Budget deficit swells to over P700B in Jan-July

The government’s fiscal position again reverted to a deficit in July, expanding the year-to-date gap as state spending soared and revenues plunged by double digits, according to the Bureau of the Treasury (BTr).

Data from the Treasury bureau showed on Wednesday that last month’s P140.2-billion shortfall wiped out May’s P1.8-billion surplus, and was wider than the P75.3-billion gap a year earlier.

“The higher deficit for the month reflects the 10.40-percent growth in government expenditures, boosted by the implementation of various Covid-19 (coronavirus disease 2019) rehabilitation and recovery measures vis-à-vis an 11.22-percent drop in revenue collection,” the BTr said in a statement.

Revenues shrank to P234.5 billion in July from the year-earlier P264.1 billion “due to the adverse impact of the health crisis on economic activity,” it added.

Expenditures expanded to P374.7 billion from P339.4 billion in July 2019, “driven by the second tranche releases for the Social Amelioration Program in line with the implementation of RA (Republic Act) 11469, or the “Bayanihan to Heal as One Act,” and other Covid-19-related expenditures.”

In June, revenues grew by 50.06 percent and spending rose by 26.65 percent.

The July gap brought the year-to-date deficit to P700.6 billion, wider than the P560.4 billion in the first half and P117.9 billion in the first seven months of 2019.

In July alone, the Bureau of Internal Revenue (BIR) contributed the bulk of revenues with P159 billion, down 11.84 percent from P180.3 billion last year but up 79.10 percent in June. The reduced collection was traced to the deduction of the P1.6-billion tax refund paid
to various claimants.

The Bureau of Customs contributed P49.8 billion, an 8.84-percent drop from P54.6 billion a year earlier, which was attributed to trade disruptions caused by lockdowns imposed to curb the pandemic.

Other offices posted P3.5 billion in tax revenues last month. As a result, total tax revenues dropped by 10.36 percent to P212.3 billion, reversing June’s 54.56-percent surge.

Nontax earnings reached P22.2 billion, with the Treasury contributing P7.6 billion, down 46.74 percent year-on-year, “due to the early remittance of dividends this year as well as lower NG (national government) share from Pagcor (Philippine Amusement and Gaming Corp.) and interest earned from government deposits, which declined by P2.6 billion YoY (year-on-year).”

Revenues from other offices hit P14.6 billion, a 12.43-percent increase from the previous year’s P12.9 billion, “partly due to the payment of P4.3 billion concession fees made by the MPCALA Holdings Inc. in connection with the Cavite-Laguna Expressway (Calax) project.”
The bulk of government spending — P315.3 billion — was for primary expenditures, which improved by 9.32 percent from P288.4 billion last year.

Interest payments reaching P59.4 billion accounted for the rest. This figure, a 16.52-percent jump from the year-ago figure, was “mainly driven by the interest paid in advance for global bonds, for which the original schedule of payment fell on a weekend (Aug. 1, 2020).”

Netting out interest payments, the primary balance hit a fiscal shortfall of P80.8 billion in July, bringing the year-to-date tally to a P453.6-billion gap.

This year’s budget deficit is projected to reach P1.81 trillion, or 9.6 percent of the country’s gross domestic product (GDP), according to latest estimates from the interagency Development Budget Coordination Committee (DBCC).

Commenting on the January-to-July deficit, ING Bank Manila senior economist Nicholas Antonio Mapa said it translated to roughly 3.7 percent of GDP, worse than the 3.2 percent at end-2019, “but far less severe than the doomsday threshold” set by the DBCC.

“This shows that the government continues to enjoy more than ample fiscal space, which should give authorities the green light to accelerate expenditures to salvage some form of growth for the economy,” he added.

Source: TheManila Times