Increased support for the government's financial inclusion and digital financial transactions proposals are expected to…
Restriction on movement is being eased, even more, increasing government revenue
According to an analyst, government revenue growth would rise further in early 2022 as mobility limitations are projected to be eased.
Last November, government revenues increased 15.56 percent year on year to PHP284 billion, according to data provided by the Bureau of the Treasury (BTr) on Friday.
This is higher than the 10.34% increase in spending to PHP412.7 billion, which resulted in a budget deficit of PHP128.7 billion, down 0.33 percent from the previous year.
“Further reopening of the economy toward greater normalcy in the coming months, with the nationwide shift to Alert Level System/smaller scale or granular lockdowns since November 2021 (away from large scale lockdowns at the city/provincial/regional level seen in the past) would help reduce government expenditures, as large scale lockdowns had been costly in the past, while also supporting further growth in government tax collections amid increased business/economic apprehensions,”
To date, most of the country has been placed on Alert Level 2.
If the Omicron coronavirus disease 2019 (Covid-19) variant is effectively handled and new daily cases remain low, Ricafort stated, “further relaxation to Alert Level 1 will essentially help lead to reduced budget deficits and, in turn, lower the need for more government borrowings/debt.”
If these plans come to fruition, it will be “a step in the right approach to enhance the country’s fiscal performance and debt management in a more sustainable manner in light of fewer lockdowns in the future,” he said.
Total government receipts increased by 5.99 percent to PHP2.77 trillion in the first 11 months of this year, according to BTr figures, while spending increased by 11.4 percent to PHP4.106 trillion.
The budget deficit now stands at PHP1.33 trillion, up 24.63 percent year on year.
The threat of the Omicron strain, as well as the prospect of implementing movement limitations to combat the virus’ spread, are among the threats, according to Ricafort, to the government’s revenue collections improving.
Increased spending for the recovery of areas devastated by Typhoon Odette is another cause that “may potentially increase the government’s expenditures, expand the budget deficit, and, in turn, increase the government’s borrowings and overall debt,” he said.
“Continued increases in government spending, particularly on infrastructure, ahead of the election ban from March 25 to May 8, 2022, in preparation for the May 9, 2022 elections and also to help pump-prime/stimulate the economy as part of the country’s economic recovery program,” he added.