September budget gap widens

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 PHP 250.9 billion from PHP 179.8 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 PHP 255.4 billion from PHP 288.8 billion a year earlier.

The bulk of revenues came from taxes, which dropped by 8.43% year on year to PHP 233.5 billion.

The Bureau of Internal Revenue (BIR) collected PHP 152.2 billion, slumping by 12.36% from PHP 173.6 billion a year ago. Collections by the Bureau of Customs (BoC) dipped by 0.47% to PHP 78.9 billion.

Meanwhile, nontax revenues fell by 35.22% to PHP 21.9 billion as revenues from other offices plunged by 47.34% to PHP 14 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 PHP 7.3 billion in unutilized funds of the Unconditional Cash Transfer Program and the PHP 2.6-billion Philippine Charity Sweepstakes Office mandatory contribution to the Universal Health Care Program,” the BTr said.

BTr income rose by 8.79% to PHP 7.9 billion from PHP 7.3 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 PHP 506.3 billion in September from PHP 468.8 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 PHP 434.9 billion. Interest payments jumped by 19.28% to PHP 71.4 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 DEFICIT

In the first nine months, the NG’s budget deficit narrowed by 2.89% to PHP 983.5 billion from PHP 1.01 trillion a year ago. This was 11% lower than the PHP 1.106-trillion program for the January-to-September period.

“The year-to-date NG deficit figure is only 66% of the PHP 1.5-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 PHP 2.84 trillion in the January-to-September period. This was also 2.98% higher than the PHP 2.76-trillion revenue program.

As of end-September, revenue collections already accounted for 76.1% of the PHP 3.7-trillion full-year program.

Tax revenues increased by 6.38% to PHP 2.54 trillion, although 2.09% lower than its PHP 2.6-trillion program for the period.

Collections from the BIR rose by 7.25% to P1.86 trillion, but 3.89% lower than its PHP 1.93-trillion target.

Customs revenues went up by 3.43% to P660.4 billion, also exceeding its PHP 644.2-billion program by 2.52%.

Meanwhile, nontax revenues rose by 10.47% to PHP 296.5 billion, nearly double its PHP 160.1-billion target for the nine-month period.

BTr income climbed by 21.84% to P158 billion, nearly triple its PHP 53.7-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 PHP 138.5 billion, but 30% above the PHP 106.5-billion target.

For the nine months ending September, state spending rose by 4.12% to PHP 3.82 trillion from PHP 3.67 trillion a year ago. It missed its nine-month PHP 3.86-trillion target by 1.06%.

“The robust disbursement performance for the third quarter helped trim down government underspending to PHP 40.9 billion or 1.06% of the program for the first nine months of the year. This compares with the PHP 170.5-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 PHP 1.4 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 PHP 3.36 trillion, while interest payments jumped by 15.04% to PHP 460.1 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 PHP 1.499 trillion, equivalent to 6.1% of the gross domestic product. The program consists of PHP 3.729 trillion in revenues and PHP 5.228 trillion in disbursements. – Luisa Maria Jacinta C. Jocson, Reporter