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National government budget gap widens by 201.78% in August


The national government saw a more than 200% increase in its budget deficit in August as growth in state spending outpaced the gain in revenue collections, data released by the Bureau of the Treasury (BTr) showed Thursday.

Treasury data showed the government posted a budget shortfall of P120.9 billion last month, wider by 201.78% than the P40.1-billion fiscal gap seen in the same month last year.

“As a result, wider budget deficits could result in more government borrowings and higher debt stock, from 54.5% of GDP (gross domestic product) in end-2020, sharply up from a low of 39.6% in end-2019,” Rizal Commercial Banking Corp. chief economist Michael Ricafort said in an email commentary.

The BTr attributed the wider deficit to the “34.20% acceleration in public spending, outperforming the 6.59% growth in revenue performance.”

Month-on-month, the budget deficit is narrower than the P121.2-billion fiscal gap posted in July. 

Year-to-date fiscal balance stood at a deficit of P958.2 billion, up 29.3% from the P740.7-billion budget gap posted in the January to August 2020 period.

The cumulative fiscal balance is also at 52% of the P1.856-trillion revised budget deficit program of the government.

Expenditures

The national government’s disbursements in August amounted to P380.2 billion, up 34.20% from a year earlier.

This is the second-highest growth in expenditures for the year following February’s 37.27% increase, according to the BTr.

“The releases of various COVID-19 funding requirements, including the financial assistance to households affected by the implementation of enhanced community quarantine in the National Capital Region (NCR) and subsidy releases to PhilHealth drove the higher outturn for the month,” the Treasury said.

Ricafort said that "the higher government spending last month is also partly attributed to increased infrastructure spending and other spending on various government projects nationwide to help stimulate the economy as part of the major economic recovery pillars, and, inevitably, as part of the preparations for 2022 presidential elections, or less than a year away."

Total state expenditures from January to August stood at P2.96 trillion, higher by 10.94% compared to the P2.67 trillion posted in the same period in 2020.

This is also 63% of the P4.737 trillion revised expenditure program of the government.

Of the total expenditures in August, 94% or P356.3 billion went to primary spending which recorded 36.62% growth year-on-year.

Interest payments, meanwhile, accounted for 6% of the total government expenditures last month at P23.9 billion, up 6.13% year-on-year due to coupon payments for the Retail Treasury Bonds issued last year.

Revenue

State collections in August totaled P259.3 billion, up 6.59% from P243.2 billion in the same period last year.

“Government revenues still managed to post a slower year-on-year growth of 6.6% in August despite the tighter restrictions/quarantine standards in view of the second two-week ECQ followed by MECQ so far this year in August 2021 that could have fundamentally slowed down business/economic activities,” Ricafort said.

Year-to-date collections stood at P2.005 trillion, up 3.87% from P1.931 trillion in the January to August 2020 period.

It is also 70% of the P2.881 trillion revised collection goal for 2020.

Of the total amount, 90% or P1.81 trillion were generated through taxes while non-tax collections comprised the remaining 10% or P191.8 billion.

In particular, the Bureau of Internal Revenue’s (BIR) collection last month amounted to P186.1 billion, down 0.99% from P187.9 billion, after deducting P480 million worth of tax refunds.

The BIR’s year-to-date collections stood at P1.338 trillion, up 6.55% year-on-year and is at 67% of the P2.081 trillion goal for 2020.

The BIR must collect P173.1 billion a month to meet the collection target.

The Bureau of Customs (BOC) collected P53.4 billion, up 20.23% from the P44.4 billion collected in the same month last year.

The Customs’ cumulative revenue totaled P412.3 billion, up 18.71% from P347.3 billion. The BOC’s year-to-date collection is 67% of the revised target of P616.7 billion.

The BOC needs to raise P51.1 billion monthly from September to December to hit its collection goal.

Income collected by the BTr in August amounted to P4.7 billion, more than double last year’s P2.1 billion on the back of higher remittance of national government share from Philippine Amusement and Gaming Corp. income, dividend remittances and earnings from Bond Sinking Fund (BSF) investment.

Despite the increase last month, the Treasury’s cumulative revenue contracted by 48.21% to P99.9 billion due to collection “high base effects” from the implementation of Republic Act 11469 or Bayanihan 1.

Collections from other offices, including non-tax privatization proceeds, fees, and charge, grew by 78.80% to P13.9 billion following the easing of lockdown rules for the period compared to last year.

“The return of P4 billion unutilized funds under the Bayanihan 1 Act from the Department of Transportation, likewise, contributed to the strong performance for the month,” the BTr said.

Year-to-date non-tax collections stood at P91.9 billion, up 19.88% from P76.6 billion in 2020.

“Going forward, risk of further lockdowns amid more contagious coronavirus variants such as the Delta variant and any further delay in COVID-19 vaccine arrivals would result to relatively wider budget deficit in terms of reduced tax revenue collections in view of some reduction of business/economic activities combined with the need for more government spending for financial assistance/social amelioration and other COVID programs,” Ricafort said.—LDF, GMA News

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