Gov’t chalks P1.2-T budget deficit as of October photo BusinessWorld Online
Finance

Gov’t chalks P1.2-T budget deficit as of October

Nov 26, 2021, 5:40 AM
Rose De La Cruz

Rose De La Cruz

Columnist

Faster government spending for January to October led to a wider budget gap of P3.7 trillion, up by 12 percent over the same period last year while revenues rose by only 6 percent to P2.5 trillion, the Bureau of Treasury reported Thursday.

APPARENTLY driven by huge pandemic costs, the government had spent double what it earned in 10 months this year, or some P3.7 trillion, up by 12 percent, over the same period last year of P940.58 billion.

In a report, the Bureau of Treasury said the government’s revenue rose by only 6 percent in 10 months to only P2.5 trillion.

As a result, for October alone, the deficit widened by 5 percent to P64.29 billion as spending reached P317.38 billion while revenue stood only at P253.09 billion.

The bulk or 90 percent of total government spending was at P285.84 billion while interest payments accounted for the remaining 10 percent at P31.54 billion.

Tax revenue jumped by more than seven percent to P219.07 billion as non-tax income rose by over 42 percent to P34.02 billion.

Collections of the Bureau of Internal Revenue rose by nearly seven percent to P162.12 billion from P152.07 billion, while the Bureau of Customs raked in P55.53 billion during the month, up by 10 percent from P50.59 billion last year, the Philippine Star said.

Higher revenue remitted by the Treasury and profit reported by state-run firms also contributed to the increase in non-tax revenue.

In October, Treasury income rose by nearly 30 percent to P8.98 billion from P6.91 billion as the agency gained returns from investments it made.

P1.86 trillion

For 2021, the government expects its budget deficit to reach P1.86 trillion, or 9.5 percent of gross domestic product (GDP), based on latest estimates.

Thus, the government can only afford a fiscal shortfall of around P663 billion for the rest of the year to land within target.

The government expects revenue generation to intensify as lockdown measures have been loosened in most areas nationwide and industries have been permitted to reopen at up to 70 percent capacity.

The government aims to bring down its budget deficit to P1.67 trillion this year, or 7.7 percent of GDP.

Economic recovery

Finance Secretary Carlos G. Dominguez III said the growth in budget deficit which year- on- year reached P1.2 trillion “reflects economic recovery.”

The Bureau of the Treasury’s cash operations report for October released on Thursday (Nov. 25) showed a bigger 10-month fiscal gap compared to P940.6 billion in 2020.

The government spent P3.69 trillion on public goods and services from January to October, up 11.5 percent from P3.31 trillion during the first 10 months of last year, the Inquirer noted.

Productive spending net of interest payments climbed 11.6 percent year-on-year to P3.32 trillion, while the amount of interest on debts paid by the government grew 10.7 percent to P370.9 billion.

The government’s tax and non-tax take, meanwhile, rose 5 percent to P2.49 trillion from 2020’s P2.37 trillion.

The internal revenue and Customs bureaus—the country’s two biggest tax-collection agencies—hiked their combined revenues by 9.1 percent year-on-year to P2.23 trillion, Dominguez noted in a speech on Thursday.

“The BOC’s collections grew by 17 percent, signaling a rise in imports. This reflects strong trade flows and more economic activity driven by the infrastructure modernization program,” Dominguez said.

End-September, imports jumped 30.3 percent to $84.9 billion from $65.1 billion last year, when global trade slumped from the stringent lockdowns to contain the spread of COVID-19.

The Treasury noted that both agencies were nearing their full-year collection targets—the Bureau of Internal Revenue’s end-October take amounting to P1.71 trillion was already 82 percent of its P2.1-trillion goal, while the P525.4-billion worth of import duties and other taxes collected by the Bureau of Customs accounted for 85 percent of its P616.7-billion target for 2021.

During the month of October alone, revenues reached P253.1 billion, up 10.9 percent year-on-year or a faster increase than the 9.6-percent growth in expenditures to a still bigger P317.4 billion.

“In October, 90 percent or P285.8 billion of the total disbursements was for primary expenditures, which posted 6.9-percent or P18.3-billion growth,” the Treasury said.

“Interest payments for October rose to P31.5 billion, up by 42.9 percent or P9.5 billion over last year mainly due to coupon payments for newly issued treasury bonds,” it added.

The October budget deficit increased 4.8 percent year-on-year to P64.3 billion.

The Cabinet-level Development Budget Coordination Committee (DBCC) had programmed this year’s fiscal deficit to hit P1.86 trillion, equivalent to 9.3 percent of gross domestic product (GDP)—poised to be the Philippines’ largest-ever, as the government spent more to fight the prolonged COVID-19 pandemic despite a still weaker revenue take than pre-pandemic levels.

Tags: #budgetgap, #BureauofTreasury, #DoF, #fasterspending, #finance, #economic recovery


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