Pandemic induces P40-B fiscal gap

Government spending for the month was slightly higher by 0.38 percent at P283.3 billion versus the P282.2 billion in August 2019

The national government's (NG) P40.1-billion budget deficit for August proved to be much wider year-on-year following lower revenue performance and higher spending to address the health crisis.

Latest data from the Bureau of Treasury (BTr) show NG deficit at P40.1 billion in August versus the recorded P2.5 billion deficit in the same month year-ago.

"This drove the year-to-date deficit to P740.7 billion, surpassing last year's shortfall for the same period by P620.3 billion," the agency said.

Government spending for the month was slightly higher by 0.38 percent at P283.3 billion versus the P282.2 billion in August 2019.

Higher for year thus far

On a cumulative basis, NG expenditures registered at P2.67 trillion, 20.79 percent higher than the posted P2.21 trillion in the first seven months last year.

Total revenues in August on the other hand, stood P243.2 billion, a 13.05 decline from the listed P279.7 in August 2019.

Bulk or 96 percent of the overall stock came from tax sources while non-tax collections accounted for the remaining 4 percent.

The Bureau of Internal Revenue managed to collect P187.9 billion for the month, reflecting an 8.59 percent decline year-on-year while year-to-date collection proved to be likewise lower at P1.30 trillion versus the P1.45 trillion in the same comparable period.

The Bureau of Customs generated P44.4 billion in August, 17.19 percent lower than the P53.6 billion in August 2019 owing to lower import volumes during the month. This brought cumulative collections of the agency at P347.3 billion, 15.55 percent lower than last year's P411.2 billion.

The BTr also recorded a 65.3 percent drop in its August income with P2.1 billion compared to P5.9 billion last year owing to the sharp 81 percent drop in the Philippine

Amusement and Gaming Corporation's remittance to the agency.

The BTr's collections on an aggregative basis managed to grow by 78.8 percent to P192.9 billion from only P107.9 billion year-ago.

Recession to remain

With the latest data set, ING Bank senior economist Nicholas Mapa offered his view of a prolonged economic recession, lasting until the end of the year.

"Despite a bounce in most economic indicators from the lows in April, we continue to expect the Philippine economy to remain in recession for at least the balance of 2020 as consumption and capital formation remain sidelined by double digit unemployment and as COVID-19 new daily infections keep consumers indoors," Mapa explained.

"Government spending, which was the main driver of GDP (gross domestic product) in the second quarter will likely ease in the second half of the year as government officials pull back on spending to protect fiscal targets," he added.

According to him, their minus 9.9 percent GDP outlook still holds while an appreciation bias for the peso could still be expected as import demand and local output will likely continue to fade.