Budget deficit widens three-fold to P879.2 billion

MANILA, Philippines  — The government incurred a nine-month budget shortfall almost three times higher than the previous year as revenues declined and expenditures soared amid the COVID-19 pandemic, the Bureau of the Treasury (BTr) said yesterday.

From January to September, the fiscal deficit widened to P879.2 billion from the P299 billion gap recorded a year ago despite an improvement in September following a decline in spending, which outpaced the drop in revenues, the BTr noted.

A deficit occurs when the government spends more than the money it generates.

Government disbursements rose by 15.1 percent to P3.02 trillion from P2.63 trillion in 2019.

However, the government failed to meet its spending program of P3.269 trillion for the period, which the BTr attributed to the slow implementation of the Bayanihan 2 law.

“The lag is attributed mainly to measures under Republic Act 11494 or the Bayanihan to Recover as One Act, which are still to be implemented following the approval of the law last Sept. 11,” the Treasury said.

Net of interest payments, primary expenditures amounted to P2.71 trillion, 16.1 percent above last year’s level of P2.33 trillion, but 7.9 percent below target.

For September alone, the BTr said public spending declined by 15.4 percent to P350.9 billion due to the timing of subsidy releases and the base effect of higher infrastructure spending in the same month last year.

On the other hand, government revenues in the first nine months declined by 7.9 percent to P2.14 trillion from P2.33 trillion in the same period last year.

This was, however, 8.8 percent above the P1.97 trillion revised revenue target for the period. This also accounts for 85 percent of the P2.52 trillion program for the whole year.

About P1.44 trillion of the total revenues came from the Bureau of Internal Revenue (BIR), which was 9.91 percent down from the bureau’s P1.6 trillion collection last year.

The BTr, however, noted that the BIR’s performance was 10.9 percent higher than the revised program of P1.31 trillion for the nine-month period.

Collections of the Bureau of Customs (BOC) from January to September reached P398 billion, down by 15.3 percent from P470 billion last year, but above the P372.2 billion goal.

The BTr itself generated P201.6 billion in revenues, 70 percent higher as compared to the P118.6 billion posted last year and P1 billion above its revised target, while income from other offices dropped by 26.7 percent year-on-year to P87.1 billion, but exceeded the revised goal by 13.8 percent.

For September, total revenues declined by 10.2 percent to P212.4 billion from P236.5 billion last year.

BIR collections during the month reached P140.6 billion, declining by 6.5 percent from P150.5 billion in the same month last year, while revenues generated by the BOC amounted to P50.8 billion, 13.7 percent down from P58.8 billion.

The inter-agency Development Budget Coordination Committee expects the fiscal deficit to widen to 9.6 percent of  gross domestic product this year as the coronavirus pandemic weakened revenue generation and increased expenditures.

Finance Secretary Carlos Dominguez expressed confidence that the two tax collection agencies would be able to meet their targets this year, which was adjusted downward to a combined total of P2.2 trillion.

On the expenditure side, the Department of Budget and Management said spending for the rest of the year would be driven mainly by maintenance expenditures, specifically for health and social-related expenses, with the passage of the Bayanihan 2 law.