Gov't spending sustains pickup in October

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Public spending continued to rise in October, sustaining the catch-up mode taken by state officials for the remainder of 2019.

Metro Manila (CNN Philippines, November 25) — Public spending further improved in October alongside a faster rise in tax collections, the Bureau of the Treasury said Monday.

Government spending totaled ₱310.8 billion for the month, up 1.37 percent from the ₱306.6 billion disbursed in October 2018at a time when expenses saw a 35.2 percent jump.

Actual spending reached ₱290.1 billion, alongside a 1.37 percent slip in interest payments for maturing debts at ₱20.7 billion, data showed.

Meanwhile, the state shored up ₱261.6 billion in revenues last month, marking a 6 percent climb from last year's collections.

The Bureau of Internal Revenue saw the biggest lift, with tax collections rising by 8.1 percent to ₱178.1 billion. This is followed by a 3 percent increase for the Bureau of Customs to ₱57.7 billion, as well as ₱24.1 billion in non-tax income.

This led to a budget shortfall of ₱49.3 billion, about a fifth narrower than last year's deficit.

As a developing economy, the Philippines spends more than the amount of funding it can raise in order to build infrastructure and provide social services.

From January-October, total spending inched up by 5 percent to ₱2.94 trillion, against a 10 percent climb in revenues to ₱2.59 trillion. This left a fiscal gap of ₱348.3 billion, still a fifth narrower compared to the same period last year.

A bank economist said the sustained growth in spending reflects the government's catch-up mode, following the delayed passage of the 2019 budget which stunted growth during the first few months of the year.

"We expect government spending to sustain the same strong pace to close out the year, which should translate to higher spending growth in both November and December, given that government spending was in contraction by end 2018," ING Bank Senior Economist Nicholas Antonio Mapa said in a market report.

READ: Analyst expects PH economy to meet target this year

Mapa added that robust consumption due to low inflation and the influx of athletes and tourists with the upcoming Southeast Asian Games would boost state spending for the last quarter of the year. Lower interest rates should also revive capital formation, and would "likely be enough to get the Philippine economy past the 6% finish line as we flip the calendar to 2020," Mapa said.

The Philippine economy has grown by 5.8 percent as of end-September, versus a 6-7 percent goal for the full year.