Philippines ends 2021 with P1.67T budget deficit

The Philippine government closed the year 2021 with a wider budget deficit as state spending for COVID-19 recovery measures exceeded revenue collections, data released by the Bureau of the Treasury (BTr) showed Tuesday.

Treasury data showed the government posted a budget shortfall of P1.67 trillion, 21.78% or P298.7 billion wider than the P1.37-trillion fiscal deficit recorded in the full-year 2020.

The full-year 2021 budget deficit is equivalent to 8.61% of the country’s gross domestic product (GDP), lower than the government’s ceiling of 9.3% fiscal gap as a percentage of GDP.

The BTr noted that last year’s shortfall resulted from the 10.60% growth in government expenditures despite an increase of 5.24% in revenue collections.

Expenditures

In particular, the government’s spending during the January to December 2021 period reached P4.675 trillion, higher by P448.2 billion or 10.60% than the P4.227 trillion expenditures posted in 2020.

The Treasury said the increase in state spending last year was owed to “infrastructure and other capital expenditures, continued spending for various recovery measures including vaccine procurement and equity infusion in support of GFI (government financial institution) lending assistance programs, as well as higher IRA (internal revenue allotment) shares of LGUs (local government units).”

Compared to the full-year program of P4.737 trillion, however, government expenditures were lower by 1.30% “mainly due to lower-than-programmed interest payments.”

Primary expenditure accounted for 91% or P4.2 trillion of total expenditures for 2021, up by 10.38% year-on-year.

Interest payments, on the other hand, stood at P429.4 billion, up 12.89% year-on-year, but 19.21% lower compared to the full-year program of P531.5 billion, generating P102.1 billion in savings, according to the Treasury.

Revenues

The government’s revenue collections in 2021 stood at P3.005 trillion, up 5.24% or by P149.6 billion compared to P2.885 trillion recorded in 2020.

The collections last year was 4.30% higher than the target of P2.881 trillion.

The BTr said that 91% or P2.7 trillion of the total revenue collection was generated through tax revenues, which grew by 9.40% year-on-year.

Non-tax sources, meanwhile, comprised the remaining 9% and posted a 24.40% contraction as collections normalized from the previous year.

The Bureau of Internal Revenue (BIR), the country’s main tax collection agency, collected P2.078 trillion after deducting P8.2 billion in tax refunds paid to various claimants.

The BIR’s full-year 2021 collection was higher by 6.51% compared to P1.951 trillion posted in 2020. It was, however, 0.15% short of the P2.081-trillion target.

The Bureau of Customs (BOC) collected P643.6 billion, up 19.69% from P537.7 collected in 2020. It was also 4.35% higher than the P616.7-billion target.

“BOC’s strong performance was credited to sustained enforcement activities, improved valuation, as well as improvement of importation volume,” the Treasury said.

The BTr’s income amounted to P125.3 billion and reflected a full- year contraction of 42.95% or P94.3 billion mainly due to lower dividends on national government’s shares of stocks, interest on advances from government and controlled corporations, and other government service income.

Despite this, the BTr said it overshot its full-year program of P74.7 billion by 67.80% or P50.6 billion as dividend remittances remain robust along with higher income from investments and interest income from national government deposits.

Total revenue from other offices or other non-tax collections including privatization proceeds and fees and charges for 2021 stood at P140.4 billion, 6.50% higher than the collections recorded a year ago and was 52.56% better than the programmed level of P92 billion.—AOL, GMA News