By PressOnePH Business
Photo from the Bureau of the Treasury Facebook page
Government spending failed to sustain its recovery, dropping anew in June and dimming hopes economic growth bounced back from a three-year low in the second quarter.
The Duterte administration recorded a budget deficit of P41.8 billion in June, narrower than the P54.3 billion in the same period last year, the Bureau of the Treasury reported on Monday.
While a deficit indicates that spending outpaced revenues, expenditures decreased 1 percent in June to P275.7 billion, while revenues rose 4.32 percent to P233.9 billion.
Spending dropped year-on-year for four of the past six months, after Congress failed to pass the 2019 budget on time, prompting the government to spend according to an old outlay where new social and infrastructure projects went unfunded.
The budget tussle, a result of allegations of budget insertions among legislators, delayed the outlay’s passage for four months. President Rodrigo Duterte signed the General Appropriations Act on April 15.
In May, disbursements grew 7.8 percent year-on-year, prompting economic officials to say spending was on its way to recovery as they devise a catch-up plan on spending that involved accelerating infrastructure projects.
While details of the plan were not revealed, the goal is to boost economic growth, as measured by gross domestic product (GDP), which slowed to a four-year low of 5.6 percent in the first quarter. The latest June figure, however, showed that spending had yet to turn a corner and may have affected second-quarter growth.
Treasury data showed agencies as the main culprit for a renewed dip in expenditures, decreasing outlays by 3.06 percent to P246.6 billion. Debt interest payments surged more than a fifth to P29.1 billion last month.
On the other hand, higher revenues were recorded by the government’s main collecting agencies, the bureaus of Internal Revenue and Customs.
BIR collections rose 15.4 percent year-on-year to P157.8 billion. Customs collected P51.3 billion, up 2.5 percent, data showed.
From January to June, the budget deficit narrowed to P42.6 billion after revenues increased 9.7 percent, and expenditures slipped 0.83 percent.
After breaching its 3-percent to GDP deficit cap last year, the Duterte government widened its fiscal space this year to 3.2 percent of GDP, equivalent to P624.4 billion, to accommodate bigger infrastructure outlays.
The delay in passing the budget, however, put a lid on spending plans early in the year with the deficit running 77 percent lower year-on-year for the first six months.
That said, economic managers last week raised the budget deficit limit to 3.2 percent of GDP from the original 3 percent until 2022, in hopes there would be more spending due to new programs like universal healthcare.
This assumption hinges on the budget being passed on time and there will be no delays similar to last year. The 18th Congress opened session early Monday, without the government submitting its budget proposal for consideration as typically practiced.