The budget deficit widens, but the vax program seems to be bridging the gap
The economy’s continuing recovery, mainly as a result of the immunization campaign, is anticipated to help increase government income and meet rising expenses.
Government expenditure outpaced income in August, resulting in a 201.78 percent year-on-year increase in the budget deficit to PHP120.9 billion.
“Further measures to reopen the economy from MECQ/ECQ (modified enhanced community quarantine/enhanced community quarantine) in the NCR (National Capital Region), with a shift toward granular/smaller lockdowns, would eventually allow greater capacity for many businesses/industries in terms of higher production, sales, net income, employment/jobs, and other business opportunities, thereby increasing the government’s tax revenue collections and helping to narrow the country’s tax gap,” says
Last August, government receipts reached PHP240.6 billion, up 3.11 percent from the previous year, according to data published by the Bureau of the Treasury (BTr) on Thursday, September 23, 2021.
On the other side, spending increased by 34.20 percent to PHP380.2 billion.
Total income increased by 3.87 percent to PHP2.005 trillion at the end of August this year, while expenditures increased by 10.94 percent to PHP2.963 trillion.
This resulted in a budget deficit of PHP958.2 billion, up 29.36% from PHP740.7 billion the previous year.
According to Ricafort, the budget deficit in August was smaller than the PHP121.2 billion deficit in July, despite increased government expenditure, such as on the social amelioration program, after the two-week ECQ in Metro Manila from August 6 to 21.
Meanwhile, Ricafort attributed the increase in the year-to-date budget gap to “increased infrastructure spending and another spending on various government projects nationwide to help pump-prime/stimulate the economy as part of the major economic recovery pillars, and, inevitably, as part of the preparations for the 2022 presidential elections, or less than a year away,” as well as “increased infrastructure spending and another spending on various government projects nationwide to help pump-prime/stimulate the economy as part
He said that the ongoing deployment of the coronavirus illness vaccination program in 2019 allows the government to attain population protection.
According to Ricafort, the NCR has allegedly accomplished this, which will assist the government in better managing new infections and reopening the economy.
“Along with current and future fiscal/tax reform initiatives, this would also help make the country’s budget deficit, debt stock, and overall fiscal performance more manageable and sustainable in the coming years, particularly if the economy picks up/recovers more,” he said.