Gov’t posts budget deficit of P14B in January 2021

The national government’s budget gap swung to a deficit of P14.1 billion in January as expenditures on public goods and services inched up while revenue collections dropped by more than a tenth due to a prolonged pandemic-induced recession.

The Bureau of the Treasury’s latest cash operations report released on Wednesday showed a reversal of the P23-billion budget surplus posted during the same month last year.

Disbursements rose 1.2 percent to P274.8 billion last January from P271.6 billion a year ago even as so-called “productive” spending net of interest payments grew by a faster 8.4 percent year-on-year to P227.8 billion.

In a statement, the Treasury attributed the higher primary expenditures equivalent to 83 percent of the month’s total to higher allocations for local government units and disbursements by line agencies. Due to on-time approval, the Department of Budget and Management was able to release P2.63 trillion out of the record P4.51-trillion 2021 national budget last January.

The overall increase in expenditures was nonetheless tempered by the 23.4-percent slide in interest payments to P47 billion from P61.4 billion a year ago.

The Treasury said interest payments dropped due to the redemption of US dollar-denominated global bonds issued in 2020 and the settlement of premiums on locally reissued treasury bonds.

On the other hand, tax and nontax revenues in January fell 11.5 percent to P260.7 billion from a year-ago’s P294.6 billion collected prior to the pandemic.

The Bureau of Internal Revenue’s tax take declined 6.5 percent year-on-year to P182.2 billion, a little below the P182.9-billion target for January.

Economic disruption

The Bureau of Customs’ collection of import duties and other taxes, meanwhile, fell by a faster 15.4 percent year-on-year to P47.3 billion even as the agency exceeded its P42.2-billion goal.

The Treasury blamed the decline in tax revenues to the continued economic disruptions brought about by the health crisis, referring to COVID-19.

Even nontax revenues slid by 31.4 percent year-on-year to P28 billion mainly due to a high-base effect of dividend remittances from government-owned and -controlled corporations, particularly the Bangko Sentral ng Pilipinas, which remitted P17.3 billion last year, and the 58.7-percent or P1.9-billion drop in the national government’s share from the income of Philippine Amusement and Gaming Corp., the Treasury said.

For 2021, the Cabinet-level Development Budget Coordination Committee has programmed a fiscal deficit of P1.78 trillion, equivalent to 8.9 percent of gross domestic product, as expenditures are projected to rise to P4.66 trillion while revenues increase to P2.88 trillion.