Budget gap widens to P99 billion in October

MANILA, Philippines — The country’s budget deficit widened in October after four months of decline as the government spent more than what it earned from revenue collections because of more subsidies to state agencies, according to the Bureau of the Treasury (BTr). Latest data from the (BTr) showed that the budget deficit in October jumped by 54 percent to P99.1 billion from just P64.3 billion in the same period last year.

This is the first time that the budget shortfall returned to expansion mode after four months of narrowing, which means that the government spent beyond what it earned from revenue collections.

Nonetheless, the year-to-date fiscal deficit at P1.11 trillion is 7.6 percent lower than the previous year’s shortfall of  P1.2 trillion.

Government spending in October went up by 22.23 percent to P387.9 billion from P317.4 billion in the comparative period.

Primary expenditures at P354.7 billion accounted for 91 percent of the total monthly spending while interest payments reached P33.2 billion, up five percent.

The Treasury said this was driven by higher national tax allotment of local governments and subsidy releases for programs implemented by government corporations.

Most subsidies went to programs of the Philippine Health Insurance Corp., National Irrigation Administration, National Housing Authority and the National Power Corp.

Last month’s higher spending was likewise driven by disbursements of social protection programs of the Department of Social Welfare and Development as well as road infrastructure projects of the Department of Public Works and Highways.

This brought year-to-date spending  to P4.06 trillion, 9.87 percent higher than last year’s P3.69 trillion.

To date, the national government has already disbursed 82 percent of the P5 trillion full-year program.

Rizal Commercial Banking Corp. chief economist Michael Ricafort attributed the increase in government expenditures  partly to higher inflation, which required more state spending.

“This can also be due to the weaker peso exchange rate and higher local and global interest rates that increased borrowing costs and debt servicing for the government,” he said.

Meanwhile, total revenue collection for October improved by 14 percent to P288.9 billion as against the P253.1 billion in 2021, with the Bureau of Customs (BoC) and Bureau of Internal Revenue (BIR) both posting increases.

This effectively brought the 10-month revenue to P2.95 trillion, 18.3 percent higher than the P2.49 trillion in the same period last year. This also accounted for 89 percent of the full-year program of P3.3 trillion.

The bulk or 91 percent of  revenues were from tax collections at P261.9 billion, up 19 percent. Non-tax collections, however, slipped 20 percent to P27 billion in October.

BIR’s haul grew by 15 percent to P186.8 billion while Customs saw its collection jump by 35 percent to P75.1 billion from P55.5 billion last year.

BIR’s year-to-date revenue also improved by 13 percent to P1.92 trillion, reaching 80 percent of its P2.4 trillion full year program.

On the other hand, Customs’ January to October aggregate at P713.5 billion already made up 99 percent of its full-year target.

Income generated by the Treasury for October soared by 47 percent to P13.2 billion largely due to higher government share payments from the Philippine Amusement and Gaming Corp. and investment performance which offset lower dividend remittance.

Collection from other offices including privatization proceeds and fees and charges for October declined by 44 percent to P13.7 billion.