The national government’s fiscal deficit narrowed to P14.1 billion in the first month of 2021 as state spending rose and revenue collections fell, according to the Bureau of the Treasury (BTr).
Treasury data showed on Wednesday that the shortfall was smaller than the P302.59-billion deficit in December and a turnaround of the P23-billion surplus in January 2020.
“The fiscal outturn resulted from a 1.18-percent year-over-year increase in government spending [and] an 11.51-percent contraction in revenue collection,” the BTr said in a statement.
Revenues declined to P260.7 billion in the first month from P294.6 billion year-on-year, while expenditures grew to P274.8 billion from P271.6 billion the year before.
The Bureau of Internal Revenue (BIR) contributed the bulk of revenues with P182.2 billion, a 6.54-percent decrease from P194.9 billion a year earlier, but an 11.53-percent increase from the December amount.
The Treasury attributed the lower revenues “to the continued economic disruptions brought about by the health crisis,” referring to the coronavirus pandemic.
The Bureau of Customs contributed P47.3 billion, a 15.41-percent dive from P55.9 billion a year earlier.
Other offices posted P9.4 billion in tax revenues, dragging the total by 8.30 percent to P232.7 billion, quicker than December 2.87-percent slide.
Nontax earnings settled at P28 billion, with the Treasury contributing P18.7 billion, down 34.27 percent year-on-year.
The BTr traced this to the “high base effect” of dividend remittances from government-owned and -controlled corporations in January, particularly the Bangko Sentral ng Pilipinas, which remitted P17.3 billion last year, and the 58.69-percent or P1.9-billion drop in [the] national government share from the Philippine Amusement and Gaming Corp.’s income.
Revenues from other offices dropped by 24.97 percent to P9.4 billion from the year-earlier’s P12.5 billion.
On state spending, the Treasury said its growth was moderated by lower interest payments, which fell by 23.43 percent or P14.4 billion year-on-year to P47.0 billion, “mainly due to the redemption of global bonds in 2020 and the settlement of premiums on reissued Treasury bonds.”
As a percentage of revenue and expenditures, these payments for January accounted for 18.04 percent and 17.11 percent, compared to the previous year’s 20.84 percent and 22.61 percent, respectively .
“Net of interest payments, however, spending grew by 8.37 percent year-on-year, or P17.6 billion from P210.2 billion a year ago, owing largely to higher allocations for local government units and disbursements by line agencies,” the bureau explained.
The bulk of government spending — P227.8 billion — was for primary expenditures, which climbed by 8.37 percent from P210.2 billion a year ago.
Netting out interest payments, the primary balance hit a fiscal surplus of P33 billion in January.
This year, the government projects the budget gap to translate to 8.9 percent of the country’s gross domestic product, wider than 7.63 percent in 2020.
In a comment, Rizal Commercial Banking Corp. chief economist Michael Ricafort said the “continued cautious approach on any additional stimulus measure, just like in 2020,” would help keep the deficit from expanding further.
“Increased commercial purchases for Covid-19 vaccines for 2021 and [beyond] could lead to [a] wider budget deficit,” which could result in “more government borrowings and overall debt stock,” he warned.