Higher government spending helped push the Philippine fiscal position back to a deficit last May, the Bureau of Treasury reported Tuesday. 

The deficit stood at P19.9 billion last month, from a P9.6-billion shortfall a year earlier, according to government data.

 

The Philippine fiscal position last May compares with a P31.024-billion surplus in April. The national government usually books a surplus in April, the deadline for tax payments. 

 

The shortfall remained under control in May and that the Aquino administration has enough fiscal space to support the country’s economic growth, said Finance Secretary Cesar Purisima.

 

He cited the first quarter performance as a reflection of that fiscal space. “The 6.4 percent growth of the Philippine economy in the first quarter– the fastest in the region, excluding China’s–is a strong proof that the economy can achieve stronger growth while keeping our balance sheets healthy.” 

 

Revenues increased by 9.4 percent to P131.403 billion from P120.088 billion. The Bureau of Internal Revenue (BIR) booked a 7.3 percent increase in tax collections to P94.55 billion, and the Bureau of Customs gained 15.5 percent in collected duties to P25.23 billion.

 

“We are pleased with the continued rise in revenue collections, especially since this allows us to pursue with our spending program for the year while making sure that our fiscal position remains under control,” said Purisima.

 

The Finance chief said higher revenues would give the government funds to bankroll major infrastructure and social programs.

 

“The wide fiscal space will now give us an advantage to finance infrastructure projects and social programs that shall in the long-term, curb poverty and promote equality,” he said.

 

Revenues from privatization went up by 8.7 percent to P6.583 billion while earnings of the Bureau of Treasury jumped 24.5 percent to P5.039 billion.

 

Government spending surged 16.7 percent to P151.304 billion in May compared to P129.689 billion a year earlier.

 

In the first five months to May, the budget deficit widened by 138.8 percent to P22.786 billion from P9.54 billion in January to May last year. Government spending rose 13.1 percent to P668.431 billion from P591.041 billion.

 

Five-month revenues rose 11.6 percent to P645.645 billion from PP581.501 billion as BIR collections increased by 12.5 percent to P439.816 billion while Customs collections went up by 12.4 percent to P120.126 billion.

 

Government would continue to plug loopholes in the tax system and pursue process re-engineering of revenue agencies, as well as work with legislators for the passage of a rationalized fiscal incentives and the indexation of the excise tax on alcohol and tobacco products, said Purisima.

 

“We remain optimistic of seeing these two bills passed into law within the year, especially since both of them are now at the Senate after the House of Representatives,” he added.

 

Government has committed to trim the budget deficit to 2 percent of GDP starting next year and until the end of President Aquino’s term in 2016. This year, the target is to keep the shortfall within 2.6 percent of GDP.

Faster disbursesments

 

Disbursements continued to accelerate and gain momentum as part of government’s commitment to build on the economy’s growth in the first quarter through reformed spending with maximum impact, Budget Secretary Florencio Abad said in a separate statement Tuesday. 

 

 “We remain vigilant vis-à-vis the continuing risks posed by global uncertainties. We also continue to closely monitor the financial and physical performance of agencies to troubleshoot implementation bottlenecks and to address capacity constraints,” he said.

 

With public spending one of the key drivers of the economy in the first three months, Abad said disbursements in the second quarter would sustain the first quarter gains.

 

The Budget chief expects a more robust spending in June due to the early implementation of salary increases under the fourth tranche of the Salary Standardization Law III, payments of conditional cash transfers, and expenditures in preparation for the opening of classes this month. —VS, GMA News