Budget deficit shrinks in H1

MANILA, Philippines — The government managed to narrow its budget shortfall as of the first semester as revenues picked up faster than overall spending amid the election ban, but the new administration is still up for a challenging ride to plug the gap.

Latest data from the Bureau of the Treasury showed that the deficit from January to June went down by 5.84 percent to P674.2 billion from P716.1 billion a year ago.

The latest figure was also lower than the P828.7 billion projection of the Cabinet-level Development Budget Coordination Committee.

Even with a lower budget shortfall, the deficit still means that the government is spending beyond what it earns.

Total revenue collection for the first half improved by 16 percent to P1.73 trillion, exceeding the target by P79.1 billion as both the Bureau of Customs (BOC) and Bureau of Internal Revenue (BIR) posted higher revenues.

The bulk or 89 percent of the revenues came from tax collections of P1.54 trillion, up 15 percent.

The BIR’s tax haul grew by 10 percent to P1.13 trillion, but this was three percent short of the P1.16 trillion target.

Customs, on the other hand, saw its collection jump by 31 percent to P396.7 billion from P301.7 billion last year.

The BOC said this was largely due to the gains from anti-smuggling measures, including the fuel-marking program which got a further boost from higher oil prices and the depreciation of the peso against the dollar.

Non-tax collections also increased by 27 percent to P186.3 billion from P145 billion in 2021.

Income generated by the Treasury for the six-month period rose by 27.5 percent to P104.1 billion on higher dividend remittance and interest income from government deposits, while those of other offices increased by 26 percent to P82.2 billion.

Meanwhile, government spending went up by 8.85 percent to P2.4 trillion but fell short of the P2.45 trillion target for the period.

The Treasury attributed this to the slower-than-expected capital expenditures following the election ban from March to May, as well as the timing of release for the special shares of local government units in the proceeds of national taxes.

In June alone, expenditures picked up by 28 percent amid higher capital outlay disbursements for road and transport infrastructure programs of the government, as well as the implementation of other social protection programs.

Rizal Commercial Banking Corp. chief economist Michael Ricafort said revenues continue to grow as the government pushes for better economic reopening, allowing more businesses and industries to operate at higher capacity.

Moving forward, Ricafort said the continuation of infrastructure projects and increased subsidies for agricultural and transportation sectors would lead to higher government expenditures.

But he said this would be offset by reduced government spending amid no more lockdown-related expenditures, as well as increased government revenues and intensified tax collections.