Sept. budget gap widens to P181B

By Jenina P. Ibañez, Reporter

THE National Government’s deficit widened in September as spending outpaced a smaller increase in revenue collection, the Bureau of the Treasury (BTr) reported.

Preliminary data from the BTr showed the fiscal gap expanded by 30% to P180.9 billion in September from P138.5 billion a year earlier. The figure was also 49.6% higher than the P120.9-billion deficit in August.

Government spending jumped by P17.5% to P412.4 billion in September from a year earlier, and was higher than the P380.2 billion in August.

“The outturn for the month includes the transfer of P10 billion to the Coconut Farmers and Industry Trust Fund in compliance with the R.A. 11524,” BTr said.

The government under Republic Act No. 11524 or the Coconut Farmers and Industry Trust Fund Act allows coconut farmers to benefit from taxes collected from them during the Marcos administration.

Primary spending — which is total expenditures minus interest payments — went up by 18.51% to P364.5 billion compared with last year’s level. Interest payments grew by 10.36% to P47.9 billion.

Meanwhile, state revenues increased by 8.96% to P231.4 billion in September.

Tax revenue went up by 10.4% to P212.7 billion year on year. Collections by the Bureau of Internal Revenue (BIR) rose by 9.69% to P154.2 billion, while collections from the Bureau of Customs increased by 13.42% to P57.6 billion.

Other tax collecting offices generated P891 million last month, or 37.2% lower than a year earlier, while non-tax revenues slipped 4% to P18.8 billion.

The government runs on a budget deficit when it spends more than it makes to fund programs that support economic growth. It borrows from foreign and local sources to plug the gap.

The P1.1-trillion budget deficit in the nine months to September is 29.56% higher than the shortfall last year, but was still 20.11% lower than the P1.4-trillion adjusted year-to-date goal.

The nine-month total was 61% of the revised P1.8-trillion full-year deficit ceiling set by economic managers.

Total spending increased by 11.7% to P3.4 trillion as of end-September, or around 72% of this year’s P4.7-trillion disbursement plan.

“However, this is still below the program for the 9-month period by 5.22% or P186.1 billion, of which P73.6 billion or 39.5% was due to the lower-than-programmed interest payments,” BTr said.

Revenue collection growth in the nine-month period inched up by 4.37% to P2.2 trillion as tax collections representing 91% of the total jumped by 9.3% to P2.02 trillion. Customs collections rose by 18% to P469.8 billion and the BIR generated P1.5 trillion, or 6.86% higher than a year earlier.

ING Bank N.V. Manila Senior Economist Nicholas Antonio T. Mapa said steady growth for both spending and revenue collection was a positive development, although growth may have been due to the low base after contractions in September 2020.

“Nonetheless, rising revenues show that economic activity has improved compared to the same period last year. Meanwhile government spending has sustained its momentum, which will likely continue to close out the year,” he said in an e-mail.

“This will be a positive in terms of GDP (gross domestic product) as government spending will need to compensate for consumption and capital formation, which may yet to revert to pre-COVID pace of expansion,” Mr. Mapa said.

But Mr. Mapa also said the widening deficit suggests continuously increasing overall debt.

“Currently the debt-to-GDP ratio is at roughly 63%, beyond the (60%) threshold that credit ratings agencies may view as sustainable,” he said.

Cid L. Terosa, a senior economist at University of Asia and the Pacific School of Economics, said in an e-mail that he expects the National Government deficit to continue to widen in the fourth quarter as the government continues to increase spending to boost economic recovery.

“At this rate, spending outpacing revenue growth bodes well for economic recovery given that the economy needs all possible ‘stimulants’ to counter the deep and prolonged negative effects of the pandemic on the economy,” he said.

“Deficit spending by the government is a powerful tool to reinvigorate the flagging trajectory of economic growth since last year.”