An economist has expressed hope for an improvement in state revenues on the back of the rollout of the vaccination program and the continued revival of economic activities amid the pandemic.
The Bureau of the Treasury (BTr) on Tuesday reported a 30.03-percent year-on-year drop in government revenues to PHP245.6 billion and a 13.24-percent jump in expenditures to PHP395.4 billion.
This resulted in a nearly 8,585-percent jump in the budget gap of PHP149.9 billion, a reversal in the previous year’s PHP1.8-billion surplus.
Rizal Commercial Banking Corp. (RCBC) chief economist Michael Ricafort attributed this to pandemic-related spending and the imposition of stricter quarantine measures.
As of end-June this year, the budget gap amounted to PHP716.1 billion, 27.78 percent higher year-on-year but lower than the PHP1.018 trillion programmed for the first half of the year.
Total revenues reached PHP1.49 trillion, higher than the PHP1.421-trillion program for the six-month period, while expenditures reached PHP2.206 trillion, lower than the PHP2.439-trillion program.
Ricafort attributed the rise in budget gap last June partly to the government’s decision to defer for two months the annual tax filings and payments for 2020, which was supposed to end by April 15 of every year, because of the imposition of the two-week enhanced community quarantine (ECQ) that started last March 27 and the modified ECQ in the succeeding four weeks.
He said the increase in government spending, not only for pandemic-related programs but on infrastructure, also contributed to the increase in budget deficit last June.
Ricafort said infrastructure spending is among the government’s measures to help in the economic recovery, as well as to fast-track the implementation of the projects ahead of the election ban before the May 2022 national polls.
“Increased government spending for Covid-19 vaccines, which could be recurring in nature in the coming years, as well as on related preparations/logistics including for testing, quarantine/health care facilities, among other(s), would also lead to wider budget deficits and higher government borrowings/debt, going forward,” he added.
Ricafort said the vaccination program is expected to “meaningfully reduce new Covid-19 local cases and help justify further reopening the economy that helps improve economic recovery prospects, as well as higher government tax revenue collections and less need for government spending on various Covid-19 programs, thereby would fundamentally help narrow the budget deficit, going forward.”
“This would also help make the country’s budget deficit, debt stock, and overall fiscal performance more manageable and sustainable in the coming years, especially if the economy picks up/recovers further, alongside existing and upcoming fiscal/tax reform measures,” he added. (PNA)
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