Gov't balance sheet swings back in the red in February
MANILA, Philippines — The Duterte administration’s budget balance returned to a deficit in February after a brief budget surplus a month ago, putting it on a delicate footing ahead of an anticipated decline in revenues and larger spending in next few months as the government responds to the coronavirus outbreak.
In a report posted on its website Monday, the Bureau of the Treasury said the government recorded a budget deficit of P37.6 billion in the second month of 2020, a turnaround from the P23 billion surplus registered in January. A deficit indicates the government is spending beyond its means. It means the amount of spending surpassed revenues generated for the period.
According to the Treasury, the budget gap in February was significantly narrower than the P76.4 billion deficit last year, when the government operated under a rollover budget that left several new projects unfunded at the time. The budget surplus at the start of the year helped narrow the year-to-date deficit to P14.6 billion, down 54.3% from the comparable period in 2019.
Broken down, revenues generated in February picked up 2.4% year-on-year or P4.8 billion to P206.8 billion, with tax collection accounting for 92% of the total. In the first two months of 2020, revenues stood at P501.5 billion, up 9.29% annually.
The Bureau of Internal Revenue (BIR) collected P142.2 billion last month, up 4.8% year-on-year.
Meanwhile, the Bureau of Customs (BoC) is already feeling the pinch of the coronavirus disease 2019 (COVID-19) outbreak amid sagging imports from major trading partner China, where the virus emerged last December. Treasury data showed the BoC generated P44.8 billion last month, up by only 1.3% year-on-year.
The negative impact of the global health crisis on revenue collection was not surprising. Last month, Finance Secretary Carlos Dominguez III said the government is seen to lose as much as P91 billion in revenues this year as the contagious disease continue to disrupt economic activities like tourism, retail and trade.
Dominguez said the government is willing to increase its debt pile to cover the projected decline in revenue and soften the blow of the virus on the local economy.
That could push the budget deficit to 3.6% of gross domestic product by year-end, he said. If realized, it would be the widest since 2009 when it reached 3.7% of GDP and would also mark the third straight year the limit will be beached under President Rodrigo Duterte.
Disbursements slow
In the same report, the Treasury said state spending in February fell 12.2% year-on-year or P34 billion to P244.4 billion “largely due to the base effect” following last year’s implementation of a landmark Supreme Court ruling giving local government units higher revenue allotment. That brought the two-month tally to P516 billion, beating last year’s outturn by 5.2%.
Excluding the effects of the high court's decision, disbursements in February grew by 6.04% annually.
Meanwhile, breaking down spending activities, the so-called "productive disbursements" by state agencies reached P229.1 billion, marking a decrease of 9.5% on an annual basis.
Interest payments on government debts, meanwhile, contracted sharply by 39.32% to P15.4 billion, data showed.
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