Govt misses five-month deficit goal
Increased spending allowed the government to post a budget deficit in May but the year-to-date target was missed on account of better-than-programmed revenues, the Bureau of the Treasury reported on Monday.
The P32.9-billion shortfall — lower compared to the P33.4 billion recorded a year earlier — was a reversal from the P46.3-billion surplus in April.
“The deficit is slightly lower than last year’s level by 2 percent as revenue growth narrowly exceeded the acceleration in government spending,” the Treasury said in a statement.
Government revenues rose by 13 percent to P259 billion, from P228.3 billion last year, while expenditures grew 12 percent to P291.9 billion from P261.7 billion.
The Bureau of Internal Revenue accounted for the bulk at P172 billion, 8 percent higher compared to the year-earlier P158.7 billion.
The Bureau of Customs netted P52.7 billion—a 33-percent gain from last year’s P39.6 billion—while other offices contributed P2.2 billion, bringing total tax revenues for May to P227 billion.
Non-tax earnings, meanwhile, totaled P32 billion with the Bureau of the Treasury contributing P21.4 billion—up 19 percent.
Other offices contributed P10.6 billion, 12 percent higher from last year.
The bulk of government expenditures was for items classified as “others,” which rose by 12 percent to P270.8 billion. Interest payments totaling P21.1 billion, up 1 percent year on year, accounted for the rest of state spending for the month.
“Foreign interest payments of P2.5 billion generated the uptick, mainly due to peso depreciation and an increase in rates for outstanding floating rate loans,” the Treasury said.
“This was partially offset by lower domestic payments worth P18.6 billion owing to maturities of various fixed rate and retail bonds in 2017,” it added.
May’s result led to a cumulative budget shortfall of P138.7 billion for the first five months of the year, nearly 120 percent higher than the P63.6-billion deficit posed during the comparative 2017 period.
The BTr, however, said the year-to-date deficit was 32 percent or P66.3 billion lower than programmed as revenue collections exceeded projections by P81.5 billion or 7 percent and also outpaced the 1 percent or P15.2-billion above-target increase in spending.
January to May revenues grew by 19 percent year-on-year to P1.186 trillion, from P996.5 billion, while year-to-date expenditures registered growth of 25 percent to P1.325 trillion from P1.060 trillion.
“Other” expenditures rose 28 percent to P1.183 trillion, while interest payments recorded 7 percent growth to P141.4 billion.
The Treasury said the five-month interest payments were still mainly due to domestic coupon payments for retail treasury bonds issued in April and December last year.
“Despite this, cumulative interest payments accounted for only 11 percent of total disbursements, down from 13 percent a year ago, primarily reflecting growth in productive government spending,” it added.
Netting out interest payments, the government recorded a P11.8-billion primary deficit in May, narrower than the P12.5 billion primary shortfall last year.
Year-to-date, the primary balance hit a surplus of P2.7 billion, also narrower than last year’s P68.7-billion surplus.
Land Bank of the Philippines market economist Guian Angelo Dumalagan said the fiscal performance report “looks good overall, as we are seeing double digit growth in both revenues and expenditures.”
Dumalagan also said the country’s fiscal deficit was expected to fall within the 3-percent ceiling, supported by stronger government collections.
“The rise in revenues makes it possible for the government to further accelerate its planned spending on infrastructure,” he said.
The government, which is targeting 7.0-8.0 percent gross domestic product growth for 2018, is banking on its “Build Build Build” program to provide the impetus.
At least 34 flagship projects are expected to be rolled out this year or early in 2019.
Focusing on government spending, ING Bank senior economist Joey Cuyegkeng said the slower May growth was due to negative base effects and the torrid expenditure pace seen in February to April.
He pointed out, nevertheless, that the strong five-month growth supported ING’s view of close to 7 percent gross domestic product growth for the second quarter and full-year 2018.
The Philippine economy grew by 6.8 percent in the first quarter, faster than the revised 6.5 percent growth posted three months earlier and the 6.5 percent seen a year earlier.
“However, the strong fiscal stimulus which also support strong domestic demand also means imports would continue to rise leading to further deterioration of the country’s external balances,” Cuyegkeng pointed out.
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