Budget deficit shrinks on higher revenue growth

MANILA, Philippines — The government continued to narrow its budget deficit in August as growth in revenue outpaced spending receipts with consistent normalization of business operations and the overall economy, according to the Bureau of the Treasury (BTr).

Based on the BTr data, the budget shortfall stood at P72 billion in August, 40.43 percent lower compared to last year’s P120.9 billion.

Rizal Commercial Banking Corp. chief economist Michael Ricafort said the narrower budget deficit was a reflection of continued economic reopening amid declining COVID cases and better vaccination coverage.

In turn, this allowed the government to generate higher tax revenue collections and reduced spending following the lack of restrictions that would have merited more financial assistance.

“This is also pushing for greater fiscal discipline amid the priority of narrowing the budget deficit and tempering the growth in the national government’s overall debt,” Ricafort said.

However, Ricafort warned of risk factors such as higher inflation and interest rates that could increase the government’s expenditures.

“Other risk factors include increased fuel subsidies for the transport and agricultural sectors as well as for the poorest sectors, lower tariffs on imported food, and other non-monetary interventions to mitigate the risks of inflation being passed on to the general public,” he said.

Collections improved by 28.23 percent to P332.4 billion in August compared to last year’s P259.3 billion, with the Bureau of Customs and Bureau of Internal Revenue (BIR) both reporting higher revenues.

The bulk or 93 percent of the income came from tax collections at P308.4 billion, up 27 percent from a year ago.

The BIR’s haul grew by 23 percent to P228.9 billion in August while Customs saw its collection jump by 47.84 percent to P78.9 billion from P53.4 billion last year.

Non-tax collections also soared by 42 percent to P24 billion in August from P16.9 billion a year ago.

Income generated by the Treasury for the month slightly rose by 4.87 percent to P4.9 billion largely due to higher government share payments from the Philippine Amusement and Gaming Corp. and Treasury’s investment income.

Collection from other offices including privatization proceeds and fees and charges for August picked up by over 50 percent to P19.1 billion.

Meanwhile, government spending in August went up by 6.39 percent to P404.5 billion.

The Treasury attributed this to the higher national tax allocation transfers and interest payments.

From January to August, the fiscal deficit shrank by 13 percent to P833 billion from P958.2 billion in the same period last year.

For the eight-month period, revenues jumped by 18 percent to P2.37 trillion while expenditures only increased by 8.02 percent to P3.2 trillion.

This makes up 72 percent of the P3.3 trillion full-year program.

For the eight-month period, BIR’s haul grew by 12.25 percent to P1.6 trillion. The agency has so far collected 65 percent of its P2.4 trillion target for the year.

Customs, on the other hand, saw its collection jump by 36 percent to P559.2 billion from P412.3 billion last year. The agency’s January to August performance is close to 80 percent of its goal of generating P721.5 billion in revenues.

Year-to-date spending, meanwhile, is about 65 percent of the P5 trillion expenditure program of the government.