Author Jenina P. Ibañez, Great journalist
The budget deficit dropped to a six-month low in October despite a year-on-year increase, reports the Bureau of the Treasury (BTr).
Preliminary data from BTr showed the economic diversified stand at P64.3 billion in October, or 4.77% more than the previous year. This was 64.46% lower than the P180.9 billion decline in September and was the lowest since the P44.4 billion difference in April.
Government revenue increased by 9.60% to P317.4 billion in October from the previous year, but was less than P412.4 billion in September.
“Ninety percent of the P285.8 billion of total monthly disbursements were for initial purchases, which increased 6.86% or P18.3 billion that month,” Treasury said in a statement.
Initial payments take all amounts deducted from interest. Interest payments grew by 42.89% to 31.5 billion in October.
So far, government revenue has jumped by 10.9% to P253.1 billion in October. To account for 87% of total revenue, tax revenue increased by 7.21% to P219.1 billion per year.
Collections from the Bureau of Internal Revenue (BIR) increased by 6.60% to P162.1 billion, while collections from the Bureau of Customs (BoC) increased by 9.76% to P55.5 billion.
Other tax offices generated P1.4 billion last month, or 14.76% lower than last year. Tax-free income rose by 42.50% to P34 billion.
The government spends budget cuts when it spends more money than it spends on programs that support economic growth. It borrows from foreign countries and locals to close the gap.
The budget deficit reached P1.2 trillion in the 10 months to October this year, or 27.94% more than the shortfall over the same period last year.
A total of 10 months was 65% of the total P1.9-trillion for the full year that was converted.
ING Bank NV Manila Senior Economist Nicholas Antonio T. Mapa in an e-mail said the recently collapsed figures show that the 2021 risk could still fall below the P1.9-trillion project.
“Properly organized, it will withstand a great deal of adverse conditions.
“However, money laundering is seen as driving a car with growth that results in a two-digit margin even though construction work is increasing, meaning that money in some areas remains relatively low. Officials seem to be reluctant to spend money to reduce debt and debt rising.
Total revenue increased by 11.51% to P3.7 trillion by the end of October, or about 79% of this year’s P4.7-trillion plan.
Monthly growth in 10 months increased 5% to P2.5 trillion. This figure was “equivalent to 86% of the revised P2.9-trillion annual program,” BTr said.
Tax collection representing 90% of total revenue increased by 9.11% to P2.25 trillion. On the downside, Customs collections jumped by 17.1% to P525.4 billion and BIR generated P1.7 trillion, or 6.83% over the previous year.
Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said the October decline, which was the lowest since April, was due to the reopening of the economy. More and more businesses were pushing for more taxes, he added.
“Budgetary instability can lead to a reduction in the government’s borrowing capacity, which will be a great way to improve financial management and debt management in a sustainable manner,” he said in a Viber message.
The reopening of the economy and the reduction of the risk of further closure that could result in the government spending more money on epidemics could help reduce interest rates, he added.
Meanwhile, Mapa said economic reforms could help reduce the amount of money that comes out of the national debt. Debt ratio to GDP was 63.1% since September, the highest in 16 years, which the government showed.
“If the rate should remain above 60% by mid-next year, we expect action from one major agency,” said Mr Mapa.
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