Gov’t budget deficit widened in Feb to P106.4B

MANILA, Philippines  -The national government’s budget deficit widened slightly by 0.6 percent to P106.4 billion in February from P105.8 billion in the same month last year, reflecting lukewarm spending even if more than half of the P5.3-trillion budget for this year has been released.

Data from the Bureau of the Treasury (BTr) show that cumulative cash operations for the first two months of the year showed a 53-percent drop in the budget deficit to P60.6 billion from P129.2 billion.

This was largely due to a budget surplus of P45.7 billion recorded in January when revenues outgrew spending.

In January alone, the Department of Budget and Management (DBM) said 56 percent or P2.97 trillion out of the P5.27-trillion allotments under the 2023 budget had been released.

The DBM touted the continued timely release of budgets, with Secretary Amenah Pangandaman saying that this was crucial in the implementation of government programs and projects.

Pangandaman strongly encouraged national government agencies to start their spending activities early to ensure the timely implementation of their respective programs and projects.

In February, expenses were stable at P106.4 billion while two-month disbursements rose slightly by 0.2 percent to P620.7 billion.

According to the BTr, the growth in disbursements was dampened by the decline in the national tax allotment shares of local governments.

This  was brought about by  the lower national tax collections in 2020—which was the base year for the determination of the 2023 shares—due to the impact of the COVID-19 pandemic.

Also, February revenues dipped by 0.2 percent to P211.9 billion while two-month receipts surged by 14.2 percent to P560 billion.

The decrease in earnings was mainly due to a 5.3-percent drop in tax collections of the Bureau of Internal Revenue, which settled at P129.1 billion from P136.6 billion in February last year.

Meanwhile, the Bureau of Customs reported a 5.8-percent rise in collections, which reached P62.9 billion from P59.4 billion.

Michael Ricafort, chief economist at the Rizal Commercial Banking Corp., said in a note that higher inflation and higher interest rates may have adversely affected tax revenue collections of the government.

These factors “could have also increased the government’s overall expenditures, thereby leading to wider budget deficits that could fundamentally add to the government’s overall debt,” Ricafort said.

“For the coming months, there is still a chance for narrower budget deficit or even a budget surplus during the tax collection season towards April 2023 amid further reopening of the economy towards greater normalcy with no more [mobility] restrictions recently and as a policy priority,” he said.

These, the economist said, may lead to increased sales, incomes, employment, livelihood, and other economic activities that would raise the government’s tax collections.

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