Deficit-to-GDP ratio likely below 3%

MANILA, Philippines — The share of the national government’s budget deficit to the country’s gross domestic product (GDP) may have reached 2.6 percent to 2.8 percent in 2017, according to the Department of Finance (DOF).

In an interview, Finance Undersecretary and chief economist Gil Beltran said the government’s deficit-to-GDP ratio was estimated to have settled at 2.6 percent to 2.8 percent in 2017, higher than the 2016 ratio of 2.4 percent.

The figure, however, was lower than the government’s budget deficit ceiling of P482.1 billion, equivalent to three percent of GDP. The deficit ceiling was part of the administration’s expansionary fiscal policy.

A deficit occurs when government’s expenditures exceed the revenue that it generates.

Earlier, Finance Secretary Carlos Dominguez said disbursements grew 13.8 percent in 2017 from P2.549 trillion in 2016.

This means expenditures likely reached P2.9 trillion last year, slightly short of the P2.909 trillion disbursement program for the year.

On the other hand, preliminary 2017 data showed two of the country’s largest revenue generating agencies, the Bureau of Internal Revenue (BIR) and the Bureau Customs posted 12.5 percent and 17 percent growth in collections last year.

This means the BIR’s collected P1.77 trillion in 2017, while the BOC generated P457.63 billion, for a total of P2.23 trillion.

As of end-November, the government’s fiscal deficit stood at P243.5 billion, wider by four percent than the P235.2 billion posted in the same period last year.

The Duterte administration has adopted an expansionary fiscal policy–raising its budget deficit ceiling to three percent of the gross domestic product from two percent–to give proper leeway to its massive infrastructure program.