2020 budget deficit ballooned to P1.37T as tax collection fell

The government’s budget deficit widened to P1.371 trillion in 2020, or more than double the previous year’s P660.2-billion shortfall, reflecting the 11.31-percent growth in public spending combined with the 8.97-percent reduction in revenue collection amid the pandemic, the Bureau of the Treasury said Friday.

The deficit, however, was 24.45 percent lower than the revised full-year program of P1.815 trillion. It was equivalent to 7.63 percent of the gross domestic product, lower than the 9.63-percent revised program, but much higher than 3.38 percent registered in 2019.

“Nonetheless, this is broadly in line with the 7.6 percent of GDP deficit outlook reported during the 178th Development Budget Coordination Committee Meeting in December 2020,” the Treasury said in a statement.

Data showed that the budget shortfall in December reached P302.6 billion, up by 20.50 percent from P251.1 billion incurred in the same month in 2019.

Revenue collection declined P281.5 billion or 8.97 percent in 2020 to P2.856 trillion from P3.137 trillion raised in 2019. This, however, was 13.34 percent better than the P2.519-trillion revised program for the year.

The Treasury said that of the total, 87.69 percent or P2.504 trillion was generated through tax collection, outperforming the revised program by 13.57 percent but lower by 11.44 percent year-on-year.

The balance of 12.31 percent or P351.5 billion from non-tax revenue grew by 13.52 percent over the 2019 level and exceeded the revised estimate by 11.74 percent. The December collection of P238.5 billion represents a 1.95-percent or P4.7-billion drop from a year ago.

Collection by the Bureau of Internal Revenue hit P1.951 trillion in 2020, surpassing the revised goal of P1.685 trillion by 15.74 percent or P265.3 billion, but still 10.32 percent lower than the 2019 outturn. BIR’s December tax take inched up to P163.4 billion from P162.6 billion achieved in 2019.

The Bureau of Customs booked P537.7 billion in revenue in 2020, higher than the revised full-year target of P506.1 billion by 6.23 percent or P31.5 billion backed by the improved valuation and gradual improvement of importation volume and intensified collection efforts by the agency.

The Customs’ collection for 2020, however, lagged behind 2019’s P630.3 billion by 14.69 percent or P92.6 billion. Collection in December went down by 13.1 percent to P45.3 billion from a year ago.

Income collected and generated by the Bureau of the Treasury reached P219.7 billion as of end-December, growing by 49.93 percent or P73.2 billion from a year ago and 3 percent higher than the P213.3-billion revised program.

Meanwhile, total disbursement grew by 11.31 percent or P429.7 billion in 2020 to P4.227 trillion on the implementation of various COVID-19 mitigation and recovery measures. This, however, was still lower by 2.49 percent or P107.8 billion against the P4.335 trillion revised full-year program as some of the economic relief measures under Republic Act No. 11494 or the “Bayanihan to Recover as One Act” (Bayanihan II) is still ongoing.

“Nonetheless, full-year spending improved from the performance during the first nine months of 2020, where disbursements fell below the program for the period by 7.5 percent or P246.2 billion,” the Treasury said.

Disbursements for December reached P541.1 billion, up by 9.46 percent or P46.7 billion from the equivalent period in 2019.

Primary expenditure hit P3.847 trillion in 2020, 11.93 percent or P410.1 billion higher than 2019’s comparable outturn and just 1.71 percent behind the revised program.

Interest payments of P380.4 billion in 2020 increased 5.41 percent or P19.5 billion from the 2019 level on higher domestic borrowing in the first three quarters which included retail Treasury bonds and reissuances of fixed-rate treasury bonds.

Net of interest payments, the government’s primary deficit in 2020 was recorded at P991.0 billion, exceeding 2019’s primary balance of P299.4 billion.

“Revenue effort slowed to 15.89 percent in 2020 from 16.08 percent in 2019, but higher than the revised program of 13.36 percent. Tax effort also decreased to 13.93 percent in 2020 from 2019’s 14.49 percent but above the 11.69 percent revised target,” the Treasury said.