The National Government’s September budget deficit increased by 39.6% to P250.9 billion. The higher deficit was due to a combined 8.06% year-over-year rise in expenditures and an 11.57% decrease in government revenues. Nonetheless, the cumulative fiscal deficit for the year decreased to P983.5 billion, down by 2.89% year over-year and is significantly lower than the P1.106 trillion target. <\/p>\n\n\n\n
On the revenue side, the National Government’s collection for September decreased to P255.4 billion, while year-to-date revenue reached P2.837 trillion, surpassing the 9-month target. Expenditures in September amounted to P506.3 billion with increased expenditures to social protection and health programs, as well as infrastructure projects.<\/p>\n\n\n\n
Our View: <\/strong>Tax collections from the Bureau of Internal Revenue (BIR) declined by 12.4% in period covered. This could be an indication of businesses facing reduced profitability or declining sales. Although government expenditures exacerbated the fiscal deficit, fiscal stimulus can act as a counter-cyclical force.<\/p>\n\n\n\n During economic downturns, increased government spending can stimulate economic activity, create jobs, and boost consumer and business confidence. It is extremely relevant considering that the government budgeted expenditure is estimated to be 22.4% of the 2023 P5.3 trillion pesos budget.<\/p>\n\n\n\n However, pump priming comes with a cost. The 2024 projected budget will result to a deficit of P 1.36 trillion, or 5.1% of GDP. This could result to more heavy borrowings. And in a financial environment of rising interest rates, deficits and debt become riskier, as they lead to higher borrowing costs.<\/p>\n\n\n\n