The National Government’s deficit performance is improving but at a controlled pace, leaving ample fiscal room to support growth for the remainder of the year, according to the Bureau of the Treasury (BTr).
During the Duterte administration’s first month in office, the budget deficit widened to P50.7 billion, higher by 57 percent compared with last year’s July level of P32.2 billion, said National Treasurer Roberto Tan in a report to Finance Secretary Carlos Dominguez III.
The Development Budget Coordination Committee (DBCC) has raised the deficit ceiling to 2.7 percent of Gross Domestic Product (GDP) this year and to 3 percent next year in an effort to raise spending on infrastructure, human capital and social protection, as part of President Duterte’s 10-point socioeconomic agenda to sustain high growth and make its benefits trickle down to all Filipinos.
The July figure brought the seven-month fiscal gap to P171.0 billion, still less than half of this year’s P388.87 billion deficit program, but much higher than the P18.5 billion shortfall recorded in the same period in 2015.
The total revenues for July declined 5 percent year-on-year owing to reduced non-tax income from the operations of the Bureau of the Treasury and other offices, while expenditures grew 5 percent as a result of strong public spending.
Cumulatively, total revenues amounted to P1.27 trillion at end-July 2016, a one (1) percent improvement from P1.26 trillion a year ago. However, netting-out the one-off transfer of Coconut Levy assets in May last year improves the revenue growth for the first seven months to 6 percent. Disbursements, meanwhile, grew 12 percent year-on-year to P1.44 trillion from P1.28 trillion.
From January to July, tax collections of the Bureau of Internal Revenue (BIR) and the Bureau of Customs (BOC), which account for about 90 percent of government revenues, along with other offices, increased by 9 percent to P1.132 trillion.
“Tax collections of state revenue agencies continued to grow during the first seven months of 2016, helping the government finance its accelerated spending program to further boost the country’s economy and transform it into a more inclusive one,” Tan said.
Although BIR collections fell slightly by 1 percent last month to P117.4 billion, the agency’s seven-month haul nevertheless grew by 9 percent to P901.0 billion from P824.1 billion in the same period last year.
Customs, on the other hand, improved its year-on-year collections last month by 3 percent, raising P31 billion. This was enough to grow its end-July collections by 6 percent to P221.5 billion.
Meanwhile, collections from other government agencies declined by 26 percent to P11 billion. “These collections for the year have so far decreased by more than half to P66.3 billion from P140.6 billion last year,” Tan said. This again was largely because of the non-recurring income from the P60.1 billion transfer of Coconut Levy Assets in May 2015.
At the same time, BTr collections also declined by 36 percent in July to P9.1 billion. Tan traced the BTR’s revenue decline to lower investment income from the Bond Sinking Fund (BSF) and Securities Stabilization Fund (SSF), as well as from the regular deposits of the general fund. The agency already collected P72.8 billion so far this year, weaker by 10 percent compared to P81.2 billion last year.
On the expenditure side, interest payments during the month amounted to P40 billion, down 25 percent from last year’s P53.1 billion. Year-to-date, interest payments declined by 7 percent to P193.7 billion from last year’s P209.2 billion.
Netting out interest payments, the government ended the first seven-months with a P22.7 billion primary surplus, which, while lower than last year’s P190.7 billion balance, also indicates better budget execution.
Secretary Dominguez earlier said the Duterte administration would be responsible with its finances while addressing the underspending in the previous administration.
Under the new administration, government infrastructure spending, a major driver for growth, is targeted to be equivalent to six percent of gross domestic product (GDP), exceeding the previous administration’s five percent goal.
