Nat’l government fiscal balance yields narrower deficit in July at P121.2B

The national government’s fiscal balance saw a narrower deficit in July on the back of higher revenue collection alongside a modest increase in state expenditures, data released by the Bureau of the Treasury (BTr) showed Tuesday.

BTr data showed the government posted a budget shortfall of P121.2 billion last month, narrower by 13.57% from P140.2 billion recorded in the same month last year.

The Treasury attributed the fiscal performance in July to the 9.21% growth in revenue collection along with a modest 0.69% increase in government expenditures during the period.

The year-to-date fiscal balance stood at P837.3 billion, up 19.5% from P700.6 billion in January to July 2020.

Revenue collections

The government’s revenue collection in July reached P256.1 billion, 9.21% higher than the P234.5 billion posted in the same month last year.

The July revenue collections brought the first seven months of 2021 collections to P1.687 trillion, up 3.47% year-on-year.

The government’s revenue is made up of 90% taxes and 10% of non-tax collections.

The country’s main tax collection agency, the Bureau of Internal Revenue (BIR), saw a 7.45% increase in its July performance raising P170.8 billion, inclusive of P1 billion in tax refunds. Year-to-date, the BIR’s collection amounted to P1.202 trillion, up 7.82% from P1.115 trillion year-on-year.

The Bureau of Customs, meanwhile, collected P57.2 billion, up 14.76% from a year earlier. This brought the Customs’ January to July collection to P358.9 billion, up 18.49% from P302.9 billion in the same period in 2020.

Collections by the BTr stood at P13.6 billion, up 78.03% year-on-year.

“The significant increase for the period was largely due to higher dividend remittances, national government share from Philippine Amusement and Gaming Corp. and interest income from government deposits,” the Treasury said.

The BTr’s total revenues for the January to July period reached P95.2 billion, already surpassing its full-year program of P74.7 billion by 27.52% “driven by higher dividend collections as well as income from Bond Sinking Fund (BSF) investment and government deposits.”

However, the year-to-date performance of the Treasury is 50.10% lower compared to the P190.9 billion raised last year due to the base effect of higher income and dividend remittances last year in line with the provisions of the Republic Act No. 11469 or Bayanihan 1.

Revenues from other office or non-tax revenues, including privatization proceeds, fees, and charges, stood at P12.7 billion, lower by 22.96% year-on-year due to the high base effect of the one-off remittance from MPCALA Holdings Inc. for the Cavite-Laguna Expressway project, according to the BTr.

Nevertheless, January to July non-tax collections still grew by 13.20% to P77.9 billion.

Expenditures

The national government’s disbursement in July amounted to P377.3 billion, 0.69% higher than the P374.7 billion in the same period in 2020.

“The modest increase can be attributed to the higher personnel services expenditures and infrastructure outlays, but were partially offset by the one-off Social Amelioration Program (SAP) of the Department of Social Welfare and Development (DSWD) whose implementation of the second tranche was still ongoing in July last year,” the BTr said.

“The timing of subsidy releases to the Philippine Health Insurance Corporation and National Housing Authority also weighed down on the growth disbursements for the period,” it added.

Year-to-date expenditures stood at P2.583 trillion, surpassing last year’s disbursements of P2.388 trillion by 8.16% or P195.3 billion.

Primary expenditures, net of interest payments, grew to P318.2 billion from P315.3 billion year-on-year.

Cumulative primary spending for the year reached P2.316 trillion, up 8.16%.

Interest payment, meanwhile, amounted to P59 billion in July, 0.60% lower than the P59.4 billion recorded in the same month last year “due to Treasury Bonds/Bills issuance was offset by lower foreign payments due to matured global bonds.”

Total interest payments for the seven-month period totaled P267.6 billion, up 8.30% due to discounts from the reissued Fixed Rate Treasury Bonds and coupon payments from Retail Treasury Bonds issued last year and this year.

Fiscal indicators

The country’s gross domestic product (GDP) expanded by 11.8% in the second quarter of 2021, rebounding from the 17% contraction in the second quarter of 2020 but declining by 3.9% from the first quarter of 2021.

Despite this, the deficit-to-GDP ratio for the first semester rose 7.86% from last year’s level of 6.53% as expenditure growth outpaced revenue collection during the period, the Treasury said.

“This reflected the higher expenditure effort of 24.21% compared to 23.47% for the same period in 2020 while revenue effort moderated to 16.53% from 16.94% due to the high base effect of dividend remittances last year. Nevertheless, tax effort increased to 14.74% from 14.19% a year ago,” it said.—AOL, GMA News