THE national government’s budget deficit widened to P1.2 trillion as of end-October this year as state expenditures continued to exceed revenues.
The latest data from the Bureau of the Treasury showed the shortfall from January to October this year was 27.94 percent higher than the P940.6 billion in the same period in 2020.
It is also equivalent to 65 percent of the revised full-year programmed budget deficit of P1.9 trillion.
State revenues accumulated during the 10-month period have reached P2.49 trillion, up by 5 percent from P2.37 trillion a year ago.
Meanwhile, government expenditures as of end-October climbed by 11.51 percent to P3.69 trillion this year from P3.31 trillion in 2020.
For the month of October alone, the national government’s budget deficit rose by 4.77 percent to P64.3 billion from P61.4 billion in the same month last year.
Revenues for the month stood at P253.1 billion, growing by 10.9 percent from P228.2 billion in the previous year.
Expenditures hit P317.4 billion, increasing by 9.6 percent from P289.6 billion.
The budget deficit as a percentage of the economy as of end-September also increased to 8.29 percent from 6.88 percent a year ago, the BTr said.
While the October budget deficit this year was slightly wider compared with that of last year, Rizal Commercial Banking Corp.(RCBC) Chief Economist Michael Ricafort noted that this was the narrowest in six months since P44.4 billion in April this year.
He attributed this to how the reopening of the economy increased economic activity, which led to higher state revenue collections and reduced government expenditures.
“Narrower budget deficits could fundamentally lead to reduced need for additional government borrowings/debt, thereby a step in the right direction to improve the country’s fiscal performance and debt management in a more sustainable manner in view of less lockdowns, going forward,” Ricafort said.
However, Ricafort warned that the risk of surges in Covid-19 infections and lockdowns amid more contagious variants as well as further delays in Covid-19 vaccine/booster shot arrivals may result in a relatively wider budget deficit.
“As a result, wider budget deficits could result in more government borrowings and higher debt stock, from 63.1 percent of GDP as of 3Q 2021, up from 54.5 percent of GDP in end-2020, and also sharply up from a low of 39.6 percent in end-2019 ,” he said.
In 2020, the government’s budget deficit more than doubled to a record-high 7.6 percent of GDP or P1.37 trillion, from only P660.2 billion or 3.4 percent of GDP in 2019.
Finance Secretary Carlos Dominguez III earlier said they are working on a fiscal consolidation plan to bring down the government’s debt and budget deficit levels as a share of the economy.