Finance Secretary Carlos Dominguez III
MANILA – Department of Finance (DOF) Secretary Carlos Dominguez III sees a return to the normal deficit level by 2022 as pandemic-related spending and ensuring implementation of the infrastructure program resulted in hikes in the government’s budget gap.
In an interview with CNBC television Tuesday, Dominguez said the fiscal deficit remains manageable despite the higher spending level to address the impact of the global health crisis.
“We are pretty sure that by 2022, we will begin to return to (the) normal fiscal deficit we have of about 3.4 to 4 percent,” he said.
Data released by the Bureau of the Treasury (BTr) on Tuesday showed that the budget gap last March rose by 167.34 percent year-on-year to PHP191.4 billion.
This after expenditures posted higher expansion compared to revenues during the period.
Total revenues in the third month this year amounted to PHP216.2 billion, 17.37 percent lower than year-ago’s PHP261.6 billion.
On the other hand, total expenditures reached PHP407.6 billion, up by 22.33 percent compared to the PHP333.2 billion same period last year.
As of end-March this year, total revenues amounted to PHP696.5 billion, 8.73 percent lower than year-ago’s PHP763.1 billion.
Expenditures rose by 19.86 percent to PHP1.017 trillion against year-ago’s PHP849.2 billion.
This resulted in a budget gap of PHP321.5 billion, 273.11 percent higher than the PHP86.2 billion last year.
In 2020, the government registered a PHP1.371-trillion budget gap, higher than year-ago’s PHP660.2 billion deficit but lower than the PHP138 trillion ceiling set by economic managers during the 178th meeting of the inter-agency Development Budget Coordination Committee (DBCC) on Dec. 3, 2020.
This year, the projected budget gap is PHP1.78 trillion while it is PHP1.641 trillion for next year.
Dominguez said while the Corporate Recovery and Tax Incentives for Enterprises Act (CREATE) law will cut government revenues by around PHP1 trillion over a period of 10 years, economic managers still pushed for this reform.
“We think that this is the time to do it. The businesses need a fiscal stimulus, number one, and secondly, that it will attract more investments into our country over the long period of time,” he added.
Under Republic Act 11534, otherwise known as the CREATE Act, corporate income tax of micro, small and medium enterprises (MSMEs) was reduced from 30 percent to 20 percent while it was cut to 25 percent for other corporations. (PNA)
