Philippines posts wider-than-expected budget deficit in 2018 amid spending boost
MANILA, Philippines — The Philippine government breached its budget deficit cap in 2018, as disbursement surpassed target and outpaced an increase in revenue generation.
Data released by the Bureau of the Treasury on Friday showed fiscal deficit stood at P558.3-billion last year, 59 percent bigger than P350.6 billion gap posted in 2017.
The budget gap in 2018 was equivalent to 3.2 percent of the country’s gross domestic product, overshooting the P523.7 billion (3 percent of GDP) ceiling for the entire year.
In December alone, fiscal deficit narrowed 24 percent year-on-year to P81 billion.
A deficit means the government spent more than it earned, while the surplus means otherwise.
Revenue collection in 2018 hit P2.850 trillion — higher than the P2.84 trillion programmed for the year and up 15 percent from P2.47 trillion generated in 2017 — thanks to the implementation of Tax Reform for Acceleration and Inclusion law which was projected to add P63.3 billion to state coffers in its first year.
“The shortfall in tax collection was more than offset by strong non-tax revenues,” the BTr said.
Meanwhile, government spending spiked 21 percent year-on-year to P3.40 trillion in 2018, exceeding the P3.37 trillion target for the year “as a result of ramped-up spending in public infrastructure, social protection and higher personnel services due to a pay hike for both the civilian, and military and uniformed personnel.”
The Duterte government has been pushing for a wider budget gap to accommodate heightened infrastructure spending, particularly big-ticket projects in its “Build, Build, Build” program. For 2019, the state has set a wider deficit ceiling at P624.4 billion (3.2 percent of GDP).
President Rodrigo Duterte’s ambitious plan is crucial to the Philippines, which has been infamous for its dilapidated infrastructure that resulted in heavy traffic and logistical difficulties that have threatened the sustainability of its economic growth.
The government expects the multibillion-peso undertaking to supercharge economic growth to 7-8 percent. In 2018, the economy grew at a three-year low of 6.2 percent despite the state spending bonanza amid high inflation. — Ian Nicolas Cigaral
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