Philippines: Budget deficit swells past P1 trillion mark in November

• Dec 24, 2020

MANILA, Philippines — The national government incurred a budget shortfall past the P1-trillion mark in the 11 months to November amid slower revenue generation and higher spending due to COVID-19 response programs, the Bureau of the Treasury (BTr) said yesterday.

Latest data from the BTr showed the national government’s fiscal deficit from January to November swelled by 161.25 percent to P1.069 trillion from P409.1 billion in the same period last year.

This figure, however, only accounts for 59 percent of the P1.815-trillion revised full-year ceiling set by the inter-agency Development Budget Coordination Committee last Dec. 3 as revenues already exceeded the full-year target, while spending continued to lag versus the goal.

For November alone, the budget deficit amounted to P128.3 billion, more than doubled from P60.9 billion a year ago.

A deficit occurs when the government spends more than the money it generates.

In the first 11 months, revenues dropped by 9.56 percent to P2.62 trillion from P2.89 trillion last year due to the impact of the COVID-19 pandemic and the imposition of lockdowns.

However, the BTr said the year-to-date collection has already surpassed the revised full-year target of P2.52 trillion by four percent.

The Bureau of Internal Revenue (BIR) generated P1.79 trillion of the total amount, down by 11.19 percent from P2.01 trillion last year, but exceeding the adjusted 2020 goal of P1.69 trillion.

Revenues raised by the Bureau of Customs (BOC) likewise declined by 14.84 percent to P492.3 billion from P578.1 billion a year ago. The bureau has already accomplished 97 percent of its P506.2 billion revised full-year program.

The BTr booked an income of P211.3 billion from January to November, up from P134.7 billion in 2019 as it collected higher dividends, service income and interest from state-run firms. This is already 99 percent of the adjusted 2020 target of P213.3 billion.

Meanwhile, government spending in the first 11 months improved by 11.59 percent to P3.69 trillion as compared to the P3.3 trillion recorded in the same period last year, driven by COVID-19 response and recovery measures.

“However, cumulative spending still fell short of the revised program for the period owing to the delayed implementation of some measures under the Bayanihan 2,” the Treasury said.

Disbursements for November recovered after two months of contraction, growing 2.3 percent to P374.1 billion from P365.6 billion last year.

The BTr attributed this to subsidy releases to the Land Bank of the Philippines for the implementation of the Unconditional Cash Transfer Program and the Philippine Health Insurance Corp. for the National Health Insurance Program, as well as capital infusion to government financial institutions for their COVID-19 lending programs, in line with the Bayanihan to Recover as One Act.

Rizal Commercial Banking Corp. chief economist Michael Ricafort said the faster pace of government spending in November bodes well for the economy’s recovery in the fourth quarter.

“The faster disbursement of the P140-billion Bayanihan 2 Law funds recently would help improve economic recovery prospects in fourth quarter 2020, partly supporting narrower GDP (gross domestic product) contraction after -11.5 percent in third quarter 2020,” Ricafort said.

Source: https://www.philstar.com/business/2020/12/24/2065895/budget-deficit-swells-past-p1-trillion-mark-november