Budget deficit widens to P99B in October

By Luisa Maria Jacinta J. Jocson, Reporter

The National Government’s budget deficit widened to P99.1 billion in October as government spending exceeded revenue collections, the Bureau of the Treasury (BTr) reported on Friday.

The BTr said in its latest cash transactions report that the budget gap for October increased by 54.08% from a deficit of P64.3 billion in the same month a year ago.

“The period’s higher deficit is due to year-on-year acceleration in government spending outstripping revenue growth,” he said.

The October deficit narrowed sharply from September’s P179.8 billion.

Government spending in October rose 22.23% to P317.4 billion from P387.9 billion a year earlier.

BTr said the government’s faster spending was driven by higher tax allocations from local government units (LGUs) and subsidy releases for programs implemented by government corporations. National tax allocations to LGUs totaled P86.5 billion and subsidies totaled P40 billion.

“Payments for social protection programs of the Department of Social Welfare and Development (DSWD) and road infrastructure projects of the Department of Public Works and Highways (DPWH) also contributed to the increase in October expenditures,” BTr.

Excluding interest payments, initial expenses related to total expenses increased by 24.11%, making up 91% of total monthly expenses and amounting to 354.7 billion.

In October, interest payments increased by 5.23% to 33.2 billion.

Meanwhile, total revenue collection rose 14.14% to P288.9 billion in October from P253.1 billion in the same period last year.

Tax receipts rose 19.53% in October to P261.9 billion from P219.1 billion a year earlier.

The bulk of tax revenues came from the Bureau of Internal Revenue (BIR), which increased by 15.20% year-on-year to 186.8 billion.

In October, Bureau of Customs (BOC) collections also increased by 35.16% to P75.1 billion, while tax collections from other offices fell by 94.31% to P99 million.

Non-tax revenues also fell 20% to P34 billion to P27 billion, as non-tax collections from other offices, privatization proceeds and fees and charges fell 44.2% to P13.7 billion.

BTr’s revenues rose 47.24% to Pr13.2 billion, “thanks to higher National Government share from Philippine Amusement and Gaming Corp. (PAGCOR) profits and higher Bond Singing Fund (BSF) investment performance offsetting lower dividend remittances.”

Michael L. Ricafort, chief economist of Rizal Commercial Banking Corp., said in an email that the increase in costs during the month was due to higher inflation and higher borrowing costs.

Headline inflation accelerated to 7.7% in October, the fastest pace in 14 years. Inflation averaged 5.4% in the 10-month period.

The Bangko Sentral ng Pilipinas (BSP) hiked its benchmark rate by 75bp this month to 5%, the highest in nearly 14 years. It has raised rates by 300 bps since May to tame inflation and keep pace with the Fed.

“Sustained growth in government revenues has been consistent with measures to further reopen the economy toward greater normalcy (which could boost government tax revenue collections with more businesses operating at higher capacity),” Mr. Ricafort added.

UnionBank of the Philippines, Inc. chief economist Ruben Carlo O. Asuncion said the October fiscal deficit was “a reversal from the fiscal prudence we saw for much of the third quarter.”

“However, we think that if revenues continue to grow in double digits, it will be a step forward for fiscal management,” Mr. Asuncion added in a Viber message.

10 MONTH CUT

Meanwhile, the fiscal deficit fell 7.61% to P1.11 trillion in the January-October period from P1.2 trillion in the same period a year ago. This is only 67% of the P1.7 trillion full-year program.

In October, total expenses increased by 9.87% to P4.1 trillion, and interest payments increased by 16.8% to P433.2 billion.

On the other hand, government revenues rose 18.31% to P2.9 trillion through the end of October, accounting for 89% of the P3.3 trillion target for the year.

In the 10-month period, tax collections increased by 17.67% to P2.6 trillion, while non-tax receipts increased by 24.33% to P299.5 billion.

The government is borrowing from domestic and foreign sources to help finance the budget deficit, which this year is limited to 7.6% of gross domestic product (GDP).

As of the end of September, the ratio of deficit to GDP decreased from 8.3% a year ago to 6.5%.