By Luisa Maria Jacinta C. Jocson, Reporter
The National Government’s (NG) budget gap narrowed in the first half of the year, as revenues surged and spending slowed, the Bureau of Treasury (BTr) reported on Friday.
BTr data showed that the fiscal deficit in the January-to-June period narrowed by 18.17% to P551.7 billion from P674.2 billion a year ago.
However, the budget gap fell short of its program for the period, lower by 28.49% from its P771.5-billion ceiling.
Revenues in the first six months rose by 7.68% to P1.86 trillion from P1.73 trillion in the same period a year ago.
This was also up 2.72% from the P1.81-trillion revenue program for the period.
Tax revenues grew by 7.5% to P1.66 trillion from P1.54 trillion, accounting for the bulk or 89% of the total collection as of end-June. This was a tad lower than its P1.68-trillion program.
The Bureau of Internal Revenue (BIR) collected P1.22 trillion, up by 7.65% from P1.13 trillion a year ago. However, this was 2.57% lower than the agency’s P1.25-trillion program for the period.
Collections from the Bureau of Customs (BoC) rose by 9.26% to P433.4 billion from P396.7 billion.
“The agency’s year-to-date performance was 3.04% or P12.8 billion better compared to the P420.7 billion first half target, driven by its anti-smuggling operations,” the BTr added.
Nontax revenues went up by 9.13% to P203.1 billion from P186.2 billion, exceeding its P130.1 billion program by 56.16%.
Revenues from other offices jumped by 34.26% to P110.2 billion, surpassing its P81.7 billion target by 34.82%.
This helped offset the 10.68% decline in BTr income to P93 billion. However, the BTr stated that its revenues in the first six months surpassed its program for the period.
“The BTr’s six-month performance surpassed the program for the period by 92.20% or P44.6 billion and was already 59.52% higher than the P58.3 billion full-year program driven by higher income from Bond Sinking Fund (BSF) investment, dividend remittances, as well as NG share from PAGCOR profit and interest income from NG deposits,” it added.
On the other hand, state spending inched up by 0.42% to P2.41 trillion in the six-month period, from P2.4 trillion a year earlier. This was 6.6% lower than the P2.58-trillion program for the first half.
The BTr attributed the slower spending to “substantial outstanding checks recorded as of end-June amounting to P124.1 billion, according to consolidated bank reports.”
“Moreover, the lower-than-programmed interest payments; ongoing implementation of some social protection programs, particularly the registration and validation of beneficiaries; as well as billing concerns from suppliers/creditors, such as late submissions of billing statements and compliance with documentary requirements have affected the spending outturn for the period,” it added.
Primary spending, which refers to spending net of interest payments, edged lower by 0.7% to P2.13 trillion. This was 6.59% lower than the government’s P2.3-trillion projection.
Meanwhile, interest payments increased by 9.81% to P282.5 billion, below its P302.8-billion program for the period.
Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said that the narrower budget deficit in the January-June period was due to revenue growth supported by the economic recovery.
“While government expenditures posted a slower growth due to more disciplined government spending and no large lockdowns since 2022 and as a policy priority, going forward, fundamentally reduced government expenditures on financial assistance and COVID-19 programs, all of which helped improve the country’s fiscal performance since the start of 2023 in terms of less need for the government to borrow, somewhat tempering the increase in the country’s outstanding debt,” he said in a Viber message.
JUNE DEFICIT
In June alone, the budget deficit stood at P225.4 billion, higher by 4.58% from the P215.5 billion gap in the same month a year ago.
“The higher deficit was due to a 7.91% year-over-year drop in government receipts even as expenditures contracted by 2.59%,” the BTr said.
At the same time, government revenues declined by 7.91% to P267.3 billion from P290.3 billion a year ago.
Broken down, tax revenues dropped by 5.12% to P238.9 billion as collections from the BIR went down by 5.07% to P164.7 billion while Customs revenues slipped by 2.72% to P74.1 billion.
Meanwhile, nontax revenues fell by 26.13% year on year to P28.4 billion.
BTr revenues declined by 48.19% to P10.8 billion due to lower dividend remittances, while revenues from other offices inched down by 0.34% to P17.7 billion.
Government spending slipped by 2.59% to P492.7 billion in June from P505.8 billion a year ago.
The BTr said this was “partly due to the lower National Tax Allotment shares of Local Government Units and outstanding checks, or those checks issued but not yet presented for payment of encashment by suppliers or creditors, in various agencies.”
Primary expenditures dropped by 6.23% to P439.8 billion while interest payments climbed by 43.89% to P52.9 billion.
“The budget deficit for the month of June (was) the widest so far this year or since December 2022, largely due to year-on-year decline in government revenues partly due to the reduction in individual tax rates for most income brackets since January 2023 under the TRAIN Law,” Mr. Ricafort said.
Under the Tax Reform for Acceleration and Inclusion (TRAIN) law, further reductions in the personal income tax rates took effect on Jan. 1.
This year, the government has set a budget deficit ceiling of P1.499 trillion, equivalent to 6.1% of the gross domestic product.
The program consists of P3.729 trillion in revenues and P5.228 trillion in disbursements.
As of end-March, the deficit-to-gross domestic product (GDP) ratio was at 4.84%, lower than the 6.41% in the first quarter a year ago and the 7.33% seen in 2022.