The October budget balance stayed in deficit as state expenditures saw double-digit growth amid modest revenue gains, the Finance department reported on Wednesday.
With barely two months left to the year, however, an analyst said the government—which claimed it would end 2015 with a strong spending kick—was set to miss the year’s deficit target.
October saw a budget gap of P27.02 billion, wider than September’s P22.14 billion and the P2.53 billion recorded a year earlier. Expenditures amounted to P190.04 billion versus revenues of P163.02 billion.
This brought the year-to-date deficit to P52.57 billion, well below the P247.49-billion target for the period and the full-year goal of P283.7 billion. Total January-October disbursements hit P1.82 trillion while revenues totaled P1.767 trillion.
In primary terms, which exclude interest payments on foreign and domestic debt, the government posted a deficit of P10.9 billion in October, a reversal of the year-ago surplus of P14.2 billion. Year-to-date, the primary balance stood at a surplus of P219.3 billion, down from P240.6 billion a year earlier.
The Finance department noted that October’s P163.02 billion in revenues were up 7 percent from a year earlier, adding that year-to-date growth was a faster 12 percent.
The Bureau of Internal Revenue (BIR) collected P115.76 billion, 14 percent higher compared to October 2014 and taking its 10-month tally to P1.190 trillion — a 12-percent increase from the same period last year.
A consistently robust revenue performance is critical to funding the country’s future, the Finance department claimed.
“Collections figures for the past 58 months have shown us on an uptrend, delivering concrete gains for our people in terms of increased funding for education, health and social services. We ought to do everything we can to protect these gains towards the close of this administration and beyond,” Finance Secretary Cesar Purisima said.
The Bureau of Customs, meanwhile, collected P32.49 billion, down 5% from last year and taking the January to October result to P300.72 billion.
The Finance department traced the fall in Customs collections to a 32 percent year-on-year decline in oil import revenues amid a global glut that has shaved prices to almost a third of year-ago values.
“However, this is offset by a 12-percent improvement in collections from non-oil commodities, allowing the year-to-date figure to maintain its footing compared to year-ago numbers,” it said.
The Bureau of the Treasury contributed P5.59 billion in October, taking its year-to-date total to P97.44 billion, a 13 percent increase. Other offices saw collections decline by 20 percent to P9.18 billion.
Double-digit rise in spending
National government disbursements expanded by 23 percent in October, to P190.04 billion from a year ago. Interest payments dropped 4 percent to P16.14 billion, while other expenditures rose 26 percent to P173.89 billion.
For the January to October period, expenditures were up 13 percent from the year-ago level. Year-to-date, interest payments amounted to P271.9 billion, P34.46 billion lower than programmed.
The rise in spending prompted the Finance department to express optimism about the country’s growth prospects for the rest of the year.
“Accelerated public spending on the back of solid fundamentals sets the stage for a strong fourth quarter finish. Keeping our record of prudent fiscal management is crucial to keeping our social contract with the Filipino people,” Purisima said.
Budget Secretary Florencio Abad was similarly optimistic.
“We welcome the continuous improvement of the national government spending, which yielded the second highest year-on-year growth to 23 percent, resulting in the fifth month that we garnered a double-digit growth in 2015,” he said.
Abad said the growth was brought about by increased funding for education, health and infrastructure.
“We are optimistic that spending performance for the remaining months of 2015 will even be higher through reforms that we instituted, such as the creation of full time delivery units (FDUs) to keep track of agency projects, and the adoption of the GAA (General Appropriations Act)-as release document [policy],” he said.
Deficit target to be missed
Nicholas Antonio Mapa, associate economist at the Bank of the Philippine Islands (BPI), said the rise spending could be traced to three factors: base effects, the urgency to spend and roll up projects before President Benigno Aquino 3rd’s term ends next year and increased efficiency at government agencies.
“First of all, the third quarter of 2014 saw the Supreme Court rule against the Disbursement Acceleration Program (DAP), effectively taking the legs out from under national government spending. Thus, the marked jump can be traced to the base effects from the almost standstill in government spending in late 2014,” Mapa said.
He added that the acceleration in spending was in line with most other administrations that are in their final months in office.
“With the Aquino administration on its last turn, we have seen increased urgency on their part to roll out projects for the President to inaugurate or break ground,” he said.
Lastly, the BPI economist noted that the government may be finally learning how to spend sans the DAP, which the Supreme Court ruled as unconstitutional.
“With so much scrutiny from the public, government officials have been much more circumspect, afraid to be slapped with a case if the next administration may not be so amicable to them. But they appear to now know how to get spending going without having to resort to DAP, which should be positive moving forward,” he said.
Despite the acceleration in spending, Mapa said he was not optimistic that the government would hit its spending target given that year-to-date deficit of to P52.57 billion remained well under the P283.7-billion target.
“As it stands, the budget balance as a percent of GDP (gross domestic product) is a mere 0.6 percent, with the target at 2 percent,” he noted.