Fiscal deficit widens by 78% in 9 months

MANILA, Philippines — The national government’s fiscal deficit widened by 78 percent to P378.2 billion in the nine months to September, already accounting for three percent of the country’s gross domestic product.

Tax effort meanwhile, improved by 0.7 points to 15.2 percent, the highest tax effort ever recorded during the period owing to the  implementation of the Tax Reform for Acceleration and Inclusion (TRAIN) law and other tax measures, the Department of Finance said.

Disbursements grew 23.6 percent to P2.49 trillion, largely due to the 42.6 percent increase in capital outlays.

Finance Undersecretary Gil Beltran said the 0.4 percentage point increase was contributed by the TRAIN Law, while the remaining 0.3 percentage point increase was accounted for by improvements in tax administration.

Including non-tax collections, the total revenue effort grew by a percentage point to 16.9 percent, also a record high for the first three quarters of the year, Beltran said.

Meanwhile, government expenditures as a share of GDP also increased by 2.2 percentage points to 20 percent, the highest three-quarter expenditure effort. This boosted economic growth in the first nine months of the year, Beltran said.

The country’s economic expansion eased further to 6.1 percent in the third quarter, bringing the average GDP growth to 6.3 percent during the period.

Government revenues climbed 17.2 percent to P2.11 trillion.  Tax revenues grew 15.7 percent year-on-year to P1.9 trillion as both the Bureau of Internal Revenue and the Bureau of Customs reported higher collections due to the TRAIN law and improved tax administration.

Non-tax revenues likewise jumped 33 percent to P216.1 billion due to higher collections of dividends on national government shares of stocks, guarantee fees, and share in the profit of the Philippine Amusement and Gaming Corp.

“Fiscal space expanded by TRAIN 1 and tax administration enabled government to boost investments and growth in the first semester. In the three quarters of 2018, capital outlays expanded by 42.6 percent in nominal terms, boosting GDP growth by a full percentage point,” Beltran said.

“Strong macroeconomic fundamentals backed by tax reforms and the Build Build Build program will continue to boost economic growth as the competitiveness of the economy rises and more jobs are created,” he added.