Gov't spending catches up in July

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(FILE PHOTO)

Metro Manila (CNN Philippines, August 23) — Government spending recovered in July, just as the economic team pledged to catch up with delayed budget releases for projects.

State disbursements reached ₱339.4 billion for the month, up 3.4 percent from funds spent in July 2018, according to the Bureau of the Treasury. This reversed last month's spending slide.

Economic managers have devised a bold catch-up plan for the remainder of the year, with hopes that this will spur state spending and allow faster economic growth.

The economy grew by just 5.5 percent in the first half. To get to 6 percent for the entire year, growth must hit at least 6.4 percent between July and December, according to the National Economic and Development Authority.

The July spending surge came alongside a bigger tax take. Total revenues hit ₱264.1 billion in July, nearly a tenth higher than the amount collected a year ago. The Bureau of Internal Revenue led the pack as it raised ₱180.3 billion, followed by a ₱54.6-billion haul from the Bureau of Customs.

Treasury collections also picked up by 22 percent to ₱14.4 billion, marking the biggest increase given bigger dividends remitted by state-owned corporations.

July yielded a ₱75.3-billion deficit, still 13 percent narrower than last year's fiscal gap.

As a developing economy, the Philippines operates on a budget deficit so that it can begin new and high-impact projects even if the funds needed are beyond what it can currently raise. On top of taxes, the government relies on issuing debt papers as well as on foreign loans to finance big projects, especially big-ticket infrastructure.

However, the year-to-date picture showed the government still has a lot of catching up to do in spending and deploying funds. Total spending amounted to ₱1.93 trillion at end-July, 11 percent lower from what was released during the same period in 2018.

In contrast, revenues grew by another 10 percent to ₱1.81 trillion, leaving the budget deficit at ₱117.9 billion, barely half the ₱279.4 billion gap last year.