October 26, 2023
MANILA – The Marcos administration posted a bigger budget gap in September after revenues contracted, although the government remains relatively safe from breaching its deficit ceiling.
The government’s budget deficit widened 39.60 percent year-on-year to P250.9 billion in September, data from the Bureau of the Treasury released on Wednesday showed.
A fiscal deficit means the government is spending beyond its means as disbursements outpace revenue growth. To bridge the budget gap, the state has to borrow from creditors at home and abroad.
Figures showed state revenues tanked 11.57 percent year-on-year in September to P255.4 billion, on the back of lower annual collections by Bureau of Internal Revenue (BIR) and Bureau of Customs.
Broken down, BIR collections, which historically accounts for 80 percent of state revenues, sagged 12.36 percent compared with a year ago to P152.2 billion while Customs’ haul inched down 0.47 percent year-on-year to P78.9 billion.
Michael Ricafort, chief economist at Rizal Commercial Banking Corp., said anemic consumption due to high inflation likely weighed on revenues as lower business sales translated to a decline in corresponding taxes paid.
“For the coming months, still relatively faster inflation could still be a drag on economic activities, specifically on spending, sales and on tax revenues collected,” he said.
Expenditures up 8.06%
Meanwhile, expenditures managed to grow 8.06 percent year-on-year in September to P506.3 billion, albeit slower than the 9.66 percent expansion recorded in August, due to disbursement of funds for banner programs of the health and social welfare departments, the Treasury said.
“Spending picked up as fiscal authorities vowed to implement catch-up spending to support flagging GDP (gross domestic product) growth,” Nicholas Mapa, senior economist at ING Bank in Manila, said.
But despite the wider shortfall in September, the government remains within its deficit limit.
Figures showed the nine-month fiscal gap amounted to P983.5 billion, accounting for 66 percent of the government’s P1.5-trillion deficit ceiling as the state slightly misses its spending targets while revenues grow.
According to the Treasury, disbursements in the January-September period reached P3.82 trillion, 1.06 percent lower than the target expenditure of P3.86 trillion for the period. “The robust disbursement performance for the third quarter helped trim down government underspending,” the Treasury explained.
Meanwhile, the government’s nine-month receipts hit P2.84 trillion, beating its target collection of P2.76 trillion for the period by 2.98 percent. INQ