The budget deficit narrowed to P74 billion at the end of the first quarter, partly as the national government spent less than the three-month expenditures program due to the COVID-19 lockdown imposed since mid-March which put a halt to rollout of public projects in Luzon and other parts of the country.
The latest Bureau of the Treasury data released on Monday (May 11) showed that the first-quarter budget deficit was not only 17.97-percent below the P90.2 billion in 2019 but also 77.76-percent smaller than the P332.9 billion programmed for the period.
End-March expenditures rose 9.16 percent year-on-year to P849.2 billion, but actual government spending on public goods and services was 14.48-percent lower than the P993 billion that should have been spent.
In a statement, the Treasury attributed underspending during the first quarter to “delays in program implementation with the enhanced community quarantine (ECQ), and lower-than-programmed interest payments and net lending.”
While interest payments as of March rose 11.24 percent year-on-year to P119.9 billion, the amount was 13.61-percent below the P138.8-billion program.
However, the bigger impact was on so-called productive spending or operating expenditures, which amounted to P729.3 billion, 14.62-percent lower than the programmed P854.2 billion for the January to March period.
Movement restrictions during ECQ stopped both public and private economic activity in areas accounting for about 70 percent of the domestic economy.
For instance, the Inter-Agency Task Force on Emerging Infectious Diseases (IATF-EID) had thumbed down the economic team’s earlier proposal for implementing agencies to continue construction of big-ticket infrastructure projects even as there was a lull in other economic activities during the lockdown.
Combined tax and non-tax revenues from January to March rose 12.72 percent year-on-year to P775.2 billion, also exceeding by 17.43 percent the P660.1-billion target for the first three months.
The bigger first-quarter revenue take came on the back of a 115.27-percent year-on-year climb in non-tax collections to P154.4 billion, hence surpassing by a bigger 209.82 percent the only P49.8-billion goal.
Tax collection inched up by just 0.78 percent year-on-year to P620.8 billion to exceed the P610.3-billion target by a mere 1.72 percent.
During the month of March alone, non-tax revenues grew 215.41 percent year-on-year to P96.6 billion.
In the case of the Treasury, its income last March jumped 538.95 percent year-on-year to P77 billion due to “early dividend remittance and higher collection of interest on advances to government-owned and/or -controlled corporations (GOCCs) as well as income from bond sinking fund (BSF) investments.”
The national government had ordered GOCCs to advance their dividends due to the COVID-19 national emergency.
Republic Act (RA) No. 11469 or the Bayanihan to Heal as One Act had sought to raise additional funds for COVID-19 response by realigning some items in the P4.1-trillion 2020 national budget.
The surge in non-tax collections in March offset the 10.67-percent year-on-year drop to P177.1 billion in tax revenues mainly collected by the bureaus of Customs (BOC) and of Internal Revenue (BIR).
The Treasury blamed the 9.43-percent year-on-year decline to P44.6 billion of the BOC’s collection of import duties and other taxes to “slower economic activity caused by the pandemic and ECQ measures” that month.
The 10.67-percent year-on-year slide in the BIR’s March tax take to P131.7 billion was attributed by the Treasury to “the imposition of the Luzon-wide ECQ in response to the COVID-19 pandemic.”
Last week, Finance Secretary Carlos G. Dominguez III said that this year’s budget deficit could balloon to “around P1 trillion” as higher spending requirements for COVID-19 will outpace expected weak revenue collections amid not only a health but also a socioeconomic crisis.
Via ad referendum, the Cabinet-level Development Budget Coordination Committee (DBCC) last month projected this year’s expenditures on public goods and services to climb to P4.163 trillion from P3.798 trillion last year, resulting in a wider budget deficit of P990.1 billion, equivalent to 5.3 percent of gross domestic product (GDP).
The government expected to collect P3.173 trillion in tax and non-tax revenues in 2020, barely up from P3.138 trillion last year.
Budget Secretary Wendel E. Avisado, who chairs the DBCC, told the Inquirer last week that the government’s macroeconomic assumptions and targets will again be reviewed this week, after first-quarter GDP contracted by 0.2 percent and made the possibility of a recession or two straight quarters of economic contraction earlier than expected.