April budget deficit hit P273.9B amid lockdown

The government incurred a record monthly budget deficit of P273.9 billion in April as tax collection came to a halt because of the enhanced community quarantine imposed by the government to contain the coronavirus pandemic.

Data from the Bureau of Treasury showed that the April deficit was a reversal of the P86.9-billion surplus a year ago.  Revenue collection tumbled 39 percent while expenditures surged 108 percent during the month.

The April deficit brought the cumulative budget shortfall in the first four months to P347.9 billion, significantly higher than the P3.4-billion deficit in the same period last year.

“As expected, the budget deficit widened substantially as revenue collection was all but nonexistent for both BoC [Bureau of Customs] and BIR [Bureau of Internal Revenue] while expenditures understandably rose 108 percent as the government rushed to help alleviate the dire situation caused by the pandemic,” ING Bank Manila senior economist Nicholas Mapa said in a report.

Mapa said cash outlays, subsidies and expenditures related to healthcare needs pushed spending to bloat.  He said that timely, substantial and targeted spending could translate into a faster pickup in the gross domestic product which would help limit the widening of the budget deficit to GDP ratio as growth outpaces the increase in spending.

The Treasury said revenues amounted to P187.8 billion in April, down by 39.17 percent from last year’s P308.7 billion. Of the total, tax collections made up 67 percent or P124.9 billion while non-tax sources contributed 33 percent or P62.8 billion. This resulted in a year-to-date revenue collection of P963 billion, lower by 3.36 percent or P33.4 billion from a year ago.

The Bureau of Internal Revenue posted a steep 61.56-percent year-on-year decrease in April collections with only P90.5 billion.

“The slower outturn was attributed to the Luzon-wide enhanced community quarantine, which was also implemented in other provinces, and the extension of deadlines for the filing and payment of income and other taxes due for the month amid the pandemic crisis,” the Treasury said.

BIR’s aggregate collection from January to April declined 20.5 percent to P559.3 billion from P703.7 billion a year earlier.

Collections by the Bureau of Customs fell 33.38 percent to P34.4 billion in April from P51.7 billion raised in the same month last year. Total BOC collection in the first four months went down by 7 percent to P179.7 billion from a year earlier.

Meanwhile, the Bureau of the Treasury raised P52.8 billion in April, exceeding the P10.5 billion it collected a year ago.

“The bureau’s strong revenue performance is credited to the remittance of dividends and other income from GOCCs in compliance with RA 11469. As a result, BTr’s cumulative revenue rose to P164.0 billion, almost four times higher than comparable figures for January-April 2019 and already 99.33 percent above the full-year target of P82.3 billion,” the Treasury said.

Collections from other sources (other non-tax including privatization proceeds and fees and charges) in April contributed P10.1 billion, up 6.61 percent over similar collections in 2019. Cumulative collection of P53.2 billion also grew by 5.78 percent or P2.9 billion on a year-on-year basis.

Expenditures in April jumped 108.14 percent to P461.7 billion, more than twice last year’s level of P221.8 billion.

“Spending was boosted by the releases of funds for the implementation of the first tranche of the Social Amelioration Program and the Small Business Wage Subsidy Program, Bayanihan grant to provinces, cities, and municipalities, and other recovery and rehabilitation measures of the national government under the Bayanihan to Heal as One Act,” the Treasury said.

This resulted in higher disbursements in the first four months of P1.310 trillion, also up 31 percent from P999.8 billion a year ago.

“Primary spending [net of interest payments] for the month of April 2020 amounted to P439.8 billion, up by P241.5 billion from a year ago. The P1.169-trillion cumulative primary expenditure also surpassed last year’s outturn by 34.62 percent,” the Treasury said.