Sign of economic recovery? October budget gap widens to P1.2 trillion
MANILA, Philippines—The national government’s end-October budget deficit widened by 27.9 percent year-on-year to P1.2 trillion as expenditure growth outpaced increase in revenues, which Finance Secretary Carlos Dominguez III said reflected economic recovery.
The Bureau of the Treasury’s cash operations report for October released on Thursday (Nov. 25) showed a bigger 10-month fiscal gap compared to P940.6 billion in 2020.
The government spent P3.69 trillion on public goods and services from January to October, up 11.5 percent from P3.31 trillion during the first 10 months of last year.
Productive spending net of interest payments climbed 11.6 percent year-on-year to P3.32 trillion, while the amount of interest on debts paid by the government grew 10.7 percent to P370.9 billion.
The government’s tax and non-tax take, meanwhile, rose 5 percent to P2.49 trillion from 2020’s P2.37 trillion.
The internal revenue and Customs bureaus—the country’s two biggest tax-collection agencies—hiked their combined revenues by 9.1 percent year-on-year to P2.23 trillion, Dominguez noted in a speech on Thursday.
“The BOC’s collections, in particular, grew by 17 percent, signaling a rise in imports. This reflects strong trade flows and more economic activity driven by the infrastructure modernization program,” Dominguez said.
End-September imports jumped 30.3 percent to $84.9 billion from $65.1 billion last year, when global trade slumped as a result of stringent lockdowns to contain the spread of COVID-19.
The Treasury noted that both agencies were nearing their full-year collection targets—the Bureau of Internal Revenue’s end-October take amounting to P1.71 trillion was already 82 percent of its P2.1-trillion goal, while the P525.4-billion worth of import duties and other taxes collected by the Bureau of Customs accounted for 85 percent of its P616.7-billion target for 2021.
During the month of October alone, revenues reached P253.1 billion, up 10.9 percent year-on-year or a faster increase than the 9.6-percent growth in expenditures to a still bigger P317.4 billion.
“In October, 90 percent or P285.8 billion of the total disbursements was for primary expenditures, which posted 6.9-percent or P18.3-billion growth,” the Treasury said.
“Interest payments for October rose to P31.5 billion, up by 42.9 percent or P9.5 billion over last year mainly due to coupon payments for newly issued treasury bonds,” it added.
The October budget deficit increased 4.8 percent year-on-year to P64.3 billion.
The Cabinet-level Development Budget Coordination Committee (DBCC) had programmed this year’s fiscal deficit to hit P1.86 trillion, equivalent to 9.3 percent of gross domestic product (GDP)—poised to be the Philippines’ largest-ever, as the government spent more to fight the prolonged COVID-19 pandemic despite a still weaker revenue take than pre-pandemic levels.
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