Budget deficit narrows in November

THE NATIONAL Government’s budget deficit narrowed to PHP 123.9 billion in November, as revenue growth outpaced state spending.

Data sent by Finance Secretary Benjamin E. Diokno to reporters on Wednesday showed the fiscal gap shrank by 3.7% to PHP 123.9 billion last month from the PHP 128.7-billion deficit in November 2021.

Month on month, the November deficit widened from the PHP 99.1 billion in October.

In the 11 months to November, the budget deficit shrank by 7.2% to PHP 1.24 trillion, from the PHP 1.33-trillion gap in the same period last year. 

Mr. Diokno said this was 75% of the revised P1.7-trillion full-year deficit program.

The Bureau of the Treasury (BTr) has yet to officially release its cash operations report for November.   

In November, revenue collections jumped by 16.57% to PHP 331.1 billion, from PHP 284.4 billion in the same month in 2021.

Tax revenues increased by 15.92% year on year to PHP 312.9 billion in November. The Bureau of Internal Revenue (BIR) collected PHP 237.1 billion, up by 12.53% year on year, while the Bureau of Customs (BoC) saw its collections surge by 30.74% to PHP 75.7 billion. There were no revenues recorded from other tax offices.

Nontax revenues went up by 28.96% to PHP 18.2 billion in November, as the BTr reported a 13.25% drop in revenues to PHP 5.3 billion. Other offices saw a 61.04% increase in revenues to PHP 12.9 billion.

Meanwhile, state spending rose by 10.24% to PHP 455 billion in November, from PHP 412.7 billion a year ago.

Primary spending — which refers to total expenditures minus interest payments — rose by 12.43% to PHP 428.9 billion year on year from PHP 381.5 billion.

“Fiscal deficit has picked up for November and it is expected because it is almost the end of the year and the National Government has to ramp up spending,” UnionBank of the Philippines, Inc. Chief Economist Ruben Carlo O. Asuncion said in a Viber message.

However, interest payments declined by 16.43% to PHP 26.1 billion in November.

“Interest payments were softer than the last period. Nevertheless, the momentum of the reopening of the economy and pent-up demand is still obvious with revenue growth,” Mr. Asuncion said.

For the January-to-November period, revenue collection continued to expand by double digits.

Revenue collection in the 11-month period hit PHP 3.28 trillion, or 18.13% higher than last year.

Tax revenues rose by 17.5% to PHP 2.96 trillion. The BIR accounted for the bulk of tax revenues with PHP 2.16 trillion, up by 12.56% from a year ago. BoC collections surged by 35.31% to PHP 789.2 billion, which helped offset the 30.68% drop in revenues from other offices.

On the other hand, state spending reached PHP 4.51 trillion as of end-November, up by 9.9% from the PHP 4.1 trillion a year ago. Mr. Diokno said this accounted for 91% of this year’s PHP 5-trillion disbursement outlook.

Primary spending rose by 9.44% to PHP 4.05 trillion, while interest payments jumped by 14.2% to PHP 459.3 million.

ING Bank N.V. Manila Senior Economist Nicholas Antonio T. Mapa said in an e-mail that revenue collections continued to improve as expected amid the improvement of economic activity.

“However, we would like to highlight that the strong BoC gains may fade as commodity prices have likewise moderated,” he said.

Mr. Mapa said a “sharp dip” in revenue collections is anticipated next year due to the scheduled reduction in income taxes.

“This could delay some of the improvements in fiscal consolidation,” he added.

Under the Republic Act No. 10963 or the “Tax Reform for Acceleration and Inclusion” law, individuals earning P250,000 and above annually would experience a fresh round of income tax reductions starting January 2023.

The Development Budget Coordination Committee earlier this month raised the 2022 revenue target to PHP 3.51 trillion, equivalent to 16.1% of gross domestic product (GDP), from PHP 3.3 trillion previously.

It also hiked the full-year disbursement outlook to PHP 5 trillion, equivalent to 23% of GDP, from PHP 4.95 trillion previously.

The deficit projection was also revised to 6.9% of GDP or around PHP 1.5 trillion this year, from 7.6% or PHP 1.65 trillion previously.