Philippines government spending rocket 21.8%

Total expenditures growing to PHP162.6b is the fastest rate this year.

According to Maybank Kim Eng, spending by the national government has been robust this year in contrast with 2011. The trend was sustained in July as total expenditures grew 21.8% YoY to PHP162.6b, the fastest rate this year. More importantly, net of interest payments, expenditures rose 20.6% to PHP111.3b, second only to March’s increase of 25.6%.

Here's more from Maybank Kim Eng:

This brought spending less interest payments in 7M12 to PHP756.7b, up 15.2% compared with a decline of 10.7% in 7M11. According to the budget secretary, infrastructure spending for the year jumped over 60% while maintenance and other operating expenditures climbed more than 30%.

Budget deficit remains a non-issue. Despite robust spending, the budget deficit for July of PHP39.2b brought the national government’s 7M12 total deficit to only PHP73.7b, way below the target PHP183.3b for 9M12. This was because revenues grew 15.3% in July to PHP123.3b and 12.1% PHP884.2b in 7M12.

The official target deficit this year is 2.6% of GDP or PHP280b. But given the progress thus far on collections and expenditures, it is likely the actual deficit this year will be lower than the official target as well as our forecast of PHP257b or 2.4% of GDP. In 2011, the budget deficit was PHP197.8b, 2% of GDP.