State spending growth slows in October

By Beatrice M. Laforga

STATE SPENDING increased for the fourth straight month in October, though by the smallest increment in that period, yielding a smaller budget deficit as revenue collections grew at a faster clip, the Bureau of the Treasury (BTr) reported on Monday.

The government posted a narrower P49.3-billion budget deficit for the month, contracting by 17.71% year on year and also a reversal from the 85.52% hike in September as revenue generation outpaced state spending.

That brought the year-to-date deficit to P348.3 billion, a fifth smaller than the P438.1-billion gap recorded in last year’s comparable 10 months.

EXPENDITURES
As the national government pressed on with efforts to catch up with its spending program that was crimped by late enactment of the national budget and a ban on new public works 45 days ahead of the May 13 midterm elections, expenditures edged up 1.37% to P310.8 billion in October from P306.6 billion a year ago.

The Treasury attributed the small increment to a high base the past year.

Primary expenditures, which count spending on infrastructure and other capital outlays but exclude interest payments, went up by 2.65% to P290.1 billion from P282.6 billion, while interest payments dropped 13.7% to P20.7 billion from P24 billion.

With NG expenditures so far dropping in three months — in March (eight percent), April (15.1%) and June (0.99%) — spending increased by 5.05% to P2.938 trillion in the 10 months to October from P2.796 trillion a year ago.

Primary expenditures similarly grew by 4.89% to P2.623 trillion from P2.501 trillion, while interest payments rose by 6.47% to P314.5 billion from P295.3 billion.

REVENUES
The government’s overall revenue collections grew 5.99% to P261.6 billion in October from P246.8 billion a year ago.

Tax collections accounted for 90.79% of the total at P237.5 billion, 6.78% more than the year-ago P222.4 billion.

The Bureau of Internal Revenue (BIR) contributed nearly three-fourths of tax collections and 68.08% of total revenues with P178.1 billion, 8.09% more than the year-ago P164.8 billion.

The Bureau of Customs accounted for 22.05% of total revenues and 24.29% of tax take with P57.7 billion, 3.04% more than the year-ago P56 billion.

Tax collections from other offices went up 3.38% to P1.7 billion from P1.6 billion.

Non-tax revenues — mainly subsidies to cover taxes on government transactions — dipped 1.2% to P24.1 billion from P24.4 billion. The Treasury contributed P10.6 billion, up 26.77% from P8.4 billion a year ago, “fuelled by higher income from NG deposits, NG share from PAGCOR income and dividends on NG shares of stocks,” a press release explained, referring to the Philippine Amusement and Gaming Corp. Other offices, however, saw their non-tax collections slide 15.82% to P13.5 billion from P16 billion.

The 10 months to October saw overall revenues grow 9.8% to P2.59 trillion from P2.358 trillion a year ago.

Tax revenues increased by 9.93% to P2.328 trillion from P2.118 trillion as BIR collections rose 10.68% to P1.781 trillion from P1.609 trillion, while Customs collected 7.57% more at P527.7 billion from P490.6 billion. Tax revenues from other offices inched up 7.05% to P19.4 billion.

Non-tax revenues during the period increased 8.68% to P261.5 billion from P240.6 billion, as the Treasury collected 30.69% more at P129.2 billion from P98.9 billion while other offices got 6.68% less at P132.3 billion.

STRAIN IN CATCH-UP EFFORTS
In a note sent to journalists, Security Bank Corp. Chief Economist Robert Dan J. Roces said October’s narrower fiscal deficit bared “the strain faced by the catch-up spending plan for the remainder of the year.”

Mr. Roces said the government may not reach its budget deficit target for the year which is capped at P624.4 billion or equivalent to 3.2% of gross domestic product (GDP).

“Government spending will carry a heavier burden in nudging growth for the rest of the year as the positive effects of the fiscal stimulus pitches and the lag upshot from monetary easing have yet to be felt,” Mr. Roces said.

For ING Bank NV Manila Branch senior economist Nicholas Antonio T. Mapa, the “government carried on its catch-up spending with expenditures up 1.4%, managing to still expand on top of the 35.2% surge in state spending last October 2018.”

“State spending coupled with revived capital formation (after BSP rate cuts) and robust consumption (low inflation and SEA games) will likely be enough to get the Philippine economy past the six percent finish line as we flip the calendar to 2020,” Mr. Mapa said, referring to the lower end of the government’s 6-7% GDP growth target for this year.