The national government’s (NG) budget gap in September narrowed by 22% to P138.5 billion in September as revenue collection and state spending both declined, the Bureau of the Treasury (BTr) said on Friday.
For the January to September period, the fiscal deficit stood at P879.2 billion, 194% higher compared with the P299-billion deficit logged a year ago, the BTr’s latest cash operations report showed.
In September, government spending dropped by 15.45% to P350.9 billion, a reversal from the 0.38% uptick seen in August. The lower expenditures were attributed to the base effect of higher infrastructure spending a year ago as well as the timing of subsidy releases, BTr said.
Primary expenditures contracted by 17.32% to P307.6 billion in September, while interest payments were flat at P43.4 billion.
The September figures show the slower state spending could be the government’s “strategy to limit the budget deficit,” said ING Bank-NV Manila Senior Economist Nicholas Antonio T. Mapa.
However, he warned a continued drop in government expenditure might slow down recovery.
“Government spending alongside the net exports account were the lone bright spots for GDP (gross domestic product) in the first half of 2020 and the projected decline in fiscal expenditures does not bode well for the GDP outlook in both 2020 and 2021,” Mr. Mapa said in an e-mail.
On the other hand, the economic slowdown continued to affect government revenues which declined 10.19% to P212.4 billion in September, as tax revenues slumped by 8.51% to P193 billion.
Broken down, tax collections by the Bureau of Internal Revenue (BIR) fell 6.56% to P140.6 billion in September, while collections by the Bureau of Customs (BoC) slipped 13.69% to P50.8 billion.
Meanwhile, non-tax revenues, which consists of privatization proceeds and fees and charges generated, decreased 24.13% to P19.4 billion.
The BTr’s income slid 19.35% to P8.6 billion due as the national government’s share in the income from the Philippine Amusement and Gaming Corp. plunged by 87.4%. The Treasury also attributed the lower income to “the timing of remittance of interest on advances from GOCCs (government-owned and controlled corporations) offsetting the higher dividend collection from NG shares of stocks.”
Non-tax revenues from other offices also fell 27.57% to P10.8 billion for the month.
“We observe that revenue collections were lower as mobility, businesses and activities slowly recover after being hampered by renewed community quarantine restrictions from the previous month,” Security Bank Corp. Chief Economist Robert Dan J. Roces said in a text message.
The budget shortfall widened in the January to September period, as expenditures rose 15.07% to P3.022 trillion due to the government’s pandemic response. However, this was still 7.53% lower than the revised P3.269 trillion expenditure program for the year.
“The lag is attributed mainly to measures under RA No. 11494 or the ‘Bayanihan to Recover as One Act’ which are still to be implemented following the approval of the law last Sept. 11,” the BTr said.
The nine-month tally showed revenues dropped 7.92% to P2.143 trillion as tax collections fell 11.28% to P1.854 trillion. The BIR’s collections decreased 9.91% to P1.443 trillion, while BoC’s tax take went down by 15.32% to P398 billion.
The cumulative tax revenues from the BIR was 10.19% higher than the revised P1.31 trillion target. Meanwhile, the BoC’s nine-month collections also surpassed the P372.2 billion revised program.
For his part, Mr. Roces is expecting the fiscal deficit to widen further in the remaining months of 2020 due to Bayanihan II. The law provides a P165.5-billion additional boost to the country’s pandemic response. — Luz Wendy T. Noble