MANILA, Philippines—Despite a budget deficit that widened to P716.1 billion, or by at least one-fourth, the national government failed to spend nearly one-tenth of programmed six-month expenditures because of delays in implementing several stimulus measures designed to protect the economy and people from the impact of the pandemic.
The Bureau of the Treasury’s cash operations report (COR) released on Tuesday (July 27) showed the end-June fiscal deficit—which meant bigger expenditures than revenue collections— was 27.8-percent higher than P560.4 billion in 2020.
However, the actual cumulative budget deficit as of June was 29.7-percent smaller than the P1.02 trillion which the Development Budget Coordination Committee (DBCC) projected last May, due to underspending.
Government spending on public goods and services from January to June reached P2.21 trillion, 9.6-percent below the P2.44-trillion program.
Productive spending net of interest payments amounted to P1.99 trillion during the first half, 8.4-percent lower than the P2.18 trillion which the national government intended to spend.
In a statement, the Treasury blamed the below-program spending on:
- Timing of subsidy releases awaiting requests from government-owned or controlled corporations (GOCC).
- Pending enactment of the Government Financial Institutions Unified Initiatives to Distressed Enterprises for Economic Recovery, or GUIDE, bill.
- Outstanding checks as of end-June which have not been transacted by contractors or suppliers
- Interest savings
But year-on-year, disbursements in the first half of 2021 rose 9.6 percent from P2.01 trillion in 2020. Primary expenditures sans interest payments grew 9.4 percent from P1.83 trillion last year.
In the month of June alone, government spending jumped 13.2 percent year-on-year to P395.4 billion.
The Treasury attributed the year-on-year increase in government spending to:
- Disbursement for infrastructure projects of the Department of Public Works and Highways
- Capital outlay projects for the Armed Forces of the Philippines modernization program
- Emergency repatriation of OFWs by the Department of Labor and Employment and Overseas Workers Welfare Administration
- Smart campuses program of Commission on Higher Education
- Expenditures by the Commission on Elections for preparations for the 2022 national elections
Tax and non-tax revenues from January to June grew year-on-year and exceeded year-to-date targets.
The first-half revenue take inched up 2.6 percent year-on-year to P1.49 trillion even as collections in June fell 30 percent to P245.6 billion due to a high base in 2020.
Revenue collection was party delayed when the government moved the deadline to file and pay 2019 income taxes to June 2020 instead of the mandatory April 15 cut-off in consideration of the most stringent COVID-19 lockdown restrictions imposed at the onset of the pandemic.
Revenues generated by the national government by end of June 2021 surpassed by 4.8 percent the P1.42-trillion goal for the period.
The tax-payment deadline this year allowed the fiscal balance to revert to a deficit of P149.9 billion in June, from the P1.8-billion surplus a year ago.
Last week, the Cabinet-level Development Budget Coordination Committee (DBCC) kept this year’s budget-deficit program at P1.86 trillion or 9.3 percent of gross domestic product (GDP).
Finance Secretary Carlos Dominguez III also last week said the national government was en route to narrowing the fiscal deficit to 7.5 percent of GDP next year (P1.67 trillion), 5.9 percent (P1.43 trillion) in 2023, and 4.9 percent (P1.29 trillion) in 2024. Last year’s deficit of P1.37 trillion was equivalent to 7.6 percent of GDP.