Fiscal deficit narrows to P42.6 B in H1

MANILA, Philippines — The country’s budget deficit shrunk in the first six months due to lower government spending, according to the Bureau of the Treasury (BTr).

According to the latest cash operations report of the BTr, the national government incurred a fiscal deficit of P42.6 billion from January to June, 77.9 percent lower than the P193 billion shortfall recorded in the same period last year.

For the month of June, alone, the country’s fiscal position settled at a P41.8 billion deficit, a reversal of the P2.6 billion surplus recorded in May. This was, however, 22.93 percent narrower than the P54.3 billion deficit recorded in the same month in 2018.

A deficit occurs when the government spends more than the revenues that it generates.

Based on Treasury data, government revenues from January to June rose by 9.71 percent, while public expenditures dropped by 0.83 percent.

Revenues increased to P1.547 trillion compared to P1.41 trillion as of end-June last year. The Treasury said P1.38 trillion of the amount was generated through tax collections.

In particular, the Bureau of Internal Revenue (BIR) generated P1.066 trillion in revenue in the first half, 10.56 percent higher than the P964.5 billion recorded a year ago.

Collections by the Bureau of Customs (BOC) also improved by 8.45 percent to P303 billion from last year’s level of P279.4 billion.

Non-tax collections as of end-June likewise climbed by 6.95 percent to reach P166.6 billion.

The BTr said P87.6 billion of the amount came from its own revenues, exceeding the bureau’s full-year target of P73.9 billion by 18.6 percent. The remaining P79 billion came from other offices.

On the other hand, the Treasury said government expenditures in the first six months amounted to P1.59 trillion, declining by 0.83 percent from the P1.603 trillion posted in the same period last year.

“Cumulative spending from January to June settled at P1.59 trillion, slightly down by 0.83 percent year-on-year or P13.4 billion mainly because the government operated under a reenacted budget during the first four months of 2019,” the BTr said.

Primary expenditures reached P1.41 trillion, lower by 1.94 percent from last year’s P1.438 trillion, while interest payments amounted to P180.1 billion or 8.8 percent higher than last year.

“As a percentage of expenditures, interest payments for the first semester accounted for 11.32 percent compared with 10.32 percent a year ago due to lower expenditures. Meanwhile, interest payments as a percentage of total revenues declined to 11.64 percent from 11.73 percent,” the BTr said.

Netting out interest payments, the BTr said the government’s primary fiscal balance as of end-June remained in surplus at P137.4 billion, a reversal of the P27.5 billion primary deficit posted in the first semester last year.

For 2019, the inter-agency Development Budget Coordination Committee (DBCC) set a revenue program of P3.15 trillion, equivalent to 16.4 percent of the gross domestic product (GDP). Expenditures, meanwhile, are targeted to hit P3.77 trillion, or 19.6 percent of GDP.