The government reduced its budget deficit by more than half in October after it stepped up collection of taxes and import duties to boost the state’s coffers, the Department of Finance said.
Finance officials also said the government did not even have to undertake massive expenditure cuts to significantly reduce the budget gap.
DOF data showed that the budget deficit for the month amounted to P9.67 billion—down by nearly 55 percent from the P21.26 billion reported in the same month last year.
Finance Secretary Cesar V. Purisima said increased revenue collection allowed the government to spend more on anti-poverty projects and programs without causing the deficit to balloon.
He said the Aquino administration is bent on attaining “inclusive growth”—where growth of the economy could be translated into poverty reduction, while the deficit remained within manageable levels.
“While the current fiscal space continues to be an opportunity for the judicious use of public funds for projects of high and inclusive growth, the finance department continues to push for revenue-generating reforms that will allow for sustainable and resilient fiscal consolidation,” Purisima said.
The government spent about P144 billion in October—up by 15 percent from 125.2 billion in the same month last year.
While expenditures grew rapidly during the period, the DOF said the increase in revenue collection was even faster. Revenue collected during the month reached P134.32 billion—up by 29 percent from P104 billion.
The DOF said the increase in revenue collection was largely due to higher taxes collected by the Bureau of Internal Revenue and the increase in import duties collected by the Bureau of Customs.
But from January to October, the government registered a significant increase in the cumulative budget deficit. The finance department, however, said the increase was well within the official fiscal program of the government for this year.
The government intended to increase spending for infrastructure and social services this year. Thus, it was expected to post a higher full-year deficit in 2012 compared with that recorded last year.
The deficit for the first 10 months amounted to P115.74 billion, rising by about 56 percent from P74.25 billion in the same period last year.
This came about as revenues reached P1.25 billion, while expenditures amounted to P1.37 billion.
Revenues marked a year-on-year increase of about 12 percent, while expenditures rose by nearly 15 percent.
According to Purisima, the deficit as of October indicated that the full-year figure could stay well below the official ceiling of P279 billion.
Last year, the deficit stood at P197.8 billion.
Officials said the government intended to spend much more this year than last year, thus registering a higher deficit. This will enable the domestic economy to maintain a decent pace of growth even as the global economy stumbles.
Boosting domestic spending is needed, they said, to counter the drag caused by weaker export earnings on the country’s economic growth.