RCBC chief economist Michael Ricafort (file photo)
MANILA – The continued reopening of the economy due largely to the vaccination program is expected to help boost government revenues and address the rise in expenditures.
Last August, government spending rose faster than revenues, resulting in the 201.78-percent year-on-year rise in budget gap to PHP120.9 billion.
“Further measures to reopen the economy from MECQ/ECQ (modified enhanced community quarantine/enhanced community quarantine) in NCR (National Capital Region), with the shift towards granular/smaller lockdowns, would eventually allow greater capacity for many businesses/industries in terms of higher production, sales, net income, employment/jobs, and other business opportunities, thereby increasing the government’s tax revenue collections and help in narrowing the country’s budget deficit,” Rizal Commercial Banking Corporation (RCBC) chief economist Michael Ricafort said.
Data released by the Bureau of the Treasury (BTr) on Thursday showed that government revenues totaled PHP240.6 billion last August, 3.11 percent up compared to year-ago level.
Expenditures, on the other hand, rose by 34.20 percent to PHP380.2 billion.
As of end-August this year, total revenues grew by 3.87 percent to PHP2.005 trillion while expenditures posted a higher year-on-year jump of 10.94 percent to PHP2.963 trillion.
This resulted in a budget deficit of PHP958.2 billion, 29.36 percent higher than year-ago’s PHP740.7 billion.
Ricafort said the budget gap last August was narrower compared to the PHP121.2-billion deficit in the previous month, which materialized despite higher government spending such as on the social amelioration program after the two-week ECQ in Metro Manila from August 6 to 21.
Meanwhile, Ricafort attributed the jump in the year-to-date level of budget gap partly to “increased infrastructure spending and other spending on various government projects nationwide to help pump-prime/stimulate the economy as part of the major economic recovery pillars, and, inevitably, as part of the preparations for 2022 presidential elections, or less than a year away.”
He said the continued rollout of the vaccination program against coronavirus disease 2019 enables the country to achieve population protection.
Ricafort said the NCR reportedly has achieved this which is expected to help the government better manage new infections and further reopen the economy.
“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)
