Revenue dip widens budget deficit in February

MANILA, Philippines — The government’s budget shortfall inched up February as revenue collections lost some steam.

Data provided by the Bureau of the Treasury on Monday showed that the budget deficit widened 0.6% year-on-year to P106.4 billion in February. Year-to-date, the budget gap was trimmed 53.07% on an annual basis to P60.6 billion. 

The deficit means the government continued to spend beyond its means, as authorities try to meet the country’s needs while revenues from tax and non-tax collections recover from a pandemic-induced slump in economic activity. To bridge the budget gap, the government would have to borrow money from creditors.

To this end, Nicholas Antonio Mapa, senior economist at ING Bank in Manila, said this trend could continue over the coming months. 

“The budget deficit settled at P106.4 billion but we highlight two significant developments.  The first is that revenue collection was actually down as (Bureau of Internal Revenue) collections dipped 5.3% after base effects wane,” he said in an e-mailed commentary. 

Broken down, revenue collections dipped 0.25% year-on-year to P211.9 billion in February.

Expenditures were unmoved at P312.8 billion in February, as the growth was muted by declining national tax allotment shares of local governments in 2020. As it is, the Treasury explained that 2020 was the benchmark year used to determine what LGUs get from the tax pie.

ING Bank’s Mapa pointed out that government spending staying flat suggests that it would not be a source of economic growth in 2023, even as the Marcos Jr. administration turned to infrastructure spending to support gross domestic product.  

“We can expect more of these trends to continue for the coming months, weighing on the growth outlook,” Mapa added.