Budget deficit widens in August

The National Government’s (NG) budget deficit widened to PHP 133 billion in August as revenues declined, data from the Department of Finance (DoF) showed.

The fiscal gap ballooned to PHP 133 billion in August from PHP 72 billion a year ago.

Month on month, the budget deficit nearly tripled from the PHP 47.8-billion gap in July.

“This is due to the 6.6% contraction in government receipts alongside a 10% growth in expenditures,” DoF Secretary Benjamin E. Diokno said in a press briefing on Friday.

In August, government revenues dropped by 6.58% to PHP 310.6 billion from PHP 332.4 billion in the same month a year ago.

Tax revenues decreased by an annual 5.82% to PHP 291.7 billion, as collections by the Bureau of Internal Revenue (BIR) slid by 6.73% to PHP 213.5 billion and the Bureau of Customs’ (BoC) revenue fell by 4.92% to PHP 75 billion.

Meanwhile, nontax revenues slipped by 17.05% to PHP 18.8 billion, mainly due to the 29.41% decline in revenues from other offices to PHP 12.6 billion. On the other hand, the Bureau of the Treasury’s (BTr) revenue jumped by 27.8% to PHP 6.3 billion.     

Mr. Diokno said that the slump in revenue collection in August was due to the suspension of work due to heavy rains.

“I think their collection days were reduced because of the inclement weather… They will make it up for the following months,” he said.

“For nontax (revenues), it might be the same because if there’s no office, there’s no collection. For the BoC, if you can’t go to the shipments, you can’t collect.”

Mr. Diokno noted the decline in Customs collections was mainly due to easing oil prices. The agency’s monthly collections have been lower year on year since June.

“Number one, the price of oil is declining and then it turns out consumption of oil has also gone down. So, both in terms of quantity and price, it has gone down…but I’m not concerned about the collection of Customs. They’re still way ahead, year to date, if you can see,” he said.

Meanwhile, state spending rose by 9.66% to PHP 443.6 billion in August from PHP 404.5 billion a year earlier.

Primary expenditures, or spending net of interest payments, went up by 7.27% to PHP 400.9 billion in August. Interest payments climbed by 38.65% to PHP 42.7 billion.

8-month gap
In the first eight months of the year, the budget deficit narrowed by 12.06% to PHP 732.5 billion from PHP 833 billion in the same period a year ago.

Eight-month revenues jumped by an annual 9.03% to PHP 2.58 trillion. This accounted for over two-thirds or 69% of the PHP 3.729-trillion program for the full year.

Tax collection rose by 8.15% to P2.31 trillion as of end-August. BIR collections went up by 9.43% to P1.71 trillion, which represents 65% of the agency’s PHP 2.64-trillion collection target for 2023.

Meanwhile, Customs collections inched up by 3.99% to PHP 581.5 billion, which made up 67% of its PHP 874.2-billion program this year.

Nontax revenues climbed by 17.06% to PHP 274.6 billion, driven by a 22.62% surge in BTr revenue to PHP 150.1 billion and an 11.01% increase in revenue from other offices to PHP 124.5 billion.

Expenditures as of end-August rose by 3.54% to PHP 3.31 trillion from P3.2 trillion in the same period a year earlier. This was 63% of the full-year spending program of P5.228 trillion.

Primary expenditures inched higher by 2.26% to PHP 2.93 trillion while interest payments increased by 14.29% to PHP 388.7 billion.

“Higher prices/inflation and higher interest rates that raised borrowing/financing costs could have been a drag on tax revenue collections amid reduced business and consumer spending,” Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said.

Headline inflation accelerated for the first time in seven months to 5.3% in August from 4.7% in July. For the first eight months, inflation averaged 6.6%.

“Higher prices could have also bloated some of the government’s expenditures. Higher US and global interest rates since 2022 could have also led to higher debt servicing costs of government Thus, all these factors led to wider budget deficit for the National Government,” Mr. Ricafort said.

The government set its deficit ceiling at PHP 1.499 trillion this year, equivalent to 6.1% of gross domestic product.

When asked if the NG’s budget deficit may likely fall below ceiling this year, Mr. Diokno said: “It turns out to be like that, because we will collect more, and spending will be less.” — By Luisa Maria Jacinta C. Jocson, Reporter