - Permanent Positions Other Compensation for Specific Groups Other Benefits
Lump-sum for: Laundry Allowance Retirement and Life Insurance Premiums
Wages of Non-Permanent Personnel Quarters Allowance Terminal Leave Benefits
Compensation Adjustment (SSLII) Bicycle Allowance Per Diem
Compensation Adjustment (SSLIII) Overseas Allowance Commutable Allowances/Fringe Benefits
Reclassification of Positions Allowance of PDO Lawyers and Pensions
Creation of New Positions Employees assigned in Night Courts PAG-IBIG Contributions

Allowance of Deputized Prosecutors Medicare-Premiums

Other Compensation Common to all Allowance of Attorney's de Officio Employees Compensation Insurance Premium
Personnel Economic Relief Allowance Inquest Allowance of PDO lawyers Social Security Insurance Premium
Additional Compensation Inquest Allowance of Prosecutors for Local Officials

Representation &Transportation Allow in Night Courts

Hardship Pay Non-Permanent Positions

Overtime Pay Hazards Duty Pay Contractual, Casual &Emergency Personnel
Year-end Bonus and Cash Gift Night Differential Pay Substitute Teachers
Clothing and Uniform Allowance Flying Pay Consultants' Specialists' Fees & Allow.
Step Increments for Length of Service Private Messenger Fee Student Labor
Productivity Incentive Benefits Technical Incentive Allowance Uniformed Personnel
Honoraria Per Diems for Meetings Military Pay and Allowances
Others Career Progression Scheme DILG Uniformed Personnel Pay & Allowance

Training and Personnel Improvement Special Group Term Insurance

Other Compensation for Specific Groups Longevity Pay Lump sum for Personal Services
Implementation of Equivalents Record Form Lump-sum for NCC 69 Lump sum for Compensation Adjustment
Conversion to Master Teachers Lump-sum for NBC 308 Other Personal Services
Magna Carta of Public Health Workers Sea Duty Pay Pensions
Subsistence Allowance Others Other Police Benefits

Maintenance & Other Operating Expenditures

Traveling Expenses Loan Repayments & Sinking Fund Contribution Taxes, Duties and Fees
Communication Services Water, Illumination and Power Services Trading and Production
Repair and Maintenance of Govt. Facilities Social Security Benefits, Rewards Gasoline, Oil and Lubricants
Repair and Maintenance of Govt. Vehicles & Other Claims Fidelity Bonds and Insurance Premium
Transportation Services Auditing Services Loss on Foreign Exchange
Supplies and Materials Training and Seminar Services Commitment Fees and Other Charges
Rents Extraordinary and Miscellaneous Exp Library Books and Materials
Interests Confidential and Intelligence Exp Lump-sum for MOOE
Grants, Subsidies and Contributions Anti-Insurgency/Contingency/ Other Services

Awards and Indemnities Emergency Expenses

4. What are infrastructure Infrastructure expenditures refer to the disbursement of funds for the construction
expenditures? of various basic public works of the country. Meant to benefit the general public,
they cover roads, ports, airports, water supply networks, irrigation, and other
capital investments. In the national budget, infrastructure expenditures generally
refer to the capital outlays of the Department of Public Works and Highways
(DPWH) and the Department of Transportation and Communication (DOTC).
They include the School Building Program of the Department of Education, and
the national irrigation projects of the Department of Agriculture.
5. What are capital Capital transfers to local government units or LGUs pertain to the portion of the
transfers to local Internal Revenue Allotment (IRA) which accrue to LGUs. They are equivalent to
government units not less than twenty percent (20 %) of their IRA allocations. The money is
(LGUs)? earmarked for development projects, such as the construction, improvement,
IRA development fund repair and maintenance of local roads, pavements, and/or communal irrigation
projects/systems.

6. What are equity Equity contributions to government corporations refer to the national government
contributions to investments in the authorized capital stock of government owned and/or
government controlled corporations.
corporations?

7. What are interest Interest payments represent the cost of borrowed funds for items financed by
payments? loans. Interest payments are thus considered a real expense item in the budget.

8. On what is the national The national budget is allocated for the implementation of various government
government budget programs and projects, the operation of government offices, the payment of
spent? salaries of government employees, and the payment of public debts. These
expenditures are classified by expense class, sector and implementing unit of
government.

