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Philippines: Budget gap widens in January
MANILA, Philippines — The government widened its budget deficit to more than P23 billion in January, opening the year with increased spending due to the expanded allocation for localities.
The Bureau of the Treasury yesterday reported that the deficit ballooned by two-thirds to P23.38 billion in January from P14.06 billion a year ago, on a near double-digit growth in expenditures.
The Treasury said that while revenue collection grew by nearly seven percent to P278.08 billion from P260.73 billion, state spending rose by about 10 percent to P301.46 billion from P274.79 billion.
On the revenue end, taxes collected by the Bureau of Internal Revenue (BIR) and the Bureau of Customs went up by over 10 percent to P255.2 billion from P231.04 billion. By distribution, the BIR accounted for close to 77 percent at P195.78 billion while the Customs chipped in the other 23 percent at P58.35 billion.
However, non-tax revenues suffered a 23 percent decline to P22.78 billion from P29.69 billion. Treasury income, for instance, dropped by nearly 42 percent to P10.87 billion on base effects from increased dividends of state-run firms in 2021.
On the expenditure side, principal spending increased by three percent to P235.91 billion from P227.77 billion, attributed to the disbursement spike for local governments, as mandated by the Mandanas ruling.
Allotment to local governments swelled by a fourth to P79.92 billion from P64.12 billion, in line with the Supreme Court decision that enlarged the local share in tax collection.
In turn, local governments are required to manage the responsibility of operating social services like agriculture, connectivity and health within their jurisdictions.
Likewise, interest payments grew by more than 39 percent to P65.55 billion from P47.02 billion, accounting for roughly 24 percent of revenue and 22 percent of expenditures. The government plans to spend a total of P512.68 billion for interest expenses this year.
The Cabinet-level Development Budget Coordination Committee expects the budget gap to dip by around one percent to P1.65 trillion or 7.7 percent of the gross domestic product (GDP). The deficit reached a record 8.61 percent of the GDP at P1.67 trillion last year.
For the year, the economic team projects that revenue collection will hit P3.3 trillion while state spending will rise to P4.95 trillion, as the government sustains its social interventions to mitigate the impact of the pandemic.
However, the deficit may bloat to as much as 8.2 percent of the GDP in 2022 if the government stops collecting fuel taxes to weather price hikes, according to the Department of Finance.
Source: https://www.philstar.com/business/2022/03/18/2168020/budget-gap-widens-january