November budget gap swells

THE government’s budget deficit continued to widen in November due to higher spending, while tax collections dropped.

The fiscal gap worsened 2.5 times to P108.2 billion from a year earlier, according to data released by the Treasury bureau on Wednesday.

This brought the 11-month budget gap to P713.8 billion, more than nine times the amount last year.

A government experiences a deficit when it spends more money than it takes in from taxes and other revenues. This gap between income and spending forces the state to borrow, increasing the national debt.

An increase in the budget gap can boost a sluggish economy by giving more money to people who can then buy and invest more. But long-term deficits can be bad for economic growth and stability.

Economic managers this month said the budget deficit this year would be equivalent to 7.6% of economic output, lower than the previous 9.6% estimate. The gap was P660.2 billion last year.

Government expenditures rose by 2.3% year on year to P374.1 billion after it released cash subsidies to the poor and funded its national health insurance program, the Treasury bureau said.

Government financial institutions also spent for the state’s coronavirus pandemic response and lending programs for affected sectors.

This brought the year-to-date spending to P3.686 trillion, 11.59% higher than a year earlier.

Revenue collections dropped for the eighth straight month to P245.8 billion in November, almost a fifth lower than a year earlier. This brought 11-month revenues to P2.617 trillion, a tenth lower than a year ago.

Tax revenues during the month declined by 17.02% to P235.9 billion, data showed.

Collections by the Bureau of Internal Revenue slid by 17.4% to P191.7 billion, while Customs collections fell by 13.29% to P43.7 billion. Revenues from other offices plunged by almost three-quarters to P500 million.

Government revenues from nontax sources also slumped by 51.65% to P9.9 billion from a year earlier.

Treasury bureau revenues fell by 48.61% to P2.8 billion after its share from the income of the state gambling regulator fell, as well as earnings from its bond sinking fund. Income from other offices fell by 52.77% to P7.1 billion.

A P140-billion stimulus fund is expected to boost economic recovery prospects this quarter, “partly supporting narrower economic contraction,” Michael L. Ricafort, chief economist at Rizal Commercial Banking Corp., said in an e-mail.

About P103.27 billion or 74% of the total had been released as of Dec. 18. — Luz Wendy T. Noble