Jan-Sept budget deficit widens, but still below cap

MANILA, Philippines (UPDATED) – The Philippines’ budget deficit during the first 9 months of 2012 more than doubled from a year ago, as the government boosted spending to cushion the impact of the global downturn on the economy.

But the deficit — amounting to P106.062 billion or over 100% bigger than last year’s P52.994 billion — was still below what the government had programmed. The deficit ceiling for January to September was P183.343 billion.

Finance and budget officials said increased tax revenues reined in the deficit even as government agencies stepped up their spending.

The lower-than-programmed budget gap also gives the Aquino administration more “fiscal space” to spend for its social programs, they added.

In September alone, the deficit hit P34.854 billion, larger than the P18.501 billion recorded in September 2011.

Revenues, spending grow

Revenues collected in January to September 2012 amounted to P1.119 trillion, up 10% from the same period last year.  

Spending, on the other hand, rose 14.5% from 2011 to P1.225 trillion.

In September alone, revenues inched up 0.9% year-on-year to P105.309 billion, while expenditures jumped 14.1% to P140.163 billion.

Both of the country’s main tax agencies showed improvement in their collections.

Of the total revenues for the 9-month period, the Bureau of Internal Revenue (BIR) contributed P772.468 billion, representing a double-digit annual growth of 12.6%. The Bureau of Customs (BOC) turned in P213.656 billion, up 9.8%.

The BIR collected P71.036 billion in September, 6.7% more than the P66.547 billion it collected a year ago, while the BOC raked in P23.208 billion or 2.6% higher than the P22.408 billion it raised a year ago.

Spending picks up

Budget Secretary Florencio Abad said government spending picked up in the third quarter of the year.

He said expenditures during the quarter reached P429.6 billion, up by an annual 15.7%, faster than the 13.8% seen in the first 2 quarters.

“The third quarter expenditure level was also larger in comparison to those in the first (P394.9 billion) and second (P400.5 billion) quarters,” he noted.

Abad attributed the acceleration in government spending to “improving absorptive capacities of departments and agencies,” among them, the Department of Public Works and Highways.

However, Abad said disbursements of these agencies still fell short of the P1.353-trillion program by 9.5%. “There is much room for improvement in the capacity of agencies to implement programs and projects.”

Economic growth

Nevertheless, Abad said, “we are again confident that government spending [contributed] significantly to economic growth in the third quarter.”

Increased government spending has been cited by government as one of the main reasons for the Philippines’ high economic growth of 6.3% in the first quarter, and 5.9% in the second.

In 2011, slow spending due to delayed projects that the government had to review, along with weak exports, drastically pulled down economic growth to 3.7% from 7.6% in 2010.

Finance Secretary Cesar Purisima, meanwhile, said that the lower-than-programmed budget deficit in the first 9 months will allow the Aquino administration to spend for its vital programs.

“Our aggressive efforts to improve tax compliance has consistently generated fiscal space to provide funding for the Aquino administration’s spending priorities,” he said. – Rappler.com