Slightly below programmed
The Duterte administration is likely incurred slightly lower than programmed budget deficit last year due to favorable revenue performance, the Department of Finance (DOF) said.
Speaking at the Management Association of the Philippines (MAP) virtual meeting, Finance Secretary Carlos G. Dominguez III said the national government’s emerging fiscal deficit is seen at 7.5 percent of gross domestic product (GDP) in 2020.
Dominguez said the emerging budget deficit, equivalent to P1.36 trillion, is marginally below the 7.6 percent revised ceiling set for last year, or P1.38 trillion in nominal terms.
However, the 2020 financing gap is more than double compared with the national government’s pre-pandemic program of 3.4 percent and the 3.4 percent level incurred in 2019.
“Despite the large increase, we expect our deficit to GDP ratio will remain within the median of our neighbors and credit rating peers around the world,” Dominguez said.
“We have made sure that the size of our deficit still takes consideration to our adherence to long term debt sustainability,” he added.
Dominguez attributed the slightly better than expected budget deficit on positive revenue collection performance.
Preliminary data from the Department of Finance showed that the Bureau of Internal Revenue and Bureau of Custom collected P2.43 trillion in January to December last year, 11 percent above their revised combined target of P2.187 trillion.
The two tax agencies, however, were 25 percent below compared with their pre-pandemic goal of P3.255 trillion. They also registered a 13 percent contraction in collections from P2.805 trillion in the previous year.
“Notwithstanding the challenging challenging circumstances, we managed to collect revenues, amounting to P2.8. trillion in 2020. This is just four tenths of one percent short of our overall collection outlook for the year,” Dominguez said.
“However, this is lower by nine percent from the 2009 level and by 19 percent from our original target before price,” he added.
Meanwhile, the government's total expenditure reached P4.205 trillion, which includes the spending mandated under the Bayanihan one and two as well as the continuation of the key infrastructure projects.
The 2020 total expenditure is 11 percent higher compared to the 2019 level.
The Philippines was in recession last year after its economy slid by 11.5 in the third quarter, 16.9 percent in the second quarter, and 0.7 percent in the first.
In the first three-quarters of the year, the country’s gross domestic product contracted by 10 percent.