End-July budget gap widens by 20% | Inquirer Business

End-July budget gap widens by 20%

8.2% rise in spending outpaces 3.5% revenue growth
By: - Reporter / @bendeveraINQ
/ 04:10 AM August 25, 2021

The government’s budget deficit at the end of the first seven months widened by about a fifth to P837.3 billion, as growth in spending outpaced that of revenue collection, the Bureau of the Treasury’s latest cash operations report showed.

The end-July fiscal deficit was 19.5-percent bigger than the P700.6 billion posted last year. Government spending on public goods and services from January to July rose 8.2 percent year-on-year to P2.58 trillion, outpacing the 3.5-percent increase in seven-month tax and nontax revenues to P1.75 trillion.


Primary expenditures net of interest payments also grew 8.2 percent year-on-year to P2.32 trillion as of July.

But in July alone, the P121.2-billion budget deficit was 13.6 percent narrower than the P140.2 billion recorded a year ago.


The smaller July deficit compared to the same month last year was mainly due to a mere 0.7-percent year-on-year growth in expenditures to P377.3 billion and the significant increase in revenue collection during the period.

Base effects

In a statement, the Treasury attributed the “modest” rise in disbursements last month to base effects, citing huge expenses in the same period last year due to the second tranche of the cash aid extended by the Department of Social Welfare and Development and the release of subsidies to state-run National Housing Authority and Philippine Health Insurance Corp.

Meanwhile, the Treasury said compensation for government employees plus infrastructure spending contributed to the increase in total expenditures in July.

Higher collections

Net of disbursements on interest paid for outstanding loans, productive spending last month grew 0.9 percent year-on-year to P318.2 billion.

Revenues in July, meanwhile, climbed by 9.2 percent year-on-year to P256.1 billion as the tax take also jumped 9.2 percent to P229.8 billion while nontax collection rose 9.1 percent to P26.3 billion.

The Bureau of Internal Revenue, for instance, hiked its collections by 7.5 percent year-on-year to P170.8 billion last month, bringing its seven-month take to P1.2 trillion, which was 7.8-percent higher than a year ago.

The Cabinet-level Development Budget Coordination Committee had programmed a record P1.86-trillion budget deficit for 2021, equivalent to 9.3 percent of gross domestic product (GDP), as the government would continue to spend more to fight the prolonged COVID-19 crisis even as this year’s revenues were projected to stay below the prepandemic collection level in 2019.

The Treasury said the budget deficit-to-GDP ratio stood at 7.9 percent in the first half of 2021, up from 6.5 percent a year ago, “as expenditure growth outpaced revenue collection over the period.” INQ

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