The country’s revenues will not be able to sufficiently finance the appropriations under the proposed 2021 national budget and will require government borrowings of at least P4.79 billion daily, Senate President Pro Tempore Ralph Recto said.
Recto gave the estimate as he revealed the “gravity and gaps” in the government’s spending plan following the COVID-19 pandemic.
“We are budgeting P4.506 trillion next year, of which only P2.717 trillion can be supported by revenues. This means the deficit of P1.749 trillion will have to be bridged by borrowings,” he said in a statement on Tuesday.
“Daily, this is how our budget meter ticks: P12.35 billion in expenses. But we can only raise P7.44 billion in taxes and other revenues. This leaves a daily deficit of P4.79 billion. This means we have to borrow P4.79 billion every 24 hours,” he added.
“Kaya naman this year pa lang, because of low tax collections, our borrowings have been put on steroids, increasing the national debt from the end of 2019 level of P7.73 trillion to a forecast P10.16 trillion by year’s end,” he said.
But he said the government will be borrowing not only to finance the some P1.75-trillion deficit, but also “to hoard an extra P513 billion, which brings net financing to P2.26 trillion next year, and moving the national debt needle to P11.98 trillion by the end of 2021.”
Recto attributed the low tax collections to, among others, the persisting travel restrictions and limited operations of restaurants and other business establishments, even as the government already eased the quarantine rules to open up the economy.
“When people are not filling their cars with gas because they have nowhere to go and their glasses with liquor because all the bars are closed, then these are just two examples why collection is down during a pandemic—when there is high demand for government help,” Recto said.
He said this is evident in the projected dip in sin tax collection on alcohol products.
“Our alcohol-proof people, world champion drinkers in gin and brandy, have made our sin tax collections recession-proof, but not this time as the forecast alcohol tax take of P113.7 billion for 2021 is P28.4 billion lower than the 2021 projections made in 2019,” he said.
Recto noted that the government spends largely for personnel services (PS), or the payment for the wages and benefits of its employees, and the pension of military and uniformed personnel.
The PS for next year amounts to P1.32-trillion, accounting for 29.2 percent of the proposed 2021 budget, said the DBM.
“A decade ago this was just something like P460 billion,” Recto said.
The Senate began on Wednesday the plenary debates on the proposed 2021 national budget.