Budget deficit rises to P1.14 trillion amid underspending

MANILA, Philippines—The government’s end-September budget deficit widened by 29.6 percent year-on-year to P1.14 trillion despite underspending during the first nine months of 2021.

The Bureau of the Treasury’s cash operations report released on Monday (Oct. 25) showed expenditures from January to September climbed 11.7 percent to P3.38 trillion from P3.02 trillion in 2020.

The growth in disbursements outpaced the 4.4-percent increase in tax and non-tax revenues to P2.24 trillion from P2.14 trillion last year.

As a result, the nine-month fiscal deficit further widened from 2020’s P879.2 billion. In 2021, the government had programmed a record budget deficit of P1.86 trillion, equivalent to 9.3 percent of gross domestic product (GDP). This was amid bigger spending requirements to fight COVID-19 while revenue collections started to pick up from last year’s pandemic-induced slowdown.

The government had programmed a larger budget deficit of P1.43 trillion for the first nine months of 2021, but the actual gap was 20.1-percent smaller due to underspending.

Actual national government expenditures as of September fell 5.2-percent below the P3.56-trillion program, as productive spending net of interest payments—amounting to P3.04 trillion—was lower than the P3.15 trillion that should have been spent in the nine-month period.

During deliberations on the proposed P5.02-trillion 2022 national budget, government officials had explained that lower-than-programmed disbursements so far was caused mainly by bureaucratic red tape.

Also, the Treasury said its end-September payments for interest on borrowings, amounting to P339.3 billion, were below the P412.9-billion program. It said these below-program interest payments meant savings for the government.

On a year-on-year basis, interest payments rose 8.4 percent from P313 billion during the first nine months of 2020. The share of interest payments to the national government’s expenditures declined to 10.1 percent as of end-September from 10.4 percent a year ago.

Actual revenues from January to September exceeded the P2.14-trillion target by 4.7 percent, as the internal revenue and Customs bureaus surpassed their respective nine-month goals by 0.7 percent and 3.1 percent.

End-September non-tax revenues of P210.1 billion were also 55.7-percent higher than the P135-billion target.

In September alone, the national government posted a budget deficit of P180.9 billion, 30.6-percent wider than a year ago’s P138.5 billion.

Expenditures in September rose 17.5 percent year-on-year to P412.4 billion as both interest payments and productive spending increased 10.4 percent to P47.9 billion and 18.5 percent to P364.5 billion.

The Treasury said disbursement for September included the transfer of P10 billion to the Coconut Farmers and Industry Fund in compliance with Republic Act No. 11524.

September’s revenue take grew 8.9 percent year-on-year to P231.4 billion as the 10.3-percent growth in tax collections to P212.7 billion made up for the 4.5-percent decline in non-tax revenues to P18.8 billion.

TSB