BUDGET GAP HITS P940.6 BILLION
The government's budget gap rose by 170.09 percent to P940.6 billion for the first ten months of the year due to its COVID-19 pandemic response.
According to the Bureau of the Treasury (BTr) revenues from January to October contracted by 8.41 percent to PHP2.37 trillion over the year-ago level of PHP2.58 trillion.
On the other hand, expenditures rose by 12.75 percent to PHP3.312 trillion from year-ago’s PHP2.937 trillion.
In terms of contribution to the government’s coffers, the Bureau of Internal Revenue (BIR), which collects about 70 percent of total tax revenues, contributed PHP1.6 trillion, a 10.38-percent drop year-on-year.
The Bureau of Customs (BOC) contributed PHP448.6 billion, down by 14.98 percent compared to the year-ago level.
For October alone, total revenues fell by 14.22 percent year-on-year to PHP228.2 billion while expenditures slipped by 6.84 percent to PHP289.6 billion.
This resulted in a budget gap of PHP61.4 billion, up by 24.56 percent a year ago.
BIR’s revenues declined by 14.62 percent to PHP152.1 billion and that of BOC dropped by 12.25 percent to PHP50.6 billion.
Economists said government spending last October is lower than in the previous months, which they attributed to fiscal management as economic managers have set a budget deficit cap of about 9.6 percent of gross domestic product (GDP) this year.
Rizal Commercial Banking Corporation (RCBC) chief economist Michael Ricafort said this budget deficit ceiling is a “positive sign in terms of fiscal discipline/performance.”
“(This is) a delicate balancing act amid the need to increase government spending for various COVID-19 (coronavirus disease 2019) programs/priorities especially for the most vulnerable sectors,” he said.
Ricafort said further easing of quarantine measures in a bid to reopen the economy will be a plus on tax revenue collections.
“However, this could be offset by the risk of relatively slower economic recovery/rebound from lockdowns that could still potentially lead to reduced tax revenue collections on a year-on-year basis and may lead to relatively wider budget deficits, with reduced government revenues vis-a-vis the need to increase government spending for various COVID-19 programs,” he said.
ING Bank Manila chief economist Nicholas Mapa said government expenditures slowed by 6.8 percent last October in line with fiscal authorities’ bid to reign in the budget deficit.
“Nonetheless, we expect the downtrend in spending to be sustained until year-end, depriving the freefalling economy much-needed fiscal stamina to recover from the pandemic,” he said.
Mapa said the recent typhoons will definitely hit this year’s output, and he expects the fourth quarter print to be weaker than the -11.5 percent in the third quarter.