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Gov’t posts August surplus

Posted on September 23, 2011

THE GOVERNMENT’S PLANS to accelerate spending appear to have stalled as it posted a budget surplus last month, with expenditures remaining weak against continually improving revenue collections.

Economic managers assured that there was still time to boost expenditures, but analysts raised red flags about the impact of continued underspending on an already sluggish economy.

The government recorded a P9.22-billion budget surplus in August, reversing the deficit trend for the months of May to July. The August result was also nearly seven times the P1.319-billion surplus posted last year.

It cut the deficit for the year so far to only P34.493 billion, nearly 85% lower than the P228.104-billion shortfall recorded in the same period a year ago.

The eight-month deficit is significantly below the third-quarter cap of P234.35 billion. It is also equivalent to just a little more than a tenth of the P300-billion ceiling for the year.

Fiscal performance was buoyed by strong revenue collections, with the government raking in P124.148 billion last month, up 15.16% from the year before. Revenues for the January-August period totaled P912.751 billion, increasing by 13.69%.

The Bureau of Internal Revenue (BIR), which accounts for about 70% of state revenues, collected P87.928 billion last month, a increase of over a tenth. This took the agency’s eight-month tally to P619.713 billion, a 13.42% gain.

The Bureau of Customs (BoC), meanwhile, increased its August revenue by more than a quarter by collecting P22.152 billion. The agency, responsible for a fifth of government revenues, has collected P171.992 billion in the eight-month period, up slightly from the P170.722 billion netted a year ago.

The BIR needs to net P74.445 billion this month to reach its P694.158-billion goal for the third quarter. The BoC, meanwhile, should take in P57.632 billion to hit its P229.624-billion target.

“Rest assured that we will continue on improving our tax administration in a bid to scoop in more revenues for public spending,” Finance Secretary Cesar V. Purisima said in a statement.

Tax administration efforts should boost BIR collections while the BoC will enjoy a surge as businesses prepare for the holiday season, Finance Assistant Secretary Ma. Teresa S. Habitan said.

Expenditures, meanwhile, were lackluster in August despite government proclamations of accelerated spending to pump-prime the spluttering domestic economy. The government spent P114.928 billion for the month, a 7.93% year-on-year increase.

This took expenditures to only P947.244 billion for January to August, 8.12% lower from the comparable 2010 period. The government now needs to spend P327.915 billion this month to keep up with the P1.275-trillion expenditure plan programmed for the first three quarters.

Sluggish public spending was one of the major factors behind the economic slowdown seen in the first semester, with gross domestic product (GDP) growing by only 4%, well below the full-year target of 7-8%.

Budget Undersecretary Laura B. Pascua claimed, however, that disbursements had increased in the past month, “indicating the acceleration of spending.” Cash allocations have also been utilized faster, she added.

“Increased spending can still be done in the remaining months,” Ms. Pascua declared in a text message.

University of the Philippines economist Benjamin E. Diokno, a former Budget Secretary, criticized the government for failing to do its responsibility to speed up project implementation.

“Imagine the benefits denied public school students when they started classes without new classrooms. At this time, education officials are still debating whether the budget for school facilities should be done... through public-private arrangements,” he said in an e-mail yesterday.

“Road maintenance is a no-brainer; it does not involve right-of-way problems. Yet it was not spent during the summer months, the ideal time for road maintenance work,” Mr. Diokno added.

University of Asia and the Pacific economist Cid L. Terosa cautioned that the underspending would likely slow third-quarter growth as well.

In addition to weakening demand for Philippine exports due to debt woes in the United States and Europe, the country’s only lifelines will be consumption spending and remittances from overseas Filipino workers, Mr. Terosa said.