PH budget deficit widened 54% to P99.1B in Oct

The national government’s budget deficit in October widened by 54 percent to P99.1 billion from P64.3 billion in the same month of 2021 as rising inflation and a weak peso helped boost expenses, which outpaced the growth in revenues.

The latest monthly readout, however, was the narrowest deficit since the P72 billion recorded two months earlier in August although much wider than the overspending in October last year.

The government is prepared to incur a budget deficit of P1.7 trillion for full-year 2022, which suggests that the deficit in November and December could be much wider.

The Bureau of the Treasury said that October’s cash operations brought the January-October budget deficit to P1.1 trillion, narrower by 7.6 percent than the P1.2 trillion in the comparative 10 months last year.

The deficit as of the end of October represents two-thirds of the full-year amount and, if the program were to be followed, the government would spend a total of P600 million above its revenues in the last two months of this year.

October expenses were beefed up by 22.2 percent to P387.9 billion while 10-month disbursements grew by 9.9 percent to P4.06 trillion.

At the same time, revenue collections jumped by 14.1 percent to P288.9 billion in October while 10-month receipts surged by 18.3 percent to P2.9 trillion.

Michael Ricafort, chief economist at Rizal Commercial Banking Corp., said government spending in October was still at a six-month low despite a strong growth rate.

Growth in expenses during October was “partly due to higher inflation as higher prices may have required more government spending, as well as weaker peso exchange rate in recent months that increased the peso equivalent of foreign debts and debt servicing,” Ricafort said.

He added that higher interest rates here and abroad also increased the cost of debt servicing for the government’s outstanding obligations.

Ricafort noted that, on the other hand, the reopening of the domestic economy boosted tax collections while also reducing the government’s COVID-related expenses since there were no more large scale lockdowns so far this year.

With sustained deficit-spending, the government’s debt stock reached P13.52 trillion as of the end of September, representing 63.7 percent of gross domestic product.