Budget deficit widens in November

By Jenina P. Ibañez, Senior Reporter  

The budget deficit widened in November as health and public works agencies continue to ramp up spending amid the coronavirus pandemic, the Bureau of the Treasury (BTr) reported.

Preliminary data from the BTr on Friday showed the fiscal gap stood at P128.7 billion in November, inching up 0.33% from last year’s P128.3 billion, and doubling the P64.3 billion gap in October.

This as government spending in November grew 10.34% to P412.7 billion from last year’s P374.1 billion.

Broken down, primary spending – which refers to total expenditures minus interest payments – rose 7.76% year on year to P381.5 billion.

Interest payments surged 55.84% to P31.2 billion from P20 billion a year earlier.

Higher spending could mainly be attributed to ramped up expenditures from the public works, health, higher education, national defense, and social welfare agencies, the Treasury said in a press release.

Meanwhile, government revenues in November reached P284 billion, rose 15.56% from the same month last year.

Accounting for 95% of the total, tax revenues went up 14.27% to P270.3 billion.

Broken down, tax collections from the Bureau of Internal Revenue (BIR) rose 9.95% to P210.7 billion, while revenues generated by the Bureau of Customs (BoC) reached P57.9 billion, or 32.5% higher than last year’s figure. Other tax collecting offices posted P1.6 billion in revenue, up 40.24% from a year earlier.

Non-tax revenues from the Bureau of the Treasury reached P6.1 billion, surging 115.47% versus last year’s P2.8 billion.

“The total Bureau of the Treasury income for November more than doubled to P6.1 billion from last year mainly driven by the increase in dividend remittances and National Government share from PAGCOR (Philippine Amusement and Gaming Corporation) income,” the Treasury said.

The government runs on a budget deficit when it spends more than it makes to fund programs that support economic growth. It borrows from foreign and local sources to plug the gap.

11-MONTH GAP HITS P1.33-TRILLION

In the 11 months to November, the budget deficit reached P1.33 trillion, up by 24.63% compared to the P1.07 trillion in the same period last year.

The 11-month total was 83% of the expected P1.6 trillion deficit for the year.

Total spending as of end-November reached P4.1 trillion, rising 11.4% versus the P3.7 trillion spent in the same 11-month period in 2020. This accounted for 89% of this year’s P4.6-trillion disbursement outlook.

Revenue collection in the 11-month period hit P2.7 trillion, or 5.99% higher than last year.

Tax collections, which represent 93% of the total, jumped 9.64% to P2.5 trillion.

Broken down, Customs collections increased 18.47% to P583.3 billion, and the BIR collected P1.9 trillion, which edged up 7.17% from last year’s figure.

“November’s wider deficit was quite expected. Note that current expenditures and budget deficit are still behind the revised program for 2021,” UnionBank of the Philippines Chief Economist Ruben Carlo O. Asuncion said in a Viber message.

“It seems that the extension of the 2021 national budget until the end of 2022 is very appropriate as government spending needs to ramp up to support the economic recovery.”

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said the deficit widened in part due to increased infrastructure spending before the public works ban leading up to the elections next year.

Further reopening of the economy in the coming months would reduce government spending on lockdown-related assistance as well as improve tax collections, he said in a Viber message.

“Offsetting risk factors include the Omicron variant that could slow down further re-opening of the economy as a matter of prudence to prevent Omicron from spreading further.”