MANILA – The government’s jab program against the coronavirus disease 2019 (Covid-19) and arrival of more vaccines are expected to counter the impact of movement restrictions on the government’s fiscal performance in the coming months.
In a report, Rizal Commercial Banking Corporation (RCBC) chief economist Michael Ricafort forecasts an increase in budget deficit in the coming months due to the cash aid distributed during the two-week enhanced community quarantine (ECQ) in Metro Manila from August 6 to 20.
Data released by the Bureau of the Treasury (BTr) on Tuesday showed a PHP121.2-billion budget gap last July, lower than the previous month’s PHP149.9 billion and year-ago’s PHP140.2 billion.
As of end-July this year, the budget deficit reached PHP837.3 billion, higher than the PHP700.6 billion in the same period last year.
“Increased government spending for Covid-19 vaccines/booster shots, which could be recurring in nature in the coming years, as well as on related preparations/logistics including for testing, quarantine/healthcare facilities, among other would also lead to wider budget deficits and higher government borrowings/debt, going forward,” Ricafort said.
However, Ricafort said reopening of the economy will help revive economic activities as more people get vaccinated.
He said higher government spending on infrastructure and other expenditures, especially ahead of the election ban for the May 2022 national polls, are expected to boost the economy’s recovery.
“Further measures to reopen the economy from MECQ (modified enhanced community quarantine)/ECQ in NCR (National Capital Region) would eventually allow greater capacity for many businesses/industries in terms of higher production, sales, net income, employment/jobs, and other business opportunities, thereby increasing the government’s tax revenue collections and help in reducing the country’s budget deficit,” he added.
Ricafort said hitting the government’s goal for population protection “would also help make the country’s budget deficit, debt stock, and overall fiscal performance more manageable and sustainable in the coming years, especially if the economy picks up/recovers further, alongside existing and upcoming fiscal/tax reform measures.” (PNA)