Budget gap narrows to P122B in May

By Luisa Maria Jacinta C. Jocson, Reporter

THE NATIONAL Government’s (NG) budget deficit narrowed to P122.2 billion in May, as revenue growth continued to outpace spending.

Data released by the Bureau of the Treasury (BTr) on Tuesday showed that the fiscal gap narrowed by 16.73% to P122.2 billion in May from P146.8 billion in the same month last year.

“The lower deficit for the period was brought about by the 9.35% increase in NG receipts overtaking the 0.88% marginal growth in NG expenditures,” the BTr said in a press release.

Month on month, the budget balance reversed to a deficit from the P66.8-billion surplus in April.

In May, government revenues rose by 9.35% to P333.4 billion during the month from P304.9 billion a year ago.

Tax revenues went up by 2.43% to P291.7 billion, despite a  1.54% drop in collection by the Bureau of Internal Revenue (BIR) to P213.3 billion. The Bureau of Customs (BoC) posted a 17.56% increase in collections to P77.9 billion.

Meanwhile, nontax revenues more than doubled to P41.7 billion in May from P20.1 billion a year ago. This was driven by revenues from the BTr, which surged 179.71% to P24.9 billion from P8.9 billion.

“The sharp increase was attributable to higher dividend and Philippine Amusement and Gaming Corp. remittances, investment income, and interest on NG deposits,” the BTr said.

On the other hand, government spending inched up by 0.88% to P455.7 billion in May, from P451.7 billion in the previous year.

“Government spending for May 2023 marginally increased as the lower National Tax Allotment (NTA) shares of local government units and net lending assistance to government corporations weighed down the growth of disbursement,” the BTr said.

Primary expenditures, or spending net of interest payments, slipped by 0.85% to P414.3 billion due to lower NTA releases.

Interest payments rose 22.21% to P41.3 billion.

For the first five months of 2023, the fiscal deficit narrowed by 28.86% to P326.3 billion from P458.7 billion in the same period a year ago.

Total revenues during the January-to-May period grew by 10.83% to P1.59 trillion from the P1.44 trillion a year ago.

“This growth was attributed to improvements in both tax and nontax collections, which grew by 9.71% and 20.56% year on year, respectively,” the BTr said.

Tax collection increased by 9.71% to P1.41 trillion, as BIR collections rose by 9.95% to P1.05 trillion while Customs collections jumped by 12.1% to P359.3 billion.

Nontax revenues increased by 20.56% to P178 billion, as revenues from other offices went up 48.95% to P95.8 billion. However, BTr revenues slipped by 1.34% to P82.2 billion due to lower dividend remittances.

On the other hand, expenditures at the end of May inched up by 1.22% to P1.92 trillion from P1.9 trillion a year ago.

Interest payments went up by 4.13% to P229.6 billion while primary expenditures increased by 0.84% to P1.69 trillion.

Nicholas Antonio T. Mapa, a senior economist at ING Bank N.V. Manila, said the improvement in revenue collection can be attributed to the uptick in economic activity.

“The narrower budget deficit was due to the combination of improvements in revenue collection and a marginal increase in government expenditure. Revenues are growing more than programmed, possibly both due to better tax administration and resilient economic activities,” China Banking Corp. Chief Economist Domini S. Velasquez said in a Viber message.

Meanwhile, sluggish state spending was likely due to the slow rollout of government projects, analysts said.

Mr. Mapa noted that expenditures were muted “perhaps to help cap the deficit as they chase fiscal consolidation.”

“Although a smaller budget deficit is positive for the government’s fiscal standing, it is negative for economic growth especially if there are delays in infrastructure projects. Absorption capacity among line agencies needs to be improved to push the country’s economic growth to a higher path,” Ms. Velasquez said.

Last week, Finance Secretary Benjamin E. Diokno expressed concern over the underspending of government agencies.

Data from the Department of Budget and Management showed that government agencies’ budget utilization rate was at 91% at end-May, slower than the 93% pace a year earlier.

The government set its deficit ceiling at P1.499 trillion this year, equivalent to 6.1% of gross domestic product.

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