Gov’t underspending narrows deficit to 0.6% of GDP in 2014

MANILA, Philippines – Government underspending pulled down the deficit to 0.6% of the gross domestic product (GDP) for 2014, the Department of Finance (DOF) said.

Public expenditures amounted to P1.982 trillion ($44.79 billion) or 13% below target.

There was also a minimal increase of 5% from the 2013 spending level of P1.88 trillion ($42.49 billion), the DOF reported Thursday, March 13.

The Aquino administration has been criticized for underspending, which budget could have been used for infrastructure development in typhoon-torn areas in the country, analysts observed since.

Relative to the size of the economy, the full year fiscal deficit was lower than both the 2% program and the 1.4% deficit-to-GDP (gross domestic product) ratio recorded in 2013.

2014’s budget shortfall only amounted to P73.1 billion ($1.65 billion) or 73% below the P266.2 billion (P6.02 billion) ceiling for previous year. It is also 55% lower than the P164.1 billion ($3.71 billion) deficit in 2013.

‘On the right track’

Interest payments alone amounted to P321.2 billion ($7.26 billion) in 2014, generating savings of P31.5 billion ($711.87 million) if compared with the P352.7 billion ($7.97 million) program for the year.

As a percentage of expenditures, interest payments fell by a full percentage point to 16.2% for the year from 17.2% in 2013.

Thus, netting out interest payments, government spending fell below target by 14% in 2014.

Government revenues also fell below target by 5%, with collections amounting to P1.909 trillion ($43.14 billion) in 2014 versus the goal of P2.018 trillion ($45.60 billion).

The Bureau of Internal Revenue (BIR), which accounts for the bulk government collections, generated P1.335 trillion ($30.17 billion), 8% below target but up 10% year-on-year.

The Bureau of Customs (BOC)  collected P369 billion ($30.17 billion), 10% lower than the goal for the year but 21% higher than its 2013 collections.

Finance Secretary Cesar Purisima said that the BOC’s 21% growth in revenues year-on-year “shows how change is taking root in the Bureau and delivering real gains.”

Budget Secretary Florencio Abad, however, said that government expenditure is “on the right track” for 2015.

In an effort to address underspending in 2014, the government will increase infrastructure investments by 4% of the projected GDP in 2015, the Department of Budget and Management (DBM) said in February.

The early enactment of the 2015 General Appropriations Act (GAA) is eyed to fuel 2015’s public spending through infrastructure programs.

The DBM said it already released P2.037 trillion ($46.03 billion) or 78% of the P2.606 trillion ($58.90 billion) budget for 2015 at the start of the year to address procurement and implementation delays, and to fast track the release of funds for public goods and services. – Rappler.com

US$1 = P44.24