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September budget gap widens

Public construction works continue as motorists drive through the service road of the Magsaysay Boulevard in Manila in this file photo. — PHILIPPINE STAR/MIGUEL DE GUZMAN

By Luisa Maria Jacinta C. Jocson, Reporter

THE NATIONAL Government’s (NG) budget gap ballooned in September as revenues declined and expenditures rose, the Bureau of the Treasury (BTr) said.

Data from the BTr on Wednesday showed that the fiscal deficit widened by 39.6% to P250.9 billion from P179.8 billion a year ago.

“The fiscal outturn for the period was underpinned by an 8.06% year-over-year acceleration in expenditures coupled with an 11.57% decrease in government receipts,” the Treasury said.

In September, revenues fell by 11.57% to P255.4 billion from P288.8 billion a year earlier.

The bulk of revenues came from taxes, which dropped by 8.43% year on year to P233.5 billion.

The Bureau of Internal Revenue (BIR) collected P152.2 billion, slumping by 12.36% from P173.6 billion a year ago. Collections by the Bureau of Customs (BoC) dipped by 0.47% to P78.9 billion.

Meanwhile, nontax revenues fell by 35.22% to P21.9 billion as revenues from other offices plunged by 47.34% to P14 billion.

“The downturn (in revenues from other offices) was due to the base effect of last year’s one-off inflows from the return of P7.3 billion in unutilized funds of the Unconditional Cash Transfer Program and the P2.6-billion Philippine Charity Sweepstakes Office mandatory contribution to the Universal Health Care Program,” the BTr said.

BTr income rose by 8.79% to P7.9 billion from P7.3 billion a year ago due to “higher interest earnings on NG deposits and NG share from Philippine Amusement and Gaming Corp. (PAGCOR) income.”

On the other hand, government expenditures jumped by 8.06% to P506.3 billion in September from P468.8 billion a year ago.

The BTr attributed this to health and social protection programs, as well as public works projects.

Primary spending, which refers to spending net of interest payments, increased by 6.42% to P434.9 billion. Interest payments jumped by 19.28% to P71.4 billion.

“There was a stark pickup in spending versus a steep drop in revenues. Despite the acceleration in spending, we believe the economy is still in much need of support,” ING Bank N.V. Manila Senior Economist Nicholas Antonio T. Mapa said in a Viber message.

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said persistent inflation could have slowed spending. Inflation accelerated for a second straight month in September, rising to 6.1% from 5.3% in August.

“The budget deficit also widened after government expenditures grew faster amid some catch-up spending by the National Government, especially on infrastructure, after some underspending earlier in 2023 that partly slowed down economic growth; as well as higher interest rates and a weaker peso exchange rate since 2022 that increased the debt servicing costs of the National Government,” he added.

NINE-MONTH DEFICITIn the first nine months, the NG’s budget deficit narrowed by 2.89% to P983.5 billion from P1.01 trillion a year ago. This was 11% lower than the P1.106-trillion program for the January-to-September period.

“The year-to-date NG deficit figure is only 66% of the P1.5-trillion full-year program due to higher revenue and lower expenditure performance than programmed for the period,” the BTr added.

Government revenues rose by 6.79% to P2.84 trillion in the January-to-September period. This was also 2.98% higher than the P2.76-trillion revenue program.

As of end-September, revenue collections already accounted for 76.1% of the P3.7-trillion full-year program.

Tax revenues increased by 6.38% to P2.54 trillion, although 2.09% lower than its P2.6-trillion program for the period.

Collections from the BIR rose by 7.25% to P1.86 trillion, but 3.89% lower than its P1.93-trillion target.

Customs revenues went up by 3.43% to P660.4 billion, also exceeding its P644.2-billion program by 2.52%.

Meanwhile, nontax revenues rose by 10.47% to P296.5 billion, nearly double its P160.1-billion target for the nine-month period.

BTr income climbed by 21.84% to P158 billion, nearly triple its P53.7-billion program due to higher receipts from dividend remittances, interest income from its managed funds, and the NG’s share from profits of PAGCOR and Manila International Airport Authority.

Revenues from other offices slipped by 0.16% to P138.5 billion, but 30% above the P106.5-billion target.

For the nine months ending September, state spending rose by 4.12% to P3.82 trillion from P3.67 trillion a year ago. It missed its nine-month P3.86-trillion target by 1.06%.

“The robust disbursement performance for the third quarter helped trim down government underspending to P40.9 billion or 1.06% of the program for the first nine months of the year. This compares with the P170.5-billion underspending recorded during the first semester, representing 6.6% of the program for the period,” the BTr said.

The weaker-than-expected 4.3% gross domestic product (GDP) growth in the second quarter was partially attributed to the contraction in government spending. This prompted the Finance department to order agencies to come up with catch-up spending plans.

In the third quarter alone, the BTr said disbursements reached P1.4 trillion, up by 11.12% from a year ago. It also exceeded its program for the period by 10.13% “on account of the continued acceleration of infrastructure expenditures.”

For the nine-month period, primary expenditures went up by 2.78% to P3.36 trillion, while interest payments jumped by 15.04% to P460.1 billion.

Mr. Ricafort said the narrower deficit in the nine-month period was due to continued economic reopening and increased business operations, which contributed to higher tax collections.

This year, the government has set a budget deficit ceiling of P1.499 trillion, equivalent to 6.1% of the gross domestic product. The program consists of P3.729 trillion in revenues and P5.228 trillion in disbursements.

Neil Banzuelo

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