Gov't spending accelerates to fastest pace in July

MANILA, Philippines - Picking up from the previous month, government spending accelerated by its fastest this year, swinging the national government's budget balance to deficit for the first seven months.

The budget gap - the difference between spending and revenues - reached P32.2 billion in July, wider than last year's P1.8 billion, the Bureau of the Treasury reported on Monday.

This brought the year-to-date fiscal performance to a deficit of P18.5 billion, reversing the first half budget surplus of P13.7 billion. The government has capped its deficit at P284 billion this year.

"The pace of expenditure growth we are seeing has a clear positive trend since we adopted a whole-of-government approach to addressing underspending," Finance Secretary Cesar Purisima said in a statement.

"Expenditures are on track to drive our growth for the third quarter," he added.

For the month of July, revenues collected reached P178.5 billion, 7 percent up from last year. Disbursements surged by a quarter from a year ago to hit P210.7 billion.

For the first seven months, revenues were up 15 percent to P1.264 trillion, data showed. Spending, meanwhile, reached P1.282 trillion, an improvement of 11 percent from last year.

The Aquino administration has come under fire for underspending which analysts said had put a dent on economic growth that slowed to 5.3 percent as of the first semester. 

While in 2010 it managed to cap the budget deficit below target, despite huge disbursements before it came in July that year, succeeding years saw it fall way below its fiscal program.

In 2011, deficit fell to 2 percent of gross domestic product (GDP), way below the 3.2-percent target that year. It was followed by 2.3 percent, 1.4 percent and 0.6 percent of GDP in 2012, 2013 and 2014, respectively.

The deficit-to-GDP ratios in those years fall below the 2.6 percent target in 2012 and two-percent goal in 2013 and 2014, Finance department data showed. 

The deficit-to-GDP ratio is a key measure of how well the government spends and collects revenues as the economy expands.