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Fiscal balance back in deficit in February despite 2019 budget delay

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A SURGE in state spending, despite delayed enactment of the P3.757-trillion national budget for 2019, fueled the fiscal deficit to grow nearly half in February, the Bureau of the Treasury reported on Friday.

In a press release, the Treasury noted that the national government’s fiscal balance reverted to a P76.4-billion deficit in February, reversing from January’s P44.5-billion surplus and increasing by 48% from the year-ago P51.7-billion gap.

FEBRUARY REVENUES
Revenues grew by a faster 13% in February, compared to January’s seven percent, to P202.1 billion from P178.5 billion a year ago, as tax collections increased by 12% (compared to eight percent in January) to P182.6 billion from P162.9 billion.

February saw the Bureau of Internal Revenue (BIR) — the government’s main tax collector — grow collections by 16% to P135.7 billion from P116.6 billion a year ago, while the Bureau of Customs raked in a percent more at P44.2 bilion from P43.7 billion.

Non-tax revenues — including taxes and duties state agencies pay on paper for transactions like importations — grew by a fourth to P19.5 billion from P15.7 billion in the same comparative months.

FEBRUARY DISBURSEMENTS
National government expenditures increased by 21% to P278.5 billion in February from P230.2 billion a year ago, with disbursements other than interest payments — a category that includes spending for infrastructure — growing by a fourth to P253.2 billion from P204.1 billion.

That compared to January’s drops of seven percent in total national government expenditures and of 10% in disbursements other than interest payments.

Interest payments dropped three percent to P25.3 billion from P26.1 billion.

YEAR-TO-DATE PERFORMANCE
February’s deficit increase coupled with January’s fourfold surplus surge resulted in a 23% reduction in fiscal gap to P31.8 billion in this year’s first two months from P41.5 billion a year ago.

February’s revenues made total collections grow by a tenth to P458.8 billion in this year’s first two months from P417.4 billion a year ago, with tax revenues climbing also by a tenth to P417.5 billion from P381 billion.

BIR collections went up a tenth to P320.8 billion from P292.3 billion, while Customs’ take rose by nine percent to P92.6 billion from 84.5 billion in the same comparative two-month periods.

Non-tax revenues grew 13% to P41.3 billion from P36.5 billion.

The first two months also saw state expenditures grow seven percent to P490.7 billion from P458.9 billion, with interest payments edging up by two percent to P71.2 billion from P69.6 billion and “other” spending going up eight percent to P419.4 billion from P389.3 billion.

The Finance department, however, said the government failed to spend a programmed P43.7 billion in the first two months due to a three-month delay in enacting the P3.757-trillion national budget.

The bicameral dispute over the 2019 national budget — which was supposed to have been enacted by end-2018 — ended on Tuesday when Senate President Vicente C. Sotto III finally signed and transmitted it to the Office of the President on Tuesday, even as he formally noted the Senate’s reservations about P95-billion post-ratification fund allocations made by the House of Representatives.

The government had been banking on front-loading infrastructure work this quarter, ahead of the 45-day ban on public works starting March 29 ahead of the May 13 midterm elections and weather disturbances next semester. The reenacted national budget left new projects unfunded.

In a statement sent to reporters on Friday, Finance Assistant Secretary Antonio Joselito G. Lambino II said the government was unable to spend some P740.7 million a day between January and February for a total of P43.7 billion.

This consisted of “idle funds that the Duterte administration could have otherwise spent on priority programs to sustain-and boost-the growth momentum and expand social protection initiatives for the poor,” said Mr. Lambino.

“The No. 1 casualty of this forced under-spending is President (Rodrigo R.) Duterte’s signature ‘Build, Build, Build’ program, as it has barred the government from front-loading investments in big-ticket infrastructure projects during the best time of the year to do construction, and for projects that have the highest multiplier effect on the domestic economy.” Mr. Lambino explained.

“Our economic managers have expressed concern over the negative impact of the budget delay because we are already past the best time of the year to front-load the implementation of the ‘Build, Build, Build’ projects.”

The inter-agency Development Budget Coordination Committee earlier this month slashed its 2019 gross domestic product growth target to 6-7% from 7-8% originally as the government operates on a reenacted budget, while that National Economic and Development Authority had separately estimated that a reenacted budget until April could drag full-year economic expansion to 6.1-6.3%, far from the state’s original target, roughly matching 2018’s 6.2% pace.

“Given that it would take weeks for Malacañang to review the Congress-submitted GAB [general appropriations bill], for the President to sign it and for the concerned agencies to implement their respective projects, we can expect the 2019 GAA [general appropriations act] to be fully on stream on or before the middle of this year yet,” Mr. Lambino added. — Karl Angelo N. Vidal





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