End-November budget deficit hits P1.33 trillion

MANILA, Philippines—The national government’s end-November budget deficit widened by almost a fourth year-on-year to P1.33 trillion, nearly matching the full-year fiscal gap in 2020.

The latest Bureau of the Treasury data on Friday (Dec. 24) showed that the 11-month deficit rose 24.6 percent from P1.07 trillion a year ago.

The national government ended 2020 with a P1.37-trillion budget deficit, the widest-ever and equivalent to 7.6 percent of gross domestic product (GDP), due to bigger spending for COVID-19 response but smaller revenue take due to the pandemic-induced recession.

The Cabinet-level Development Budget Coordination Committee (DBCC) last week said the end-2021 deficit would likely be a lower P1.61 trillion or 8.2 percent of GDP, compared to the programmed P1.86 trillion or 9.5 percent of GDP.

The narrower — but still poised to be a new record-high — 2021 budget deficit came on the back of faster-than-expected recovery in tax and non-tax revenues yet government agencies’ persistent underspending.

The 11.4-percent year-on-year increase in end-November expenditures to P4.11 trillion outpaced the 5.9-percent rise in revenue collections to P2.77 trillion.

Productive spending net of interest payments increased 11.2 percent year-on-year to P3.7 trillion.

In a report last Thursday (Dec 23) the Department of Budget and Management (DBM) said it expects expenditures growth to “continue for the rest of the year as line agencies have until Dec. 31, 2021 to obligate available funds and could strongly propel spending as they try to complete the implementation of programs and projects and pay outstanding due and demandable obligations before the end of the year.

“This should also support the strong growth momentum coming into the fourth quarter as the prospect for economic recovery remains sanguine,” the DBM said. The economic team had said 7 to 8 percent year-on-year growth during the current fourth quarter was “doable” to achieve 5 to 5.5 percent full-year GDP expansion, although the onslaught of Super Typhoon Odette in parts of Luzon, Visayas and Mindanao could ease the momentum and aggravate temporary poverty among vulnerable sectors.

The DBCC expects full-year disbursements to reach P4.63 trillion, short of the P4.74-trillion original program.

On revenues, the 9.6-percent growth in end-November tax collection to P2.52 trillion offset the 19.9-percent drop in non-tax take to P257.9 billion.

As of November, the Bureau of Internal Revenue (BIR) collected P1.92 trillion, up 7.2 percent year-on-year. The Bureau of Customs’ (BOC) collection of import duties and other taxes climbed 18.5 percent to P583.3 billion.

The DBCC had projected tax and non-tax collections to hit P3.03 trillion by yearend, larger than the P2.88-trillion target as well as the P2.86-trillion actual revenues generated last year amid the pandemic-induced recession.

In November alone, the national government posted a budget deficit of P128.7 billion, only 0.3-percent wider than P128.3 billion a year ago.

Expenditures in November rose 10.3 percent year-on-year to P412.7 billion, boosted by a 55.8-percent jump in interest payments to P31.2 billion and a 7.8-percent increase in primary spending by agencies like the departments of Health (DOH), Department of National Defense (DND), Department of Public Works and Highways (DPWH), Department of Social Welfare and Development (DSWD), as well as the Commission on Higher Education (CHEd), the Treasury said in a statement.

Revenues grew by a faster 15.6 percent year-on-year to P284 billion last month, as the non-tax take soared 48.7 percent to P13.7 billion, while tax-collection increased 14.3 percent to P270.3 billion.

TSB