Budget shortfall slightly up in November as underspending persists

MANILA, Philippines — The Duterte administration continued to spend more than it earned in November, but it is still poised to miss its budget deficit target for the year as underspending persists.

Data from the Bureau of the Treasury released on Friday revealed the budget gap in November amounted to P128.7 billion, widening by 0.33% year-on-year.

But despite the slightly bigger gap, the nine-month shortfall hit P1.3 trillion, only accounting for 72% of the state’s full-year deficit limit of P1.9 trillion, or 9.5% of gross domestic product. Economic managers last week said the 2021 budget deficit, as a share of the economy, is forecast to settle at 8.2%.

Sought for comment, Sonny Africa, executive director at non-profit IBON Foundation, said the government was still underspending.

"The latest government cash operations data is consistent with the DBCC's projection that the budget deficit this year will be smaller than expected because of higher-than-targeted revenues and lower-than-targeted disbursements," Africa said.

Data from the Treasury showed that government spending inched up 10.34% year-on-year to P412.7 billion last month. On a year-to-date basis, disbursements amounted to P4.1 trillion, rising 11.4% year-on-year.

For this year, economic officials project spending to grow 9.6%, lower than their goal of 12.1% growth. For Africa, such a performance is unacceptable as many Filipinos still need help from the government amid the lingering pandemic and the recent onslaught of typhoon Odette.

"The government is underspending according to its targets. But, worse, it is underspending according to the post-lockdown stimulus needed for more rapid recovery and possibly even according to what's needed to respond to the aftermath of typhoon Odette," Africa added.

Meanwhile, revenues expanded 15.56% year-on-year to P284 billion in November as easing lockdowns translate to improving tax collections. In the past 11 months, collections rose 5.99% year-on-year to P2.8 trillion, inching closer to the state’s watered-down revenues target of P2.9 trillion for 2021.

Africa said the below-target deficit should give the government more fiscal space to ramp up its pandemic response and relief efforts for Odette’s victims.

"The lower than targeted budget deficit should be seen as indicating up to P250 billion more in the fiscal room to maneuver for COVID-19, typhoon Odette response, and recovery instead of being offered to ratings agencies as a sign of creditworthiness," Africa said.