Budget gap shrank to P40B in August

The government’s budget deficit narrowed to P40 billion in August on the muted increase in spending and decline in revenues, according to the Bureau of the Treasury (BTr).

Data from the Treasury bureau showed on Wednesday that the gap was lower than the P140.20-billion shortfall in July, but higher that the P2.5-billion deficit a year ago.

“The fiscal outturn resulted from the 13.05-percent year-over-year decrease in government receipts due to the continued impact of the [coronavirus] pandemic [and the] minimal growth in government expenditures for the period,” the BTr said in a statement.

Revenues fell to P243.2 billion in the eighth month from the year-earlier P279.7 billion.

Expenditures slightly picked up to P283.3 billion from P282.2 billion year-on-year, the bureau said, “mainly due to the timing of subsidy releases to the [Philippine Health Insurance Corp.] for the health insurance premiums of indigent beneficiaries enrolled under the National Health Insurance Program, where some P27.7 billion was released in August last year.”

In July, revenues slipped by 11.22 percent and spending grew by 10.40 percent.

The August gap brought the year-to-date shortfall to P740.7 billion, wider than the P120.4 billion in the first eight months of 2019.

In August alone, the Bureau of Internal Revenue contributed the bulk of revenues with P187.9 billion, down 8.59 percent from P205.6 billion a year earlier, but up 18.17 percent from July.

The Bureau of Customs contributed P44.4 billion, a 17.19-percent drop from P53.6 billion in August 2019, which was attributed to lower import volumes caused by the pandemic.

Other offices posted P800 mllion in tax revenues last month. As a result, total tax revenues slid by 10.94 percent to P233.1 billion, worse than July’s 10.36-percent decline.

Nontax earnings hit P10.1 billion, with the Treasury contributing P2.1 billion, decreasing by 65.30 percent year-on-year, which it blamed on “an 81 percent year-on-year drop in remittance from Pagcor (Philippine Amusement and Gaming Corp.), adding to lower income from government investment and deposits.”

Revenues from other offices reached P8 billion, a 33.32-percent reduction from the year-ago’s P12.1 billion, “still due to limitations in government transactions following the imposition of stringent health protocols,” the Treasury said.

The bulk of government spending — P260.8 billion — was for primary expenditures, which dropped by 0.71 percent from P262.6 billion a year earlier.

Interest payments reaching P22.5 billion accounted for the rest. The BTr said this figure, a 14.98-percent increase from the year-ago amount, was “mainly due to the coupon payment for the three-year RTBs (retail Treasury bonds) issued in February 2020 and other issuances this year.”

Netting out interest payments, the primary balance settled at a fiscal deficit of P17.5 billion in August, bringing the eight-month tally to a P471.1-billion gap.

This year’s budget shortfall is seen to reach P1.81 trillion, or 9.6 percent of the country’s GDP, according to latest estimates from the interagency Development Budget Coordination Committee.

Commenting on the January-to-August deficit, ING Bank Manila senior economist Nicholas Antonio Mapa said the government reined in spending to preserve its “fiscal stamina.”

“With four months left in the year, the budget deficit-to-GDP ratio stands at 3.9 percent of GDP, and we expect this ratio to close below 4 percent before yearend as revenue collections improve while government keeps a lid on spending,” he added.

Mapa expects state spending to contract by yearend and revenue collections continuing to top revised estimates, although it would remain lower year-on-year.