Gov’t posts P29.9-B budget surplus in Aug

MANILA, Philippines - Lower-than-planned public spending and improving revenue collections allowed the Philippines to post a budget surplus in August, further narrowing the deficit in the first eight months of the year.

In a report, the Department of Finance said the government posted a budget surplus of P29.9 billion in August, a reversal of the deficit in the previous month and the third monthly surplus for the year. The latest budget figure was also a 36-percent improvement from the P21.901-billion surplus recorded a year ago.

Revenues climbed 10 percent to P170 billion while expenditures rose by only five percent to P140.11 billion despite the government’s earlier pronouncements it would accelerate spending to sustain strong economic growth.

Revenue for the eight-month period grew 12 percent to P1.27 trillion while public spending remained low, rising by only six percent to P1.3 trillion.

The August fiscal surplus allowed the government to narrow its eight-month deficit by 69 percent to P25.9 billion from P56.7 billion in the same period in 2013.

A budget deficit occurs if a government expenditures exceed revenue, while a surplus ensues if income exceeds spending.

The government’s reluctance to spend has been blamed for the economy’s slow start in the first quarter, prompting the World Bank to slash its growth forecasts for the Philippines for 2014 and 2015 to 6.4 percent and 6.7 percent, respectively.

According to the World Bank, the Philippines could sustain high growth by accelerating structural reforms and increasing investments in infrastructure.  It must also spend an additional five percent of gross domestic product on health and education to boost productivity and competitiveness of Filipino workers.

The Aquino administration set a P266.2 billion budget deficit ceiling for the year, equivalent to two percent of the Philippine economy as measured by gross domestic product (GDP).

The eight-month deficit comprises only 10 percent of the full-year cap.