2-month budget gap swells to P 130B

The national government’s budget deficit widened by 793.7 percent to P130 billion as of end-February as two-month revenues remained lower compared to pre-lockdown levels while spending on public goods and services increased to respond to the prolonged pandemic.

The Bureau of the Treasury’s latest cash operations report released on Tuesday showed the fiscal deficit ballooned from P14.6 billion in the first two months of last year.

During the month of February alone, the deficit widened by 208.5 percent to P116 billion from P37.6 billion a year ago.

Expenditures from January to February amounted to P610.3 billion, up 18.3 percent year-on-year. Disbursements in February climbed by a faster 37.3 percent year-on-year to P335.5 billion.

Primary expenditures or essential spending net of interest payments rose 32.9 percent year-on-year to P304.4 billion last month and by 21.1 percent to P532.1 billion during the two-month period.

Equity infusion

In a statement, the Treasury said public spending was boosted on February by the additional equity injected into state-owned Development Bank of the Philippines and Land Bank of the Philippines as well as state-run Philippine Guarantee Corp. for their lending programs to small businesses under the extended Bayanihan to Recover as One Act or Bayanihan 2 law.

On the other hand, tax and nontax revenues declined 4.2 percent year-on-year to P480.3 billion during the first two months even as collections in February alone grew by 6.2 percent to P219.6 billion.

Revenue growth

The Treasury said total revenue collection had “yet to fully recuperate from a slow start to the year as well as the timing of dividend remittances.”

End-February tax collections of the Bureau of Internal Revenue (BIR) shrank by 0.2 percent year-on-year to P336.3 billion, while the Bureau of Customs (BOC) take from import duties and other taxes declined by a bigger 6.2 percent to P94.5 billion.

The lower two-month revenues generated by the country’s two biggest tax-generating agencies were nonetheless narrowed by the growth posted in the month of February—the BIR grew collections by 8.4 percent year-on-year to P154.1 billion, while the BOC’s increased by 5.4 percent to P47.2 billion.

For 2021, the Development Budget Coordination Committee has programmed a P1.78-trillion budget deficit, equivalent to 8.9 percent of gross domestic product.

This fiscal gap would keep the Philippines in the middle of the pack in Asean (Association of Southeast Nations) and among similarly rated peers as the government wanted to keep its investment-grade credit ratings to keep debt costs low at a time when it is ramping up borrowings to finance the protracted fight against the health and socioeconomic crises inflicted by the COVID-19 pandemic. INQ