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Budget back in the black

Posted on May 24, 2011

THE GOVERNMENT saw its budget return to the black last month as continued underspending, coupled with strong yet below-target revenue collections, allowed for a sizeable April surplus.

"With fiscal discipline and strong commitment to improving revenue collections, things are definitely improving," Finance Secretary Cesar V. Purisima said in a statement issued yesterday.

The result for April was a P26.258-billion surplus, the biggest for the month in 25 years. It allowed the government to claw back the first quarter deficit of P26.197 billion with P61 million left over.

It was the second monthly surplus for 2011 since January’s P13.4 billion, and was also more than 10 times higher than the P2.599 billion posted in April 2010.

Revenue collections totaled P138.335 billion in April, up from P124.468 billion a year earlier. The four-month tally was P461.413 billion, higher than the P390.292 billion posted in the comparable 2010 period.

The Bureau of Internal Revenue (BIR), responsible for about 70% of state revenues, contributed P103.393 billion in April, boosted by the annual deadline for the filing of income tax returns. The month’s take, however, was short of the agency’s P105.12-billion target. BIR Commissioner Kim S. Jacinto-Henares has attributed this to lower-than-expected withholding tax collections from the sale of Treasury bills and bonds.

The Bureau of Customs, meanwhile, netted only P22.44 billion during the month against a goal of P25.19 billion. This was due to reduced rice importations by the government, Mr. Purisima explained.

The tax bureau has so far collected P302.942 billion for 2011. It needs to collect P157.358 billion to reach its midyear goal of P460.3 billion. The Customs bureau, meanwhile, has netted P85.058 billion. It must now collect P57.282 billion more to hit its P142.34-billion midyear target.

Expenditures, meanwhile, totalled P112.077 billion for April, bringing the four-month tally to P461.352 billion. With two months left in the first half, spending remains well below the programmed P838.547 billion for the first six months of the year.

The government is targeting a January-June deficit of P152.128 billion.

April expenditures were almost P10 billion less from a year earlier. Spending during the first four months was also down over a tenth from P521.872 billion last year.

Mr. Purisima said expenditures had dropped due to reduced interest payments, down by a quarter to P11.432 billion last month. He claimed this had led to P22.4 billion in savings which can be used for the conditional cash transfer (CCT) program, which has a P21.9-billion budget for this year.

The Budget department, in a separate statement, said the government had also spent less given the absence of 2010 items such as election-related activities and assistance to farmers and fisherfolk affected by a dry spell.

Budget Secretary Florencio B. Abad, however, said government agencies needed to ramp up spending as P1.09 trillion, or some 66.3% of this year’s P1.645-trillion budget, had already been disbursed.

"Agencies have a lot of catching up to do," Mr. Abad said, adding that President Benigno S. C. Aquino III has scheduled a Mid-Year Budget Execution Assessment in July.

He claimed that spending was on track in some areas, noting that the Public Works department has completed a cost assumption review. Some 1.47 million of the 2.34 million targetted CCT beneficiaries will receive their cash grants next month, he added.

Commenting on the fiscal results, University of Asia and the Pacific economist Cid L. Terosa said, "The surplus can lead to other positive developments such as greater savings for future investments and bigger fiscal space for other government expenditures."

University of the Philippines economist and former Budget Secretary Benjamin E. Diokno, for his part, said: "The surplus is transitory if the intention is to spend what Congress has authorized. Assuming that what is budgeted will be spent within the year, then the final fiscal position will be as planned, unless revenue targets are exceeded."

The government has programmed P1.711 trillion in expenditures this year against P1.411 trillion in revenues. It expects a yearend deficit of P300 billion, equivalent to 3.2% of gross domestic product.