Budget gap widens to P74.4 B in March

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

The gap – which indicates expenditures exceed revenue – totaled P74.39 billion in March, more than four times the P17.4 billion a year ago, the Bureau of the Treasury reported yesterday.

This was the biggest shortfall since December’s P75.14 billion. For the first three months, the deficit surged more than three-fold 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 the first-quarter budget operations maintained the nation’s fiscal sustainability and contributed positively to first-quarter growth,” it said in a statement.

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 two 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.

According to DOF data, revenues slumped eight percent to P157.8 billion in March. Only collections by the Bureau of Internal Revenue rose in March at nine percent.

Revenues by the Bureau of Customs were down nine percent, while revenues by Treasury and other offices slumped 55 percent and 38 percent, respectively.

It was a different story on the disbursement side. Spending surged 23 percent to P232.19 billion.

This was the fastest growth rate since July’s 25 percent and marked the third straight month of double-digit growth this year.

“We...are pleased that efforts to ramp up public spending since last year has shown substantial results,” Budget Secretary Florencio Abad said in a separate statement.

“We expect that spending will remain on track to drive further growth in the succeeding quarters,” he said.

For the first quarter, revenues inched up two 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.