Budget deficit narrows in February

MANILA, Philippines — The government incurred a fiscal deficit of P37.6 billion in February, lower by nearly 51 percent than the budget gap of P76.4 billion a year ago following a decline in disbursements due to high base effects, the Bureau of the Treasury (BTr) reported yesterday.

The latest figure, however, was a reversal of the P23 billion surplus recorded in January.

For the first two months, the budget deficit amounted to P14.6 billion, 54.3 percent lower than the P31.8 billion recorded in the same period in 2019.

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

Based on Treasury data, expenditures for the month of February reached P244.4 billion, outpacing revenue generation which amounted to P206.8 billion.

Tax collections made up 92 percent of the total, with the Bureau of Internal Revenue (BIR) collecting P142.2 billion, 4.79 percent up from P135.7 billion in February 2019.

In addition, collections of the Bureau of Customs (BOC) amounted to P44.8 billion in February, growing by 1.33 percent from last year’s collection of P44.2 billion.

“The slow growth for the month was mainly due to the slowdown of importation from China amid the coronavirus outbreak,” the Treasury said.

Non-tax collections, meanwhile, reached P17 billion in February, P5.9 billion of which came from the BTr.

The BTr’s revenue was 36.25 percent lower than the P9.2 billion a year ago due to lower dividend remittances from state-run corporations.

Non-tax revenues from other offices, including privatization proceeds and fees and charges, rose by 7.46 percent to P11.2 billion from P10.4 billion last year.

On the other hand, Treasury data also showed that expenditures declined by 12.22 percent to P244.4 billion in February from P278.5 billion in the same period last year.

“The BTr attributed the drop largely to the base effect of internal revenue allotments (IRA) of local government units for January 2019, which was released in February last year, as well as lower interest payments,” the BTr said.

Interest payments contracted by 39.32 percent to P15.4 billion in February.

Net of interest payments, the national government’s productive spending totaled P229.1 billion, lower by 9.51 percent from P253.2 billion.

Meanwhile, the national government incurred a primary deficit of P22.2 billion in February 56.45 percent narrower than the P51.1 billion posted in the same month in 2019. This brought the cumulative primary surplus up by 57.98 percent to P62.2 billion over last year’s P39.4 billion.

Sought for comment, Nicholas Mapa, senior economist at ING Bank, said the pullback in February expenditures was more due to base effects after the strong outlay in the same month in 2019.

“The trends, however, will likely change in March,” Mapa said.