RCBC chief economist Michael Ricafort (File photo)
MANILA – Continued reopening of the economy, along with spending on the government’s infrastructure program, are expected to counter the impact of the rise in budget deficit as of March 2021, a bank economist said Tuesday.
The Bureau of the Treasury (BTr) on Tuesday reported the 167.34-percent year-on-year rise of budget gap last month to PHP191.4 billion.
As of end-March this year, the budget gap reached PHP321.5 billion, 273.11 percent higher than year-ago level.
Rizal Commercial Banking Corporation chief economist Michael Ricafort said that once cases of coronavirus disease (Covid-19) infections decline, easing of quarantine restrictions and reopening of the economy are structural solutions to the hikes in budget gap because these “increase the capacity, production, sales, income, employment of many businesses and industries, and also help in increasing the tax revenue collections of the government.”
Ricafort said government spending, particularly on infrastructure projects, is a plus because this is an important pillar of the economic recovery program to pump-prime the economy.
These factors, along with other measures such as roll-out of the Covid-19 vaccination program and the implementation of stimulus programs, are expected to boost economic activity and help lift government’s revenue generating capacity, he added.
Ricafort said “structurally, faster economic recovery that effectively increases the GDP (gross domestic product) base would help address this in the coming months/years, alongside with fiscal reform measures especially if economic conditions improve further.”
“Thus, there is a need to prudently use the government’s financial resources and ensure there would be enough in the coming months/years, given the uncertainties on how long Covid-19 pandemic would linger and would continue to have adverse effects on the economy, especially on the most vulnerable sectors,” he added.
BTr data show that revenues last March declined by 17.37 percent to PHP216.2 billion, while expenditures rose by 22.33 percent to PHP407.6 billion.
For the first three months this year, government revenues amounted to PHP696.5 billion, 8.73 percent down year-on-year while spending rose by 19.86 percent to PHP1.017 trillion. (PNA)
