MANILA – Substantial and targeted spending are expected to help in the Philippine economy’s recovery and address the increase in budget deficit, an economist said.
In a report, ING Bank Manila senior economist Nicholas Mapa said these can also translate to a faster pickup in the gross domestic product (GDP), which would help limit the widening of the budget deficit to GDP ratio, as growth outpaces the increase in spending,
Mapa said the big jump in the government’s budget gap last April is expected, given the requirements for the government’s program to address the impact of the coronavirus disease 2019 (Covid-19).
Cash outlays, subsidies, and expenditures related to healthcare needs, he said, “pushed spending to bloat and we hope (the) government continues to throw a lifeline to the now anemic economy until it can get back on its feet”.
“The battle cry now for the government should be ‘whatever it takes’ with the authorities resisting to enter austerity mode to ensure that the economic hardship is minimized so that we can get the economy back in form at the soonest,” he added.
On Wednesday, the Bureau of the Treasury (BTr) reported that the budget deficit last April reached PHP273.9 billion, a turn-around of 415.27 percent compared to the PHP86.9-billion surplus in the same period last year.
Revenues totaled to PHP187.8 billion, 39.17 percent lower than the PHP308.7 billion in April 2019.
Of the total, the Bureau of Internal Revenue (BIR) collected PHP90.5 billion, 61.56 percent lower than the PHP235.5 billion in the same period last year.
The BTr attributed lower revenues to the delay in the collection of the income tax return (ITR) and other taxes after an enhanced community quarantine (ECQ) was implemented in the whole of Luzon from March 17 until May 12.
Other areas around the country followed with different levels of quarantine.
A modified ECQ is in effect until May 31 for Metro Manila, pending authorities’ decision on whether to loosen this or not while most areas around the country are now on general community quarantine.
The quarantine was put in place to lessen people’s movement and prevent the spread of the coronavirus disease (Covid-19).
Meanwhile, collections by the Bureau of Customs (BOC) last April declined by 33.38 percent to PHP34.4 billion from year-ago’s PHP51.7 billion.
Expenditures for the month surged to PHP461.7 billion, 108.14 percent higher than the PHP221.8 billion in the same period in 2019.
In the first four months this year, revenues totaled to PHP963 billion, 3.36 percent lower than the PHP996.4 billion in the same period in end-April 2019.
Expenditures rose by 31.12 percent to PHP1.310 trillion over the PHP999.8 billion last year.
This resulted in over 10,000-percent jump of the budget deficit to PHP347.9 billion from PHP3.4-billion budget gap in the same period last year.
The pandemic has resulted in a 0.2-percent contraction of the domestic economy, as measured by gross domestic product (GDP), in the first quarter this year, the first negative growth since the fourth quarter of 1998.
“Prevention is always better than cure, and the cost of preventing an economy from freefalling at the onset will be less than digging the Philippines out from an all-out economic depression,” Mapa added. (PNA)