End-June budget gap narrows to P42.6B
Government spending on public goods and services during the first six months declined from a year ago, narrowing the budget deficit to only P42.6 billion as of June, putting economic growth at risk to again fall below 6 percent in the second quarter.
The end-June fiscal deficit was 77.91-percent lower than the P193 billion recorded in the same six-month period last year, the Bureau of the Treasury data released yesterday showed.
From January to June, the government spent a total of P1.59 trillion, down 0.83 percent from P1.604 trillion a year ago “mainly because the government operated under a reenacted budget in the first four months of 2019,” the Treasury said in a statement.
The P3.7-trillion 2019 national budget was signed by President Duterte only on April 15 due to delays caused by the squabble between the two houses of Congress over “pork” funds.
As such, the government underspent about P1 billion a day between January and April.
In the meantime, combined tax and nontax revenues in the first six months climbed 9.71 percent to P1.548 trillion from P1.411 trillion a year ago mainly as the country’s two largest tax-collection agencies shored up collections.
The Bureau of Internal Revenue’s end-June tax take jumped 10.56 percent year-on-year to P1.066 trillion.
The Bureau of Customs, meanwhile, saw its collection of import duties and other taxes rise by 8.45 percent year-on-year to P303 billion during the six-month period.
“Even with the spending plan enacted and the May election ban lifted by June, spending in the second quarter slipped by roughly 2.3 percent from the second-quarter 2018 levels. Despite the government’s best efforts to implement ‘catch-up spending,’ the projected misstep coming from the government spending side coupled with possible handicapped capital formation could mean second-quarter GDP (gross domestic product) struggles to get past 6 percent again,” ING Bank Manila senior economist Nicholas Antonio T. Mapa said in a note to clients.
Mapa was referring to the economic team’s “bold” spending catch-up plan, under which major infrastructure agencies such as the Departments of Transportation and Public Works and Highways would speed up implementation of P803 billion worth of projects for the rest of the year.
The catch-up program was expected to reverse underspending at the start of the year in a bid to jack up economic growth to over 6 percent for the entire 2019.
First-quarter GDP growth fell to a four-year low of 5.6 percent mainly due to public underspending.
In the month of June alone, the government recorded a budget deficit of P41.8 billion, 22.93-percent smaller than P54.3 billion a year ago.
Disbursements in June declined 0.99 percent year-on-year to P275.7 billion, while revenue increased 4.32 percent to P233.9 billion.
For 2019, the Cabinet-level, interagency Development Budget Coordination Committee last week programmed a full-year budget deficit of P624.4 billion, as the expenditure target of P3.77 trillion should outpace the P3.15-trillion revenue goal.
