NG budget gap narrows to PHP 54.2 billion in August

The National Government’s (NG) budget gap sharply narrowed in August as a double-digit jump in revenues offset a surprising dip in spending, the Bureau of the Treasury (BTr) said on Wednesday.

Treasury data showed the budget deficit shrank by 59.24% to PHP 54.2 billion from the PHP 133-billion gap a year ago.

“The lower deficit was brought about by the 24.4% growth in government receipts alongside a minimal 0.68% contraction in government expenditures,” the Treasury said in a statement.

Month on month, the budget shortfall widened by 87.93% from PHP 28.85 billion in July.

In August, government spending slipped by 0.68% to PHP 440.5 billion from PHP 443.6 billion a year earlier.

“This can be partly attributed to the lower total subsidy releases to government corporations, and the sizeable outstanding checks recorded in various departments, such as the Department of Public Works and Highways (DPWH), the Department of Social Welfare and Development (DSWD), and the Department of Health (DoH) during the period,” BTr said.

Primary spending, which refers to total expenditures minus interest payments, fell by 3.27% to PHP 387.8 billion in August. It accounted for 88.02% of total spending for the month.

Interest payments jumped by 23.7% to P52.8 billion, driven by “additional issuances of debt securities at relatively higher coupon rates,” the Treasury said.

On the other hand, revenue collection increased by 24.4% to PHP 386.3 billion from PHP 310.6 billion a year ago.

Tax revenues rose by 9.76% to PHP 320.2 billion in August, driven by an 11.51% jump in Bureau of Internal Revenue (BIR) collections to PHP 238.1 billion.

Collections by the Bureau of Customs (BoC) went up by 4.69% to PHP 78.5 billion, while those by other offices also rose by 11.97% to PHP 3.6 billion.

Nontax revenues surged by 251.22% to PHP 66.1 billion, as privatization proceeds, fees, charges and grants jumped by 295.34% to PHP 49.6 billion.

Treasury collections also rose by 162.88% to PHP 16.5 billion, primarily driven by the Power Sector Assets and Liabilities Management’s PHP 10-billion settlement of guarantee fee arrears, alongside increased Philippine Amusement and Gaming Corp. (PAGCOR) income.

NG’s primary deficit net of interest payments stood at PHP 1.4 billion for August, lower than the primary deficit of PHP 90.3 billion a year ago.

Security Bank Corp. Chief Economist Robert Dan J. Roces said the August budget shortfall “suggests that fiscal discipline measures are yielding results.”

“I think the government will remain vigilant in managing expenditures and continue to implement strategies for revenue enhancement to ensure long-term fiscal sustainability amidst volatility in a monetary easing environment,” he said in a Viber message.

EIGHT-MONTH DEFICIT

In the first eight months of the year, the budget deficit narrowed by 4.86% to PHP 697 billion from PHP 732.5 billion a year ago.

As of end-August, the budget shortfall accounted for 47.09% of the government’s PHP 1.48-trillion deficit ceiling for this year.

Revenue collections went up by 15.91% to PHP 2.99 trillion in the eight-month period from PHP 2.58 trillion last year.

Tax revenues rose by 10.83% to PHP 2.56 trillion, as BIR collections jumped by 12.55% to PHP 1.92 trillion, while Customs revenues increased by 5.66% to PHP 614.4 billion.

Nontax revenues in the first eight months surged by 58.66% to PHP 434.9 billion. Treasury income rose by 33.46% to PHP 200.3 billion “largely due to higher dividend remittances, interest on advances from GOCCs (government-owned and -controlled corporations), guarantee fee collections, and the NG share from PAGCOR income.”

On the other hand, government spending grew by 11.32% to PHP 3.69 trillion in the eight months from PHP 3.31 trillion in the year-ago period.

“Year-to-date primary expenditures grew by 8.7% or PHP 254.5 billion to PHP 3.2 trillion from last year’s PHP 2.9 trillion for the same period largely due to higher National Tax Allotment releases to LGUs (local government units),” BTr said.

Interest payments as of end-August also jumped by 31.07% to PHP 509.4 billion.

As of end-August, the primary deficit had narrowed by 45.47% to PHP 187.5 billion.

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said easing interest rates and a stronger peso “would help ease/reduce debt servicing costs for the coming months and would help narrow the budget deficit.”

“One measure that would help reduce the National Government’s budget deficit and also reduce additional borrowings and overall debt by the NG would be the increased remittance of dividends and surplus by some GOCCs to the NG, if allowed under the law,” he said.

In April, the Department of Finance raised the mandatory dividend remittances of GOCCs to the NG to 75% of their annual net earnings in 2023 from 50%.

The government’s budget deficit ceiling for this year is equivalent to 5.6% of gross domestic product. It aims to reduce the deficit-to-GDP ratio to 3.7% by 2028. — Beatriz Marie D. Cruz