Philippine fiscal position swings to surplus in Oct.

The national government’s fiscal position swung to a surplus in October, driven by a 23% jump in revenues, the Bureau of the Treasury (BTr) said on Wednesday.   

The NG posted a PHP 6.3-billion budget surplus in October, a turnaround from the PHP 34.4-billion deficit in the same month a year ago.

This was the first budget surplus since the PHP 42.7-billion surplus posted in April.

Month on month, the budget balance swung to a surplus from the PHP 273.2-billion deficit in September.

Data from the BTr showed government revenues increased by 22.63% to PHP 473.1 billion in October from PHP 385.8 billion a year ago, as tax revenues jumped by 16.94% to PHP 414.9 billion.

The bulk of tax revenues came from the Bureau of Internal Revenue (BIR), which collected PHP 325.5 billion in October, up 18.62% year on year.

“The double-digit growth in October can be attributed to higher collections on value-added tax (VAT), personal income tax (PIT), documentary stamp tax (DST), corporate income tax (CIT), excise tax on tobacco products, and percentage taxes,” BTr said.

Collections by the Bureau of Customs jumped by an annual 11.5% to PHP 86.9 billion in October, while collections by other offices were flat at PHP 2.4 billion.

On the other hand, non-tax revenues also went up by 87.65% year on year to PHP 58.3 billion in October. Treasury revenues declined by 13.5% to PHP 14.5 billion, due to “the base effect of early remittances of dividends from government-owned and -controlled corporations last year.”

Collections by other offices surged by 206.72% to PHP 43.7 billion.

Meanwhile, expenditures rose by 11.08% to PHP 466.8 billion in October from PHP 420.2 billion a year ago.

“This was mainly attributed to higher personnel services expenses due to the first tranche of the salary adjustments of qualified civilian government employees and the release of FY 2022 Performance-Based Bonus of the Department of Education,” it said.

Spending also got a boost from the implementation of infrastructure projects of the Department of Public Works and Highways and foreign-assisted rail projects of the Department of Transportation, as well as social protection and health programs.

Interest payments slipped by 6% to PHP 55.4 billion, while other expenditures jumped by 13.89% to PHP 411.4 billion.

“Budget surplus (in October) may stem from low budget utilization rate of several agencies due to various factors such as procurement and disbursement issue,” John Paolo R. Rivera, a senior research fellow at the Philippine Institute for Development Studies, said in a Viber message.

10-month deficit

In the first 10 months, the budget deficit narrowed to PHP 963.9 billion from PHP 1.02 trillion in 2023.

As of end-October, the shortfall represents only 64.94% of the PHP 1.48-trillion deficit ceiling for the year.

Revenue collections jumped by 16.83% to PHP 3.77 trillion in the January-to-October period. This accounted for 88.2% of the revised PHP 4.27-trillion revenue program for this year.

Taxes, which made up 86% of the total revenues, increased by 11.4% to PHP 3.23 trillion.

Revenues generated by the BIR rose by 13.49% to PHP 2.42 trillion as of end-October, making up 84.95% of the PHP 2.85-trillion revised full-year program.

“The 10-month year-on-year growth is due to higher VAT, a total of 12 months’ worth of VAT was already collected with the change of filing schedule from monthly to quarterly. The other sources of higher BIR collection are PIT, CIT, combined taxes on bank deposits and government securities, DST, and percentage taxes,” the Treasury said.

Customs collections went up by 5.32% to PHP 777.6 billion, representing 82.75% of the revised PHP 939.7-billion program.

Nontax revenues, which accounted for 14.32% of the total revenues, jumped by 64.93% to PHP 539.4 billion.

On the other hand, expenditures increased by 11.52% to PHP 4.73 trillion in the first 10 months from PHP 4.24 trillion in the comparable period last year.

Interest payments rose by 23.03% to PHP 638.7 billion from PHP 519.1 billion a year ago.

“The better budget balance data for the month of October 2024 and for the first 10 months of the year may be attributed to faster growth in recurring tax revenues especially from the BIR as the economy reopened further,” Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

He said many businesses reported improved sales, which resulted in higher tax revenue collections.

“Going forward, the CREATE MORE (Corporate Recovery and Tax Incentives for Enterprises to Maximize Opportunities for Reinvigorating the Economy) would lead to some foregone tax revenue collections,” he said.

But this could be offset “by increased foreign direct investments, more jobs, and increased business/economic activities in the country that would result in more recurring tax revenue collections,” Mr. Ricafort said.

The Treasury said revenue effort for the first three quarters improved to 17.5% of gross domestic product (GDP), slightly higher than 16.4% a year ago and exceeded the 16.1% target for 2024.

Tax effort also went up to 14.91% in the first three quarters versus 14.72% in 2023, and above the 14.42% full-year target.

Expenditure effort rose to 22.6%, up from 22.13% a year ago and surpassed the full-year target of 21.72%.

“The fiscal deficit-to-GDP ratio stands at a manageable 5.14% of GDP for the first three quarters of 2024. This is lower than the 5.7% level during the same period last year and well below the 5.6% target for 2024,” the Treasury said. – Aubrey Rose A. Inosante, Reporter