MANILA, Philippines — The need to sustain hefty spending on infrastructure will make it difficult for the Marcos administration to achieve its fiscal consolidation goals this year, with the state’s budget deficit likely to stay elevated, Nomura said.
In a commentary sent to journalists, the Japanese investment bank said it forecasts “a still-high” deficit-to-gross domestic product (GDP) ratio of 5.9 percent this year.
This would be a tad smaller than the 6.2 percent actually recorded in 2023, when the government overshot its deficit limit of 6.1 percent of GDP.
If Nomura’s projection is realized, the shortfall would again breach the Marcos government’s upwardly revised deficit-to-GDP target of 5.6 percent for 2024, which capped the fiscal gap at P1.5 trillion.
“Targets will be challenging to meet, given spending priorities,” Nomura said.
“We think this will also be difficult to achieve, owing to the high prioritization of infrastructure spending under the government’s ‘Build Better More’ program,” it added.
Budget shortfall
Latest data from the Bureau of the Treasury (BTr) showed the state posted a budget shortfall of P164.7 billion in February.
READ: PH gov’t swings back to budget deficit
A budget deficit happens when the government spends beyond its means, while a surplus means the opposite. Figures showed the fiscal gap in February reversed the P88-billion surplus recorded in January. It also brought the year-to-date budget deficit to P76.7 billion, up by 26.56 percent.
Dissecting the latest cash operations report of the BTr, total expenditures in February jumped 22.14 percent year-on-year to P388.7 billion on the back of higher fund releases to support the projects of local governments.
Of the total amount spent in February, P340.9 billion went to productive spending on state projects and programs, while P47.8 billion was used to settle interest on government debts.
Higher collection
Meanwhile, revenues grew 5.73 percent to P224 billion. The Bureau of Internal Revenue, which historically accounts for 80 percent of total state revenues, saw its collection rise 6.65 percent to P138 billion in February, while the Bureau of Customs raised P70.6 billion, up by 12.19 percent.
READ: PH plans to borrow P2.46T in 2024
The Marcos administration plans to borrow a total of P2.46 trillion from creditors at home and abroad in 2024 to help bridge its budget deficit.
Finance Secretary Ralph Recto—who is avoiding new taxes and is banking on better revenue collection instead to improve the state’s fiscal health—said the borrowing program this year would be composed of local debts worth P1.85 trillion and foreign financing amounting to P606.85 billion. INQ