Budget deficit widens to P215 billion in June

By Diego Gabriel C. Robles

THE NATIONAL Government’s budget deficit widened in June, as revenues grew by double digits but was outpaced by faster spending for road and transport infrastructure projects, military modernization efforts, and social welfare programs.

The Bureau of the Treasury (BTr) on Tuesday said the budget gap stood at P215.5 billion in June, 43.8% higher than the P149.9 billion in the same month a year ago.

“The June outturn was driven by the 27.91% growth in expenditures which outpaced the 18.20% increase in government receipts,” it said in a statement.

Government expenditures rose by 28% to P505.8 billion during the month, thanks to an increase in capital outlay disbursements for road and transport infrastructure programs and projects under the Armed Forces of the Philippines’ modernization program.

“Spending, likewise, grew on the back of the implementation of various social protection programs of the Department of Social Welfare and Development (DSWD), the release of the P10-billion Coco Levy Fund, and higher personnel services expenditures,” the Treasury said.

On the other hand, total revenue collection jumped by 18.2% to P290.3 billion in June from P245.57 billion in the same period last year. This was driven by a 17.42% rise in tax revenues to P250.9 billion, and a 23.46% increase in nontax revenues to P39.4 billion.

The bulk of tax revenues came from the Bureau of Internal Revenue (BIR) with P173.5 billion, up by 8.9% year on year. The Bureau of Customs (BoC) collected P76.2 billion, a 46.07% increase from last year, while tax collections from other offices slid by 46.47% to P1.1 billion.

“The [BoC] attributed the gains from anti-smuggling measures including the fuel marking program which was further boosted by elevated oil prices and peso depreciation,” the BTr said.

The BTr’s revenues dipped by 0.33% to P20.8 billion, while nontax collections from other offices surged by 68% to P18.6 billion.

Primary expenditures, or spending net of interest payments, expanded by 28.33% to P469 billion in June.

Interest payments increased by 22.81% to P36.8 billion in June, “due to the effect of monetary policy adjustments on the reissuance of government securities.”

Analysts attributed the higher expenditures in June to catch-up projects as the election ban on public works projects ended in May.

“Spending was also upbeat in June after the election ban was lifted and as interest payment rose sharply by 23% due to rising interest rates,” said Nicholas Antonio T. Mapa, senior economist at the Manila branch of Dutch bank ING Bank N.V.

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said that “the wider budget deficit [against] a year ago could be attributed to the end of the 45-day election ban on some public works [and] other government spending.”

“This is partly offset by the double-digit growth in government revenues as consistent with measures to further reopen the economy towards greater normalcy,” Mr. Ricafort said.

NARROWER GAPIn the first six months of 2022, the budget deficit narrowed to P674.2 billion, 5.84% lower than the P716.1-billion gap a year ago and 18.64% below the program.

Total revenue collection by the National Government jumped by 15.91% to P1.73 trillion in the first half, and exceeded the six-month target of P1.648 trillion by 4.8%.

Tax revenues, which accounted for 89% of the total, jumped by 14.72% to P1.54 trillion during the six-month period. This was attributed to the 9.7% increase in BIR collections to P1.13 trillion, and 31.47% rise in BoC collections to P396.7 billion.

Nontax revenues, on the other hand, went up by 26.85% to P186.3 billion, thanks to a 27.54% rise in BTr revenues to P104.1 billion.

On the other hand, year-to-date expenditures rose by 8.85% to P2.4 trillion, but fell short of the six-month goal of P2.47 trillion by 3%.

The BTr said this can be attributed to “the slower-than-expected capital expenditures amid the election ban in late March up to early May, as well as the timing of release for the special shares of LGUs (local government units) in the proceeds of national taxes to July.”

Primary expenditures stood at P2.14 trillion in the first semester, up by 7.34% year on year but 3.57% short of the P2.2-trillion program.

Interest payments surged by 23.34% to P257.2 billion.

“As a percentage of expenditure and revenue, interest payments for Jan.-Jun 2022 accounted for 10.71% and 14.89% respectively, compared with 9.45% and 13.99% last year,” the BTr said.

The government expects the budget deficit to hit P1.65 trillion this year, slightly lower than the actual deficit of P1.67 trillion in 2021.

As of the first quarter, the budget deficit as a ratio of the gross domestic product (GDP) stood at 6.4%.

The government aims to reduce the deficit to 7.6% of GDP this year, and further to 6.1% in 2023, 5.1% in 2024, 4.1% in 2025, 3.5% in 2026, 3.2% in 2027, and 3% in 2028.