Philippines’ budget deficit narrows by 16.73% in May

The national government’s fiscal balance saw a narrower deficit in May as state collections exceeded spending growth during the period, data released by the Bureau of the Treasury (BTr) on Tuesday showed.

The government’s budget shortfall stood at P122.2 billion during the month, 16.73% lower than the P146.8-billion deficit in May 2022.

“The lower deficit for the period was brought about by the 9.35% increase in national government receipts overtaking the 0.88% marginal growth in national government expenditures,” the BTr said.

Year-to-date, the budget gap for the first five months of 2023 amounted to P326.3 billion, down 28.86% from the P458.70-billion cumulative shortfall in the same period last year.

The narrower fiscal gap was also due to the higher growth in revenues at 10.83% against the spending growth of 1.22%.

In an emailed commentary, Rizal Commercial Banking Corporation chief economist Michael Ricafort said the Marcos administration’s “priority on fiscal discipline and no more lockdowns so far since 2022 reduced the government’s expenditures on ayuda or financial assistance and other COVID programs since lockdowns in the past which was proven to be costly for the government that led to wider budget deficits that, in turn, led to large government borrowings, or a total of P4 trillion from 2020-2021 (or an average of about P2 trillion per year) and PHP1.690 trillion in 2022.”

Revenues

Broken down, the government’s collections in May stood at P33.4 billion, up 9.35% from P304.9 billion collected in the same month last year.

This brought the cumulative year-to-date state revenues to reach P1.592 trillion, up 10.83% from P1.437 trillion year-on-year.

“This growth was attributed to improvements in both tax and non-tax collections, which grew by 9.71% and 20.56% year-on-year, respectively,” the Treasury said.

Tax revenues in May totaled P291.7 billion, up 2.43% from P284.8 billion, bringing the total tax collections to P1.414 trillion for the January to May period.

Non-tax collections amounted to P41.7 billion, up 107.35% from P20.1 billion a year earlier. Year-to-date non-tax revenues reached P178 billion, up 20.56% from P147.7 billion.

The Bureau of Internal Revenue’s (BIR) contributed the largest share in total revenues at P213.3 billion, albeit lower by 2.43% from P284.8 billion year-on-year.

Year-to-date, however, the BIR’s collections grew by 9.71% to P1.054 trillion from P959 billion in January to May 2022.

The Bureau of Customs (BOC) also raised P77.9 billion for May, topping its previous year’s outturn by 17.56% from P66.3 billion.

This brought the Customs' January to May collections to P359.3 billion, up 12.19% from P320.5 billion.

The BTr, likewise, reported its income rising by 179.71% to P24.9 billion in May from P8.9 billion a year earlier, bringing its year-to-date collections to P82.2 billion.

The Treasury said the increase in its income in May was attributable to higher dividend and PAGCOR remittances, investment income, and interest on NG deposits.

Other non-tax revenues including privatization proceeds and fees and charges contributed P16.8 billion in May, posting a year-on-year growth of 49.78% or P5.6 billion.

Expenditures

Government spending, meanwhile, saw a moderate increase of 0.88% to P455.7 billion from P451.7 billion a year earlier.

This, as the lower National Tax Allotment (NTA) shares of local government units and net lending assistance to government corporations weighed down the growth of disbursements, according to the BTr.

“Net of these items, however, spending grew by 5.7% (P20.8 billion), mainly attributed to higher capital expenditures of the Department of Public Works and Highways, and Department of Transportation for their road and transport infrastructure projects, respectively, as well as larger personnel services expense with the release of the mid-year bonus of qualified government employees,” it added.

Year-to-date disbursement as of end-May amounting to P1.9 trillion also saw a moderate growth of 1.22%.

Total interest payments for May stood at P41.3 billion, up 22.21% year-on-year.

This brought the year-to-date interest payments to P229.6 billion, up 4.13% from the same period last year.

“As a percentage of revenue, IP for the 5- month period accounted for 14.41%, declining from the previous year’s 15.34%. On the other hand, its share to expenditures increased to 11.96% from 11.63% a year ago,” the Treasury said. — BM, GMA Integrated News