‘Slow’ state spending slashed October budget gap by 65%

The government’s budget shortfall was markedly smaller in October than a year ago, keeping the state away from its deficit limit for 2023 after revenue collections outgrew spending.

Data released on Wednesday by the Bureau of the Treasury showed the budget gap had shrunk 65.27 percent to P34.4 billion in October versus the P250.9 billion shortfall in September.

The budget gap amounted to P1.02 trillion from January to October, down 8.45 percent. This stood at only 68 percent of the P1.5-trillion deficit limit set by the Marcos administration for 2023.

As of the third quarter, government deficit accounted for 7.51 percent of the economy.October revenues rose 33.56 percent to P385.8 billion, bringing 10-month collections to P3.22 trillion.

The Bureau of Internal Revenue, which historically accounted for 80 percent of revenues, raised P274.4 billion last month, 46.94 percent higher due to remittance of value-added tax returns. This brought year-to-date collections to P2.13 trillion, up 11 percent and equivalent to 80.8 percent of its full-year target.

The Bureau of Customs collected P77.9 billion in October, up by 3.83 percent. Its 10-month collections climbed 3.47 percent to P738.3 billion, meeting 84.46 percent of the full-year goal.

Government spending, meanwhile, rose 8.32 percent year-on-year to P420.2 billion in October amid election expenses.

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But compared with September, expenditures fell 17 percent partly due to lower national tax allotment share of local government units.

Since the start of the year, the government has spent a total of P4.24 trillion, up 4.52 percent.

“This was a result of the slow spending of the government. We should expect it to catch up as the government ramps up spending for the remainder of the year to help improve GDP (gross domestic product) growth,” said Michael Enriquez, president of Sun Life Investment Management and Trust Corp. —Ian Nicolas P. Cigaral INQ