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Budget gap narrows to ₱983.5 billion in January-September

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THE state’s budget deficit in January to September narrowed by nearly 3 percent to P983.5 billion but it missed its programmed deficit as national government spending slowed during the period.

Manila’s budget deficit from January to September was 11.11 percent, or about P123 billion, short of its programmed amount of P1.106 trillion as expenditures fell below target.

“The Year-to-Date [YTD] NG [national government] deficit figure is only 66 percent of the P1.5 trillion full-year program due to higher revenue and lower expenditure performance than programmed for the period,” the Bureau of the Treasury (BTr) said in its latest report.

The national government’s revenues during the nine-month period rose by 6.79 percent year-on-year to P2.837 trillion from P2.657 trillion, according to the Treasury. The year-to-date earnings was nearly 3 percent higher than the P2.755 trillion programmed by the national government.

Meanwhile, the state’s expenditures fell behind its nine-month target by P40.9 billion despite growing 4.12 percent year-on-year.

The national government’s total expenditures from January to September went up by P151.1 billion to P3.821 trillion from P3.67 trillion a year ago.

The state’s spending in the reference period was below its intended expenditure level of P3.862 trillion, Treasury data showed.

Treasury data also showed that the state is falling behind both in terms of operating expenses and interest payments during the nine-month period.

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said the “budget deficit” in the nine-month period was brought about by the reopening of economy following the lifting of the state of public health emergency due to Covid-19.

“Thereby fundamentally increasing sales, incomes, employment, and other economic opportunities, all of which increase the government’s tax revenue collections, while also reducing the government’s expenditures on Covid-related programs and other forms of financing assistance since the pandemic started,” Ricafort told the BusinessMirror.

Ricafort said the “relatively” faster inflation and higher interest rates and financing costs would remain a “drag” on the country’s economic activities, particularly on spending, sales and tax revenue collections of the national government.

“Higher prices also bloat the national government’s various expenditures, while relatively higher-for-longer interest rates in the US/globally/locally would still lead to higher debt servicing costs of the national government, all of which would widen the budget deficit and increase the outstanding national government debt,” he said.

For the month of September alone, the state’s budget deficit widened by 39.6 percent to P250.9 billion from P179.8 billion recorded in the same month of last year, according to the Treasury.

“The fiscal outturn for the period was underpinned by an 8.06 percent year-over-year [YoY] acceleration in expenditures coupled with an 11.57-percent decrease in government receipts,” the Treasury said. The national government’s revenue performance in September declined by P33.4 billion to P255.4 billion from P288.8 billion, based on Treasury data.

Tax revenues during the reference month declined 8.43 percent year-on-year to P233.5 billion from P255 billion as collections by both the Bureau of Internal Revenue and Bureau of Customs fell.

Non-tax revenues plunged by 35.22 percent to P21.9 billion from P33.8 billion.

Meanwhile, the state’s expenditures in September reached P506.3 billion, about 8.06 percent higher than the P468.6 billion recorded in the same month of last year.

Image credits: Walter Eric Sy / Dreamstime.com

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