Philippines' budget deficit narrows to P47.8 billion in July

The national government continued to post a budget deficit in July, albeit the lowest level in three months as revenues grew at a faster pace than expenditures.

According to data released by the Bureau of the Treasury (BTr) on Thursday, the budget deficit stood at P47.8 billion in July, 44.89% lower than the P86.8-billion deficit the same month a year ago.

It is also the lowest in three months since April 2023. 

The year-to-date budget deficit was recorded at $599.9 billion, down from P761.0 billion in the same period in 2022.

“(This is) largely due to faster year-on-year (growth) in government revenues as the economy reopened towards greater normalcy as manifested by the lifting of the COVID national state of public health emergency since July 22, 2023,” Rizal Commercial Banking Corp. (RCBC) chief economist Michael Ricafort said.

The treasury bureau also attributed the narrower budget gap to higher revenues during the month at P411.7 billion, reflecting a 33.40% or P103.1-billion increase as the Bureau of Internal Revenue (BIR) collected P273.1 billion, while the Bureau of Customs (BOC) collected P73.1 billion.

The BTr also recorded a P50.8-billion income for the month, its highest monthly collection for the year as it reported higher dividend remittances from managed funds and government deposits, along with the national government share from profits of the Philippine Amusement and Gaming Corp. (PAGCOR).

“There is urgency for tax reform and other fiscal reform measures to further boost/intensify tax revenue collections through new/higher taxes, at least intensified tax collections from existing tax laws, as well as more disciplined government spending,” Ricafort said.

Expenditures hit P64.1 billion

The same data showed that expenditures posted a year-on-year growth of 16.22% or P64.1 billion from P395.4 billion to P459.5 billion, with higher disbursements in the Departments of Social Welfare and Development (DSWD), Agriculture (DA), Public Works and Highways (DPWH), and Transportation (DOTr).

Interest payments for the month climbed 22.0% or P11.5 billion to P63.6 billion, bringing the year-to-date level up 11.87% to P36.7 billion.

“Intensified tax revenue collections based on existing tax laws, possible new taxes, and higher tax rates under the proposed additional tax reform measures… would structurally improve the recurring sources of tax revenues for the government that improves the credit quality or ability to pay the government's debts,” Ricafort said.

President Ferdinand “Bongbong” Marcos Jr. in his State of the Nation Address (SONA) in July called on Congress to support additional tax measures, which are already being pushed by his economic team.

Finance Secretary Benjamin Diokno in 2022 said the economic team was looking to recommend the passage of legislation to tax single-use plastics and digital transactions.

The Medium Term Fiscal Framework also includes the rationalization of the mining fiscal regime and the motor vehicle user’s charge or road user’s tax, which the Development Budget Coordination Committee (DBCC) expects to generate an additional P12.4 billion and P15.8 billion respectively in the first year of implementation.

The Department of Budget and Management (DBM) earlier this month bared proposals to amend the government procurement process, in a bid to speed up government spending and boost economic growth. —NB, GMA Integrated News