Government confident fiscal deficit to fall within target for 2018

MANILA, Philippines — The Department of Budget and Management (DBM) yesterday gave assurance that the national government would not breach its 2018 fiscal deficit ceiling on the back of higher revenue in the fourth quarter of the year.

Budget Secretary Benjamin Diokno is confident that the deficit-to-gross domestic product (GDP) ratio would not exceed the three percent target for the whole year, even as the deficit already reached this level as of the third quarter.

Earlier, the Department of Finance (DOF) said the country’s fiscal deficit as of end-September widened by 78 percent to P378.2 billion from the P213.1 billion in the same period last year.

This is already equivalent to three percent of the country’s GDP, which is the deficit ceiling set by economic managers for the whole year.

“Remember, the deficit-to-GDP ratio, that’s for the first three quarters. So we still have the program deficit for the fourth quarter,” Diokno said during yesterday’s  Pandesal Forum in Quezon City.

Diokno said the government is optimistic that growth in revenue would outpace spending in the last quarter, given the expected increase in collections during the Christmas season.

He said expenditures are also seen to slightly ease in the fourth quarter as the government has already front-loaded its projects in the first nine months.

“The deficit, remember, is the difference between expenditures and revenues. Revenues will be much higher, I think, as a result of the Christmas season,” Diokno said.

“Secondly, since we have frontloaded already in the first three quarters, then we won’t spend so much in the fourth quarter so there’s no danger that we will breach our three percent deficit-to-GDP ratio,” he said.

The economy grew by a slower 6.1 percent in the third quarter, bringing the average GDP growth to 6.3 percent in the first nine months.

Government revenue as of end-September climbed by 17.2 percent P2.11 trillion from P1.18 trillion in the same period last year. As a result, the country’s revenue effort improved one percentage point to 16.9 percent in the third quarter.

Meanwhile, disbursements also grew 23.6 percent year-on-year to reach P2.49 trillion in the first nine months.

According to Diokno, the government has overspent in the first three quarters as it front-loaded some projects, particularly infrastructure and construction projects, ahead of the rainy season.