Gov’t spending slowdown shrank Nov budget gap
A contraction in public spending narrowed the Marcos administration’s budget deficit in November, in what an analyst said could be a symptom of weak economic activity in the final quarter of the year.
Data from the Bureau of the Treasury released on Thursday showed the budget shortfall last month amounted to P93.3 billion, 24.75 percent smaller compared with a year ago. However, this was larger than the P34.4-billion deficit in October.
That the budget balance remained in deficit meant the government continued to spend beyond its means. To bridge the fiscal gap, the state typically borrows from creditors at home and abroad.
Figures showed the smaller shortfall in November was mainly due to a collapse in state spending. Expenditures during the month fell 4.69 percent year-on-year to P21.3 billion, which the Treasury attributed to a decline in fund transfers to local government units, as well as to lower payments made for big-ticket infrastructure projects.
Since the beginning of the year, government spending amounted to P4.68 trillion, 10.58-percent short of the expenditure plan for the entire 2023.
At this rate, Domini Velasquez, chief economist at China Banking Corp., believes the Marcos administration is at risk of underspending this year, which would not bode well for growth.
The Philippine economy snapped three consecutive quarters of sluggish growth after expanding 5.9 percent in the July-September period. What saved the economy from another slowdown was government spending, which was responsible for 36 percent of growth in the third quarter.
“There is a possibility that it may fall short of its expenditure target, requiring an additional expenditure of around P500 billion in December,” Velasquez said.
“Ensuring the effective implementation of the cash-based budgeting system and expediting government procurement reforms will be crucial in fully utilizing the P5.8-trillion budget allocated for next year. These measures will help optimize the allocation of resources and enhance the efficiency of public spending,” she added.
Revenues up
Meanwhile, government receipts in November climbed by 2.82 percent from the previous year to P340.4 billion.
That brought the year-to-date revenues to P3.56 trillion, up by 8.75 percent and representing 95.58 percent of the P3.73-trillion target for 2023.
By collecting agencies, the Bureau of Internal Revenue, which historically accounted for 80 percent of state revenues, raked in P274.4 billion last month, up by 46.94 percent due to third quarter remittance of value-added tax returns. INQ
