National gov't swings back to budget deficit in July

The Philippine government’s fiscal balance reverted to a deficit in July as state spending exceeded revenues during the period.

Data released by the Bureau of the Treasury showed the national government posted a budget shortfall of P140.2 billion, up 86.21% from the P75.3-billion gap recorded in July 2019.

Last month’s budget gap

“The higher deficit for the month reflects the 10.40% growth in government expenditures, boosted by the implementation of various COVID-19 rehabilitation and recovery measures vis-à-vis an 11.22% drop in revenue collection,” the Treasury noted.

For January to July, the fiscal position stood at a deficit of P700.6 billion, 494.03% higher than the P117.9-billion budget gap posted in the same period last year.

Expenditures

The national government’s disbursements for July rose to P374.7 billion, up 10.40% from P339.4 billion year-on-year “driven by the second tranche releases for the Social Amelioration Program (SAP) in line with the implementation of RA 11469 or the Bayanihan to Heal as One Act and other COVID-19 related expenditures.”

Year-to-date, government spending reached P2.388 trillion, up 23.78% from P1.930 trillion in the same comparable period.

Primary spending, net of interest payment, in July amounted to P315.3 billion, up 9.32%.

Total primary spending in the first seven months of 2020 grew 26.07% to P2.141 trillion.

Interest payments for July increased by 16.52% to P59.4 billion “mainly driven by the interest paid in advance for Global Bonds for which the original schedule of payment fell on a weekend (August 1, 2020).”

For January to July, interest payments grew 6.94% to P231 billion.

As a percentage of revenue, interest payments for the seven-month period accounted for 14.64%, increasing from the previous year’s level of 12.75% due to lower collections.

Meanwhile, interest payments as a percentage of expenditure improved to 10.34% from 11.97% a year ago due to faster spending.

Revenues

On the other hand, government revenues in July fell by 11.22% to P234.5 billion “due to the adverse impact of the health crisis on economic activity.”

Year-to-date, total revenue collection stood at P1.688 trillion, down 6.84% from P1.812 trillion.

The lion’s share or 85% of government revenues came from taxes.

The country’s main tax collection agency, Bureau of Internal Revenue, collected P159 billion in July, down 11.84% from P180.3 billion last year “after the deduction of P1.6 billion tax refund paid to various claimants.”

BIR’s January to July collection stood at P1.115 trillion, down 10.53% from P1.250 trillion.

The Bureau of Customs (BOC), meanwhile, raised a total of P49.8 billion last month, net of P98 million tax refund.

Th3 BOC’s July performance was 8.84% lower compared to the P54.6 billion achieved in the same month a year ago, “weighed down by disruptions to trade caused by lockdown.”

This trimmed the Customs’ aggregate collection as of end-July to P302.9 billion from the prior year’s total of P357.7 billion.

The Bureau of the Treasury (BTr) collected to P7.6 billion in July, down 46.74% slower “due to the early remittance of dividends this year as well as lower national government share from PAGCOR (Philippine Amusement and Gaming Corp.) and interest earned from government deposits which declined by P2.6 billion year-on-year.”

The Treasury’s cumulative revenue for the seven-month period, however, grew by 87.16% to P190.9 billion and already exceeded the original full-year target of P82.3 billion by more than P108.6 billion contributed by higher dividends and other government service income.

The P14.6 billion non-tax collections, including privatization proceeds and fees and charges grew 12.43% over last year partly due to the payment of “P4.3 billion concession fees made by the MPCALA Holdings Inc. in connection with the Cavite-Laguna Expressway (CALAX) project.”

Year-to-date, non-tax collections of P68.3 billion, however, is still lower by 25.70% relative to 2019’s level “because of the restrictions to some economic activities as well as government operations caused by the ongoing COVID-19 pandemic.” --KBK, GMA News