Philippine budget deficit widens to P940.6 billion in 10 months

MANILA, Philippines — The country’s fiscal deficit widened by almost three-fold from January to October as government spending continued to outpace revenue generation, the Bureau of the Treasury (BTr) reported yesterday.

According to the latest cash operations report of the BTr, the government’s budget shortfall from January to October reached P940.6 billion, a sharp 170 percent increase from the P348.3 billion recorded in the same period last year.

This occurred as year-to-date disbursements saw a double-digit growth amid a contraction in revenues.

For October alone, the country’s deficit rose by nearly 25 percent to P61.4 billion from P49.3 billion in the same perod last year. This was, however, narrower than the P138.5 billion budget gap recorded in September.

Public spending declined by almost seven percent in October, albeit at a slower pace than the 12.75 percent decline in revenues, the BTr said.

Expenditures, in particular, dropped to P289.6 billion compared to P310.8 billion in October last year.

“This is largely attributed to the base effect of the one-off pension differential releases for the military and uniformed personnel in October last year, as well as the expected lower capital outlays during the year because of the pandemic,” the BTr said.

The Treasury said the decline in capital expenditures was mainly due to the discontinuance and realignment of some capital outlay projects this year, brought about by the coronavirus pandemic and the lockdowns implemented.

Nonetheless, the BTr said year-to-date spending was still by 12.75 percent to P3.31 trillion from P2.94 trillion in the first 10 months of last year, propelled by the government’s COVID-19 emergency response and assistance programs.

This accounted for 76.4 percent of the P4.335 trillion revised full-year expenditure program for 2020.

Primary expenditures amounted to P2.98 trillion, 13.5 percent highger than the P2.62 trillion last year, while interest payments reached P335 billion, 6.54 percent higher than last year’s P314.5 billion.

Meanwhile, the BTr said government revenues in October contracted by 12.75 percent to P228.2 billion from the P261.6 billion raised a year ago.

This brought the government’s year-to-date revenues to P2.37 trillion, 8.41 percent lower compared to last year’s P2.59 trillion. The Treasury noted that this already comprised 94 percent of the P2.5 trillion revised revenue program for the year.

During the 10-month period, the Bureau of Internal Revenue (BIR) generated about P1.6 trillion in revenues, 10.38 percent lower than last year’s level of P1.78 trillion. This is already 95 percent of the bureau’s revised full-year goal of P1.7 trillion, the BTr said.

Similarly, the Bureau of Customs’ collections dropped by 15 percent to P448.6 billion from P527.7 billion last year. This is equivalent to 89 percent of the BOC’s P506.2 billion revised program for the year.

The BTr booked P208.5 billion in revenues, 61 percent higher than last year’s P129.2 billion and equivalent to 98 percent of the P213.3 billion target.

Sought for comment, Rizal Commercial Banking Corp. chief economist Michael Ricafort said the narrower budget deficit in October reflects the slower government spending both on a year-on-year and month-on-month basis.

Ricafort said this may be partly attributed to the slow deployment of the P140 billion stimulus package under the Bayanihan to Recover as One Act back then, as well as the realignment of some 2020 budget items to various COVID-19 programs.

“As a result, a slower trend in government spending could lead to slower recovery in GDP data, as may have been seen recently,” he said.

However, Ricafort said the faster disbursement of the Bayanihan 2 funds in recent weeks may help improve economic recovery prospects in the last quarter of the year.