Above-target budget deficit ‘manageable’ – Dominguez
Credit to Author: MAYVELIN U. CARABALLO, TMT| Date: Fri, 22 Feb 2019 16:30:25 +0000
Last year’s budget deficit exceeded programmed levels, the government confirmed on Friday even as it called the result “manageable”.
At 3.2 percent of gross domestic product (GDP) — higher than the programmed 3.0 percent — the 2018 shortfall represented an improvement from the previous year’s 2.2 percent, the Treasury bureau claimed in a statement.
Finance Secretary Carlos Dominguez 3rd described the above-target gap — equivalent to the 2019 goal — as “manageable” and said the government expected to keep it under control this year.
In nominal terms, the Treasury confirmed that the budget shortfall hit P558.3 billion in 2018 as earlier reported based on an unofficial data.
Full-year collections reached P2.85 trillion, breaching the P2.82-trillion program by 1 percent and up 15.3 percent for the year.
Expenditures, meanwhile, grew by 20.5 percent to P3.40 trillion, exceeding the P3.35-trillion spending goal.
The Bureau of Internal Revenue (BIR) accounted for the bulk of revenues with P1.95 trillion, 10 percent higher compared to the year-earlier P1.77 trillion but short of the full-year program of P2.07 trillion.
“The shortfall may be partly attributed to non-implementation of fuel marking and the slowdown in consumption amid high inflation and peso depreciation,” the Treasury said.
The Bureau of Customs (BoC) netted P593.1 billion — a 29-percent gain from last year’s P458.2 billion and also exceeding the P593.1 billion programmed for the year.
“Revenue enhancement measures coupled with proper valuation and tariff classification of goods, as well as a strengthened campaign against illegal trade and the windfall from peso depreciation, contributed to the strong BoC performance,” the Treasury said.
Other offices contributed P20.9 billion, bringing total tax revenues for the month to P2.56 trillion. Tax revenue growth accelerated by 14 percent from a year earlier but fell short of the P2.56-trillion program.
This resulted in a tax effort-to-GDP ratio of 14.7 percent in 2018, an improvement from 14.2 percent a year ago and the highest in 20 years but short of the 15.4-percent program
Non-tax earnings, meanwhile, totaled P284.3 billion with the Treasury contributing P114.2 billion — up 14 percent. Other offices contributed P170.1 billion, 39 percent higher from last year.
The bureau attributed this to “higher dividends from NG (national government) shares of stocks amounting to P40.8 billion (four times higher than the P10.0 billion program) and the NG share from Pagcor (Philippine Amusement and Gaming Corp.) income amounting to P31.8 billion.”
This resulted in a revenue effort of 16.4 percent, advancing from 15.6 percent a year ago and exceeding the targeted 16.3 percent.
The bulk of government spending, meanwhile, was for primary expenditures that rose by 22 percent to P3.05 trillion.
Interest payments (IP) of P349.2 billion accounted for the rest of state spending for the year.
“The growth in IP for 2018 was attributed to discounts on T-bills issued in 2018, coupon payments of new debt issued in 2017, and upward adjustments in foreign debt servicing due to peso weakness and higher LIBOR rates,” the Treasury said.
Moreover, it explained that the interest payment component of spending contracted to 10.2 percent from 11.0 percent last year, lower than the programmed 10.5 percent.
Interest payments as a percentage of total revenue improved to 12.3 percent from 12.6 percent in 2017, slightly better than the 12.4 percent program.
“In sum, the quality of government spending has improved,” the Treasury claimed, noting that expenditures as a percentage of GDP increased to 19.6 percent from 17.9 percent a year ago and was significantly above the 19.3-percent target.
Netting out interest payments, the government recorded a P209-billion primary deficit in 2018, wider than the P40.1-billion shortfall posted a year earlier.
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