Nat'l gov’t budget deficit narrows month-on-month in October as public spending continues decline

The national government’s fiscal balance yielded a narrower shortfall on a month-on-month basis in October as public spending continued to contract, albeit lower than the still tepid state collections amid the COVID-19 crisis.

Data released by the Bureau of the Treasury (BTr) showed the budget deficit last month stood at P61.4 billion, leaner than the P138.5-billion shortfall in September.

“This highlights slower government spending both on a year-on-year basis (-7%) and also on a month-on-month basis to P289 billion, among the lowest in eight months or since February 2020 and also among the slowest in a year (since August 2019),” Rizal Commercial Banking Corp. chief economist Michael Ricafort said.

Ricafort said the narrower budget gap in October partly reflects “the relatively slower deployment/rollout of the P140 billion Bayanihan 2 Law funds back then (but already accelerated to about 2/3 of the said Bayanihan 2 Fund recently).”

Late last month, the Department of Budget and Management was criticized by lawmakers for the slow release of funds allocated under the Bayanihan to Recover as One Act.

So far, around P90 billion of the P140 billion appropriations under the Bayanihan 2 were released.

“Definitely, there is a need to speed up the disbursements and rollout of the Bayanihan 2 funds to achieve the objective of greater response to COVID-19 especially for faster economic recovery and also to further bolster the medical/health care sector and for funding other COVID-19 programs, given the fact that approvals and deployment need to be completed in less than a month for the remaining 1/3 of the Bayanihan 2 Law funds, so the schedule is already tight and expediency is key right now to have a positive impact on economic recovery program/efforts,” Ricafort said.

Year-on-year, the budget deficit widened by 24.56% from a P49.3-billion fiscal gap in October 2019.

“The budget gap widened behind a 12.75% year-on-year contraction in revenue receipts despite a 6.84% reduction in disbursements,” the Treasury said.

October’s budget shortfall brought the year-to-date fiscal balance to a deficit of P940.6 billion, 170.09% wider than last year’s P348.3-billion deficit.

Expenditures

The government’s expenditures in October stood at P289.6 billion, down 6.84% from P310.8 billion year-on-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 noted that the decline in capital expenditures is mainly attributed to the discontinuance and realignment of some capital outlay projects this year pursuant to the Bayanihan 1 and the delays brought by the COVID-19 lockdowns.

The January to October government expenditures amounted to P3.312 trillion, up 12.75% from P2.937 trillion.

“This was propelled by the implementation of various government COVID-19 emergency response and assistance programs,” the BTr said.

Revenues

Government collection in October amounted to P228.2 billion, down 12.75% from P261.6 billion in the same comparable period in 2019.

Tax collections comprised the lion’s share of P203.8 billion or 89% of the total state revenues last month while the balance of 11% or P24.4 billion came from non-tax collections.

Year-to-date, state revenues contracted by 8.41% to P2.371 trillion from P2.589 trillion.

Ricafort said “the COVID-19 lockdowns reduced the government's revenue collections by -8% year-on-year.”

The Bureau of Internal Revenue (BIR) saw a 14.62% decline in tax collections in October to P152.1 billion from P178.1 billion year-on-year.

The Bureau of Customs also recorded a decline in collections of 12.25% to P50.6 billion from P57.7 billion.

Non-tax revenues grew 1.84% to P24.4 billion from P24 billion.—AOL, GMA News