PHL gov’t fiscal gap widens to P321.5B in Q1

The national government’s fiscal balance saw a wider deficit in the first quarter of 2021 on the back of higher state expenditures against a drop in revenue collections as the country grapples with the COVID-19 pandemic.

Data released by the Bureau of the Treasury (BTr) showed that the national government incurred a budget deficit of P321.5 billion in January to March, 273.11% wider than the P86.2-billion shortfall in the same period in 2020.

For March alone, the fiscal gap stood at P191.4 billion, up 167.34% from P71.6 billion in the same month last year.

The higher budget deficit during the period arose from the -8.73% drop in government revenues to P696.5 billion from P763.1 billion in January to March 2020 and the 19.86% increase in state expenditures at P1.017 trillion from P849.2 billion year-on-year.

“The hard lockdowns in NCR Plus since the latter part of March 2021 resulted and would still continue to lead to wider budget deficits in the coming months, in terms of reduced government tax collections with the significant reduction in business/economic activities due to ECQ/MECQ, as well as increased government spending on various COVID programs such as on social amelioration, purchase of COVID-19 vaccines, and pump-priming activities especially on infrastructure to further support the economic recovery program,” Rizal Commercial Banking Corp. chief economist Michael Ricafort said.

Revenue performance

Total revenue collection in January to March stood at P696.5 billion, lower by P66.6 billion from P763.1 billion in the same period in 2020.

In particular, the Bureau of Internal Revenue, the government’s main tax collector, saw a 0.18% growth in its collections to P469.7 billion from P468.8 billion.

The Bureau of Custom’s, meanwhile, posted a 2.66% increase in its collections in the first quarter of 2021 to P3.9 billion.

The increase in BIR and BOC’s collections, however, was offset by the decline in the BTr’s collection to P39.3 billion, down 64.63% from P111.2 billion a year earlier due to the drop in remittances from government-owned and controlled corporations.

Other non-tax revenues, including privatization proceeds, fees and charges, slipped by 0.42% to P31.1 billion from P32.2 billion.

Expenditures

Government expenditures, on the other hand, grew by 19.86% to P1.017 trillion in the first three months of 2021 from P849.2-billion in disbursements in the same period in 2020 due to the various disbursements for infrastructure projects of the Department of Public Works and Highways, as well as he social welfare programs of the departments of Social Welfare and Development, Labor and Employment, and the Overseas Workers Welfare Administration.

The continuing implementation of the Bayanihan 2 for initiatives such as the Rice Resiliency Program of the Department of Agriculture and health programs of the Department of Agriculture also contributed to the strong spending performance during the period, according to the Treasury.

Interest payments, meanwhile, stood at P125.9 billion, up 4.98% from P119.9 billion year-on-year.

“Recent increase in new COVID-19 cases and the delay in the arrival and rollout of COVID-19 vaccines could slow down economic recovery prospects as these could also limit/temper any additional measures to re-open the economy from lockdowns, thereby could lead to reduced government tax revenue collections and more government spending for various COVID-19 program; resulting to wider budget deficits, more government borrowings, and higher overall outstanding debt for the country,” Ricafort said. — RSJ, GMA News