Gov’t on-track to hit 2024 fiscal goals —Recto

The Philippine government is on track to meet its fiscal targets this year amid the strong revenue collections and manageable deficit level seen in the first half of the year, according to Finance Secretary Ralph Recto.

“So far, we are on track to meet our fiscal program for the year, having already achieved half of our targets,” said Recto at the Senate’s deliberations of the proposed P6.352-trillion national budget for 2025.

The Finance chief said that state revenues reached P2.15 trillion in January to June, up 15.6% year-on-year.

For this year, the Marcos administration is targeting P4.27 trillion in revenues, equivalent to 16.1% of the gross domestic product (GDP).

Broken down, collections from the country’s main tax collectors, the Bureau of Internal Revenue (BIR) and the Bureau of Customs (BOC), reached P1.84 trillion, up 10% from a year earlier.

Recto said the higher tax collections during the period was due to digitalization, strict enforcement, and plugging of leakages in the tax system—especially from e-commerce.

Non-tax revenues, meanwhile, stood at P314.2 billion, up 63% following the Department of Finance’s (DOF) mandate to hike the government-owned and -controlled corporations’ (GOCCs) dividend rates to 75% from 50%.

“This robust revenue performance placed us among Asia’s top revenue-to-GDP ratios at 17.1% for the first half of the year. And this is above our full-year target of 16.1%,” the Finance chief said.

State expenditures also grew to P2.76 trillion, up 14.6% year-on-year, bring the first semester 2024 expenditure-to-GDP ratio to stand at 21.9%.

The government’s fiscal balance stood at a deficit of P613.9 billion as of end-June this year.

Relative to the size of the economy, the deficit-to-GDP ratio during the period was at 4.9%, below the government’s ceiling of 5.6% deficit-to-GDP ratio for the entire year.

Efficiency

Recto, moreover, said he has tasked the BIR and BOC to “work doubly hard and boost efficiency” as tax collections are expected to rise by 11.8% annually, which will outpace the roughly 8.7% average increase of nominal GDP every year from 2024 to 2028. 

“These projections took into account the additional revenues from the refined revenue reforms of the DOF, which we recalibrated to ensure that they do not place undue burdens on the taxpayers,” Secretary Recto said.

Disbursements, on the other hand, are expected to grow by an average of 7.4% and remain at about 21.1% of the GDP.

“With higher government revenue collections and improved expenditure management, our fiscal deficit is projected to drop from 5.6% in 2024 to 3.7% by 2028,” the Finance chief said.

Outstanding debt

Recto also reiterated that there is no cause for concern regarding the Philippine government's total outstanding debt as the size of the country’s economy is large enough to allow the government to generate without difficulty the resources needed to meet its debt obligations.

As of the first half of 2024, debt-to-GDP ratio was at 60.9%, down from 61% as of end-June 2023.

The end-June 2024 running debt stock  reached P15.48 trillion, up 9.4% from P14.15 trillion in the same period last year.

Recto said that the debt level as a percentage of GDP “will gradually decline in a realistic manner while creating more jobs, increasing people’s incomes, and decreasing poverty in the process.”

The DOF targets to bring down the ratio below 60% over the medium term by 2028.

The Finance chief stressed that government spending will continue to prioritize education, infrastructure, food security, social protection, and national security to support the country’s growth momentum. —VAL, GMA Integrated News