Philippines’ August budget deficit widens as revenues slip

The Philippines’ budget deficit widened in August as revenues fell faster than spending, adding pressure on the government to borrow more and keep within its deficit ceiling.

The gap ballooned 56% to PHP 84.8 billion (USD 1.5 billion) from a year earlier, according to data released by the Bureau of the Treasury on Wednesday. Compared with July, the shortfall surged more than fourfold from P18.9 billion.

Collections fell 8.8% to PHP 352.5 billion, dragged by a steep decline in nontax revenues, which slid nearly 68% to PHP 21.3 billion. Treasury income dropped 53%, while remittances from other offices tumbled 73%.

Tax revenues, however, inched up 3.4% to PHP 331.2 billion. Bureau of Internal Revenue collections rose 5% to PHP 250.1 billion, offsetting weaker Bureau of Customs receipts, which slipped 1.4% to PHP 77.4 billion.

Government expenditures fell 0.7% to PHP 437.3 billion in August from a year ago, weighed by lower primary spending, which excludes interest payments. Primary outlays dropped 3.5% to PHP 374.2 billion.

Interest payments, by contrast, jumped almost 20% to PHP 63.1 billion. The primary deficit — net of interest costs — widened to PHP 21.7 billion from just PHP 1.4 billion a year earlier.

For January to August, the fiscal gap rose 25% to PHP 869.2 billion from a year earlier. The deficit represents 56% of the PHP 1.56-trillion full-year ceiling, leaving room for additional borrowing in the final four months.

Spending climbed 7.2% to PHP 3.95 trillion, already 65% of the government’s PHP 6.08-trillion expenditure program. Primary spending increased 6% to PHP 3.37 trillion, while interest payments grew almost 15% to PHP 584.1 billion, making up 15% of total disbursements.

Revenue collections rose 3.1% to PHP 3.09 trillion, equivalent to 68% of the PHP 4.52-trillion full-year goal. Tax revenues made up 90% of the haul, rising 8.9% to PHP 2.79 trillion.

The BIR collected PHP 2.14 trillion, up 11%, boosted by higher corporate and personal income taxes, value-added tax, tobacco excise, percentage tax on financial institutions, and documentary stamp duties. The robust performance of the BIR allows the deficit to remain manageable, the Treasury said.

Customs collections edged up 1.1% to PHP 621.4 billion, supported by efforts against smuggling and illicit trade.

Nontax revenues, by contrast, fell 31% to PHP 298.3 billion, though this still accounted for 97% of the PHP 306.5-billion annual target.

Treasury income slipped 5.5% to PHP 189.3 billion, surpassing the revised PHP 179.2-billion goal. The bureau cited higher interest earnings on deposits, dividends from state companies, and remittances from the Philippine Amusement and Gaming Corp. and Manila International Airport Authority.

The primary deficit surged 52% to PHP 285 billion in the eight-month period, accounting for 85% of the total fiscal gap. The Treasury attributed the increase to the government’s push for priority programs and growth-supportive spending.

The government aims to cap the deficit at PHP 1.56 trillion this year, equivalent to 5.5% of gross domestic product (GDP). Officials plan to gradually narrow the shortfall to PHP 1.55 trillion or 4.3% of GDP by 2028. — Aubrey Rose A. Inosante