Budget deficit swells 3-fold to P121 billion in August

MANILA, Philippines — The government’s budget shortfall widened to P121 billion in August, three times more than the P40-billion deficit a year ago, as spending for COVID-19 measures, including social amelioration, increased following the revert to strict lockdown in Metro Manila.

The Bureau of the Treasury yesterday reported that the budget deficit ballooned as expenditures went up by more than 34 percent to P380.2 billion to fund quarantine interventions.

On the other hand, revenues raised by the government rose by just seven percent to P259.3 billion, mainly due to improved collections in import duties and non-tax income.

The government alone widened its primary spending by nearly 37 percent to P356.3 billion. Disbursements in August jumped to cover for various measures to mitigate the lockdown’s impact on the poor.

During the lockdown period from Aug. 6 to 20, the government spent at least P10.89 billion to distribute P1,000 in cash aid per individual, or up to P4,000 per family, to the poorest 80 percent in Metro Manila.

Likewise, it expanded subsidies for state-run Philippine Health Insurance Corp. to finance its programs and services.

Based on records from the Treasury, interest payments also grew by over six percent to P23.9 billion on coupon payments for retail Treasury bonds issued last year.

For revenues, taxes collected in August rose by around three percent to P240.6 billion, while non-tax income surged by roughly 88 percent to P18.6 billion.

The Bureau of Customs improved its tax take by more than a fifth to P53.4 billion, offsetting the less than one percent dip in the Bureau of Internal Revenue’s (BIR) collection at P186.1 billion.

On a yearly basis, the budget deficit has spiraled by over 29 percent to P958.2 billion as of end-August, from P740.7 billion a year ago. The government has now breached at least 51 percent of its deficit program for 2021 at P1.85 trillion, or 9.3 percent of gross domestic product.

The government has generated P2 trillion in revenues in the eight months to August, completing nearly 70 percent of the P2.88 trillion target for the year.

Spending, on the other hand, reached P2.96 trillion, depleting about 63 percent of the P4.73 trillion program, as primary expenditures and interest payments surged by 11 percent and eight percent, respectively.

The government expects its fiscal deficit to rise to 9.3 percent of economic output this year, from 7.6 in 2020, but plans to cut it to 7.5 percent in 2022, 5.9 percent in 2023 and 4.9 percent in 2024.