Fiscal gap closes in on 2018 program

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Calungbuyan Bridge
State spending growth continues to outpace the increase in revenues. -- DPWH

By Elijah Joseph C. Tubayan

THE NATIONAL GOVERNMENT’s fiscal deficit grew more than fourfold in November as expenditure growth continued to outpace revenue increase, driving the year-to-date gap closer to 2018’s full-year program, the Bureau of the Treasury reported on Thursday.

The budget shortfall widened by 354% to P39.1 billion in November from P8.6 billion in the same month last year.

Overall revenues increased by seven percent to P259.7 billion last month from P243.5 billion in November 2017.

Of that amount, tax revenues amounted to P242.2 billion, up six percent from P228.3 billion a year ago, marking their smallest increase since September’s flat performance. The Bureau of Internal Revenue’s (BIR) tax collections grew by seven percent to P192 billion from P179.4 billion, the slowest since an eight percent contraction in September. Collections by the Bureau of Customs (BoC), on the other hand, were the weakest so far this year, edging up by three percent to P47.9 billion from P46.4 billion.

Tax revenues from other offices decreased by 10% to P2.3 billion from P2.5 billion.

Non-tax revenues grew 15% to P17.5 billion in November from P15.2 billion a year ago, of which the Treasury collected P4.7 billion — a 10% year-on-year uptick — while other offices raked in P12.8 billion, 16% higher from last year.

National government disbursements increased by 19% to P298.8 billion in November from P252.1 billion in the same month last year, even as last month’s increase slowed from October’s 35% growth rate in October and similar double-digit increments for much of the year.

The Budget department has said that the smaller increase in disbursements is expected, as it front-loaded funds for the government’s programmed spending.

Spending for items like infrastructure and other capital outlays grew 18% to P274.2 billion from P231.5 billion, while interest payments grew 20% to P24.7 billion from P20.6 billion.

The 11-month fiscal deficit stood at P477.2 billion, 96% wider than the P243.5 billion shortfall recorded in the same period last year.

The latest year-to-date fiscal gap was 91% of the P523.7-billion full-year deficit ceiling for 2018.

January-November revenues totalled P2.618 trillion, 16% bigger than the P2.25 trillion collected in the same period last year and equivalent to 92% of the P2.846-trillion revenue goal for the whole year.

Year-to-date tax revenues accounted for P2.36 trillion of the overall revenues, up 15% from P2.054 trillion a year ago.

The BIR raked in P1.801 trillion, 11% bigger than the past year’s P1.621 trillion, while the BoC collected P538.5 billion, a 30% increase from P413.1 billion a year ago.

Other offices meanwhile generated P20.4 billion, up five percent from P19.5 billion in the same comparative 11 months.

Non-tax revenues on the other hand totalled P258 billion, up 31% from P196.4 billion the past year. The Treasury raised P103.6 billion of that amount, which was 20% bigger than P86.5 billion last year, while other offices collected P154.4 billion, a 41% increase from P109.8 billion a year ago.

Total state expenditures in the 11 months to November stood at P3.095 trillion, 24% bigger than the P2.494 trillion which the government spent in the same period in 2017, and equivalent to 92.5% of the P3.346-trillion 2018 downgraded disbursement target.

Interest payments amounted to P320 billion, marking a 10% year-on-year increase from P290 billion, while “other spending” grew 26% to P2.775 trillion from P2.204 trillion.

Sought for comment, Rizal Commercial Banking Corp. economist Michael L. Ricafort said that the latest fiscal deficit “is in line with the expected full-year target,” despite the relatively slower revenue growth for the month of November.

“The continued growth in government revenues, despite the high base/denominator a year ago, remains a good signal on the sustainable growth in recurring government revenues especially from taxes amid fiscal/tax reform measures put in place, as manifested by the latest affirmation of the country’s credit ratings by Fitch Ratings, especially on fiscal management/performance of the government,” Mr. Ricafort said in an e-mail on Thursday after the Treasury released the data.

He also noted that a sharp decline in global oil prices, and a stronger peso since October have partly reduced revenue collections from imports.

National government fiscal performance (November 2018)