7-month budget deficit widened to P701B

Government spen­ding to fight the new coronavirus disease (COVID-19) has bloated public expenditures during the first seven months, widening the end-July budget deficit to P700.6 billion while tax and nontax revenues remained weak due to the pandemic-induced recession.

The seven-month fiscal deficit was 494-percent wider than the P117.9-billion shortfall posted a year ago, the latest Bureau of the Treasury data released on Wednesday showed.

In July alone, the budget deficit of P140.2 billion was 86.2-percent bigger than the P75.3 billion recorded during the same month last year.

The budget deficit is projected to swell to P1.82 trillion by year’s end, equivalent to 9.6 percent of gross domestic product, as the government ramps up spending to fight COVID-19 despite a lower revenue take compared with prepandemic levels.

The amount spent by the national government on public goods and services from January to July amounted to P2.39 trillion, up 23.8 percent from P1.93 trillion a year ago as spending was “boosted by the implementation of various COVID-19 rehabilitation and recovery measures,” the Treasury said in a report.

Net of interest payments, primary expenditures as of July rose 26.1 percent to P2.14 trillion from P1.69 trillion last year.

During the month of July alone, disbursements grew 10.4 percent to P374.7 billion from P339.4 billion a year ago as productive spending net of interest paid on outstanding obligations increased by 9.3 percent year-on-year to P315.3 billion.

The Treasury attribu­ted the climb in government spending last month to “the second-tranche releases for the social amelioration program in line with the implementation of Republic Act No. 11469, or the Bayanihan to Heal as One Act, and other COVID-19-rela­ted expenditures,” referring to the dole-out for poor households whose disbursement had been delayed.

On the other hand, total revenues from January to July declined 6.8 percent to P1.69 trillion from P1.81 trillion a year ago “due to the adverse impact of the health crisis on economic activity,” the Treasury said.

The Bureau of Internal Revenue’s (BIR) end-July tax take dropped 10.5 percent year-on-year to P1.12 trillion, while the Bureau of Customs’ (BOC) collection of import duties and other taxes fell by 15.3 percent to P302.9 billion.

In July, tax and nontax revenues slid by 11.2 percent to P234.5 billion from P264.1 billion during the same month last year.

The BIR collected P159 billion last July, down 11.8 percent year-on-year, while the BOC’s take declined by 8.8 percent to P49.8 billion even as the actual collections of the country’s two biggest revenue agencies were higher than their downgraded monthly targets. The Treasury blamed “disruptions to trade caused by lockdown” for the lower BOC revenues last month.

Income collected and generated by the Treasury in July declined 46.7 percent year-on-year to P7.6 billion even as its seven-month take jumped by 87.2 percent to P190.9 billion and surpassed the full-year goal of P82.3 billion.

To recall, state-run corporations were ordered to remit their 2020 dividends to the Treasury at the start of the lockdown period in mid-March to help finance COVID-19 response. —BEN O. DE VERA