The government’s budget deficit worsened in December amid lower revenue and increased spending amid a coronavirus pandemic, according to the Treasury bureau.

The fiscal gap rose by a fifth to P302.6 billion from a year earlier, data from the bureau released on Friday showed. This brought the full-year deficit to P1.371 trillion, more than double the P660 billion in 2019.

Last year’s deficit was equivalent to 7.63% of the country’s economic output, higher than 3.38% in 2019. But it was lower than the 9.63% revised program for the year.

“This is definitely because of the economic impact of the COVID-19 pandemic that directly resulted in closures of micro, small and medium-sized enterprises and lower domestic demand,” Ruben Carlo O. Asuncion, chief economist at UnionBank of the Philippines, Inc. said in a text message. “These, of course, resulted in lower government receipts.”

A deficit occurs when a government spends more than the taxes it collects, forcing the state to borrow and increase debt.

In December, government expenditures rose by 9.46% to P541.1 billion, bringing the full-year spending to P4.227 trillion, 11% higher than a year earlier.

Revenue slipped by 1.95% to P238.5 billion that month. Revenue fell by 8.97% to P2.856 trillion last year from a year ago.

Collections by the Bureau of Customs and other offices dropped by 13.13% and 14.74% to P45.3 billion and P700 million, respectively. Tax collections by the Bureau of Internal Revenue inched up by 0.48% to P163.4 billion.

Nontax revenue also increased by 5.2% to P29.2 billion as revenue from other offices jumped by 30.56% to P20.8 billion despite a 29% fall in Treasury collections to P8.4 billion.

The Treasury bureau traced the lower revenue to tax relief measures meant to ease the burden on consumers.

This year, the Development Budget Coordination Committee capped the fiscal deficit to 8.9% of the economy, with gross borrowings expected to hit P3.03 trillion.

A measure seeking to cut corporate income tax to 25% from 30% may cost the government as much as P250 billion in foregone revenue from 2021 to 2022, according to Finance Assistant Secretary Maria Teresa S. Habitan.

“Although initially it will be negative for national revenue, the longer-term impact may offset the shorter-term receipt shortfall,” Mr. Asuncion said.

The measure, which has been submitted for President Rodrigo R. Duterte’s signature, is expected to allow companies to expand and hire more people, he added.