The government narrowly missed hitting its fiscal gap ceiling last year despite widening by more than 50 percent year-on-year, the Department of Finance (DoF) reported on Tuesday.
During his presention at a Management Association of the Philippines meeting and induction ceremony, Finance Secretary Carlos Dominguez 3rd said that as of end-2020, “our emerging deficit spending amounted to P1.36 trillion, or equivalent to 7.5 percent of our projected GDP (gross domestic product) for the year.”
“This is slightly below our target in 2020,” he added.
The amount was 51.45 percent bigger than the P660.23 billion gap in full-2019. The interagency Development Budget Coordination Committee earlier set a budget shortfall ceiling of P1.38 trillion, or 7.6 percent of GDP, for 2020.
Dominguez also reported that the government collected P2.84 trillion in revenues last year despite the challenges posed by the coronavirus pandemic, calling the figure “four-tenths of 1 percent short of our total collection outlook for the year.”
“However, this is lower by 9 percent from the 2019 level and by 19 percent from our original target before the crisis struck,” he added.
In 2019 state revenues hit P1.13 trillion, with the bulk — P2.82 trillion — coming from tax collections.
The government’s total expenditure requirement reached P4.205 trillion last year, up 11 percent from P3.79 trillion in 2019, Dominguez said, which “includes the spending mandated under Bayanihan 1 and 2, as well as the continuation of the key infrastructure projects we are banking on to support economic recovery.”
Formally known as Republic Act (RA) 11469, or the “Bayanihan to Heal as One Act,” Bayanihan 1 covered assistance to disadvantaged or displaced workers during the pandemic; grants to cities, municipalities and provinces; and purchase of coronavirus detection kits, among others. The law expired on June 25.
Also known as RA 11494, or the “Bayanihan to Recover as One Act,” Bayanihan 2 details interventions that include cash-for-work programs; skills training; social assistance programs; funding for the agriculture, tourism, transportation and education sectors; and more lending programs to help businesses survive.
“Because none of the emergency spending for the health crisis was programmed, we needed to bridge the budget gap with additional borrowings,” Dominguez said.
The government’s debt-to-GDP ratio is projected to have reached 53.5 percent in 2020 from its pre-pandemic target of 40.2 percent and historic low of 39.6 percent the year before.
“This level kept us well within the prescribed bounds of fiscal viability,” the Finance chief said.
Gross financing the government secured last year amounted to P2.63 trillion, excluding the P540-billion peso-emergency short-term loan from the Bangko Sentral ng Pilipinas, which was fully repaid last December and reavailed this month.
“We have set out a clear strategy for financing our deficit. We prioritized domestic borrowings followed by official development assistance and the international capital markets. We determined this plan as the most prudent approach, ensuring sustainability in our debt service,” Dominguez said.