Gov't incurs 3-month high March deficit on revenue slump, strong spending

MANILA, Philippines - The Aquino administration incurred its widest budget deficit in three months in March, pulling up the first-quarter tally as contracting revenues failed to catch up with strong spending.

The gap - which indicates more revenues spent than earned - totaled P74.39 billion in March, more than four times the P17.4 billion a year ago, the Bureau of the Treasury reported.

This was the biggest amount since December's P75.14 billion. For the first three months, deficit surged more than threefold to P112.49 billion.

Traditionally, a quarterly budget program is provided based on the annual deficit cap. This year's limit was pegged at P298.6 billion, but the Department of Finance (DOF) said three-month figures are still unavailable.

"The DOF is confident that the first-quarter budget operations maintained the nation's fiscal sustainability and contributed positively to first-quarter growth," it said.

Growth, as measured by gross domestic product (GDP), expanded 6.9 percent from January to March, the fastest quarterly expansion in three years.

As a percentage of GDP, the 2016 deficit cap is equivalent to 2 percent. For the first quarter, the gap already reached 3.44 percent.

"Seasonally, March is really a big deficit month because of low revenues. But we can expect a pick-up in April because of the income tax payment deadline," Finance Undersecretary Gil Beltran said by phone.

In March, revenues slumped eight percent to P157.8 billion, data showed. Only collections by the Bureau of Internal Revenue rose that month at 9 percent.

Bureau of Customs raked in 9 percent lower, while revenues by Treasury and other offices slumped 55 percent and 38 percent, respectively.

"There was quite strong expenditures, but revenues were weak... It was lower revenues that failed (the performance)," said Alvin Ang, economist at Ateneo de Manila University.

Disbursements surged 23 percent to P232.19 billion in March. This was the fastest growth since July's 25 percent. 

For the first quarter, revenues inched up 2 percent, falling way below expenditure growth of 17 percent.

Remrick Patagan, research director at Institute for Development and Econometric Analysis Inc., said faster spending will continue as the Aquino administration finishes its projects before it steps down.

"As long as revenues to continue to grow, the front-loading of expenditures in the early part of the year is not a cause for concern but a step in the right direction," he said in an e-mail.

"There is reason to believe fiscal space can be maintained until the change in administration," he added.