National Expenditures Program

Amounts in billion pesos
2002 2001 2000 1999
Particulars Proposed Adjusted Actual Actual

Current Operating Expenditures 691.1 635.7 592.9 501.4

Personal Services 264.4 246.2 235.2 215.3
Maint. & Other Operating Expd 426.7 389.5 357.7 286.1
Capital Outlays 83.5 57.2 86.9 75.7
Net Lending 6.1 7.0 2.6 3.2
Total Obligations, Nat l Government 780.7 699.9 682.4 580.3
Source: BESF, 2000 and 2001

The national government budget is allocated according to the following major sectors:
social services, economic services, defense, general public services, and debt
service.
Allocation for social services include those for: a) education, culture and manpower
development; b) health services; c) social security, welfare and employment; d)
9. How is the national housing and community development; and, e) land distribution.
government budget
sectorally allocated? Provision for economic services include those for: a) communications, roads and
transportation facilities; b) agriculture, agrarian reform and natural resources; c) water
resources development and flood control; d) trade and industry; e) power and energy;
and, tourism.
 2002 2001 2000 1999

Social Services 232,963 217,217 212,981 192,838

Education, Culture and

Manpower Dev't 129,672 121,498 116,827 110,614
Health 14,518 13,644 14,658 14,962
Social Security, Welfare &
Employment 30,359 27,671 26,407 24,862
Housing and Community
Development 2,229 2,479 8,275 4,114
Land Distribution 4,536 4,149 3,550 2,216
Other Social Services 1,913 2,718 981 812
Local Government Units 49,736 45,058 42,283 35,258

2002 2001 2000 1999

Economic Sector 157,666 141,237 167,217 139,205

Agriculture 27,763 19,910 23,370 22,355

Agrarian 1,740 1,713 5,352 4,492
Natural Res. and Water
Environment 8,762 6,422 6,295 6,142
Trade and Industry 3,002 2,821 4,718 3,125
Tourism 1,170 998 1,625 869
Power and Energy 1,220 1,273 1,185 3,650
Water Resources Dev't & Flood
Control 6,762 4,141 4,632 5,880
Comm, Roads and Other Transport 53,055 53,126 75,564 54,588
Other Economic Services 7,144 8,211 4,479 4,752
Local Government Units 47,048 42,622 39,997 33,352

Expenditures for defense include those that support the general effort to ensure national security, stability and peace,
which are indispensable to economic growth and development.

General public services expenditures are those that are spent for: (a) general administration such as general
government, fiscal affairs, foreign affairs and international commitments, electoral, audit, civil service and lawmaking
functions; and (b) public order and safety, including various functions pertaining to law enforcement, maintenance of
public order, and political administration.

Expenditures for the debt burden are those that go into the servicing of government's regular and assumed debts
from domestic and foreign sources. It includes interest payments.

Defense 2002 2001 2000 1999

Defense 46,113 32,782 36,208 32,959

Domestic Security 45,309 31,765 36,208 32,959
Others 804 1,017

2002 2001 2000 1999

General Public Services 133,646 120,018 122,526 105,900

General Administration 39,452 35,992 40,996 36,990

Public Order and Safety 54,215 47,700 47,177 40,781
Other General Public
Services 2,341 2,228 2,355 1,447
Local Government Units 37,638 34,098 31,998 26,682
Debt Service 2002 2001 2000 1999
Net Lending 6,135 7,023 2,634 3,193
Interest Payments 204,267 181,601 140,894 106,290

10. How are government expenditures The national government budget is broken down into the following cost
categorized by cost structure? categories: 1) general administration and support (GAS); 2) support to
operations (STO); 3) operations (O); and 4) projects.

Expenditures for general administration represent those that are normally

GAS considered as agency overhead. They cover general management and
supervision, human resources development, and productivity incentive benefits.

Support to operations refers to those activities that facilitate the performance of

STO the agency's mandated functions and services. Examples under this category
are those meant for policy formulation and planning services; for
program/project coordination, monitoring and evaluation; and for information
management support system.
Project
Expenditures for Operations are those that go to regular activities directly
addressing the agency's mandates. They include expenditures for programs
involving the production of goods; delivery of public services; regulation of
societal activities; conduct of basic governance; or provision of general
management and supervision to the entire government bureaucracy.

Project expenditures are those that fund activities which accomplish identifiable
outputs within a set period. They may be sourced from foreign assistance or
local funding.
11. What is the significance of Dividing the budget into functional cost components allows for a better analysis
categorizing expenditures by cost of government expenditures. The State can focus on more priority needs, thus
structure? improving the quality of government spending.