Government-led import activities helped widen the budget deficit in recent months, Japan-based Nomura Securities Ltd. said, citing latest data.

“As we suspected, the sharp rise in overall fiscal spending, which drove the fiscal deficit to a record level in September, was led by growth in public sector capital spending,” Nomura said.

“This reflects progress on the government’s catch-up spending plans on infrastructure projects,” it added.

Latest data from the Department of Budget and Management (DBM) show higher government spending on infrastructure and capital outlay, which surged 53.9 percent year-on-year in September.

“Infrastructure and other capital outlays reached P100.3 billion this September, corresponding to a growth rate of 53.9 percent from last year’s level of P65.2 billion,” the DBM said.

“This growth, also the fastest this year for the category, is attributed to the full and partial completion of projects of the Department of Public Works and Highways,” it added.

Given this development, the financial services giant expects the current account deficit (CAD) to widen further towards the end of the year.

“We continue to believe that the CAD is set to widen for the rest of the year and maintain our 2019 CAD forecast at 2.7 percent of gross domestic product (GDP) after narrowing to just 2 percent in the first half,” Nomura said.

“An expansionary fiscal stance, combined with front-loaded monetary easing, suggests the macro policy mix is most impactful in boosting total investment spending, adding to CAD widening pressure,” it added.

Previously, the government committed to a catch-up plan and boost its spending to help reverse the impact of the budget delay which has hobbled local output growth averaging only 5.5 percent in the first six months of the year.