Fiscal gap widens in March


Fiscal gap widens in March

LOWER revenues amid the acceleration in government spending resulted in a wider national government budget deficit in March, data released by the Bureau of the Treasury (BTr) showed on Tuesday.

The BTr’s cash operations report revealed that P191.4-billion shortfall in March was wider than the P71.6-billion and P116-billion fiscal gaps a year and a month ago.

“The national government achieved a P191.4-billion fiscal deficit for March, rising from P71.6 billion last year as government expenditure grew by 22.33 percent year-over-year, while revenue generation dropped by 17.37 percent,” the BTr said in a statement.
Revenues declined to P216.2 billion in the third month of the year from P261.6 billion in March 2020, while expenditures grew to P407.6 billion from P333.2 billion a year earlier.

The March budget deficit brought the first quarter shortfall to P321.5 billion, wider than the P86.2 billion in the first three months of 2020.

In March alone, total tax revenues inched up by 7.09 percent to P190.1 billion, while nontax earnings plunged to P26.1 billion.

The bulk of government expenditures — P359.9 billion — was for primary spending, which increased by 24.08 percent from P290.1 billion a year ago.

Accounting for the rest are interest payments, which picked up to P47.7 billion.

Netting out interest payments, the primary balance reached a fiscal gap of P143.8 billion in March, bringing the first quarter tally to a P195.6-billion shortfall.

This year, the government is projecting the budget deficit to translate to 8.9 percent of the country’s gross domestic product, wider than the 7.63 percent in 2020.

Going forward, Finance Secretary Carlos Dominguez 3rd has expressed his confidence that the government’s budget deficit will return to its normal level next year.

“We are pretty sure that by 2022 we will begin to return to the normal fiscal deficit we have of about 3.5 to 4 percent,” he said during a television interview also on Tuesday.

In a separate message to reporters, Dominguez added the government will achieve the level of fiscal gap “from a combination of a reduction in the disruptions due to the contagion, increase in public and private investments, drop in unemployment, increase in consumption, increase in taxable profit, return to solid investments led growth of the economy.”