July marks third month of budget gap
THE GOVERNMENT saw the third straight month of deficit in July, with revenues recovering from the previous month’s fall and spending maintaining its double-digit pace, the Treasury bureau reported yesterday.
July saw a P50.5-billion fiscal deficit that was steady from a year ago, compared to gaps amounting to P33.4 billion in May and P90.9 billion in June.
Revenues recovered from June’s seven-percent fall to grow 14% to P194.6 billion in July from the year-ago P170.3 billion. Tax collections alone picked up 16% to P174.5 billion in July from P150 billion a year earlier, with the Bureau of Internal Revenue (BIR) making up 79% at P138.2 billion, 18% more than P117.4 billion previously and the Bureau of Customs (BoC), which contributed a fifth, collecting 13% more at P35 billion from P31 billion.
Expenditures maintained their double-digit growth, though it was the slowest in three months at 11%, compared to May’s 20% and June’s 28%. State spending totaled P245.1 billion in July against a year-ago P220.9 billion.
Interest payments, which made up 18% of total spending, increased by 12% to P44.6 billion in July from P40 billion a year ago, while non-interest expenditures grew 11% to P200.5 billion from P180.9 billion.
Taking out interest payments from expenditures nearly halved the primary deficit to P5.9 billion from P10.6 billion a year ago.
The government’s fiscal performance in July widened the budget gap by a fifth to P205 billion in the first seven months from the P171 billion seen in 2016’s comparable period.
Total revenues increased by eight percent to P1.371 trillion from P1.271 trillion, with tax collections alone growing by 10% to P1.244 trillion from P1.132 trillion. BIR collections rose nine percent to P986.1 billion from P900.9 billion, while BoC’s take went up by a faster 11% to P245.3 billion from P221.5 billion.
Total state expenditures increased by nine percent to P1.576 trillion from P1.442 trillion.
The seven months to July yielded an P8.8-billion primary deficit that was a reversal from the year-ago P22.7-billion primary surplus.
Sought for comment, Ruben Carlo O. Asuncion, chief economist at Union Bank of the Philippines, said in an e-mail that “revenues must continually grow as expenditure plans are ambitiously huge moving forward,” referring to state plans to progressively increase spending, especially on infrastructure.
Under the government’s 2017-2022 “Build, Build, Build” plan to spend a total of P8.44 trillion on infrastructure, expenditures will rise from P847.22 billion, equivalent to 5.32% of gross domestic product (GDP) this year, to P1.17 trillion or 6.68% in 2017 and to P1.899 trillion or 7.45% by the end of the program period.
Mr. Asuncion cited an International Monetary Fund study that states “deficit-financed increases in public investment lead to higher borrowing costs that constrain output increases over time, underscoring the importance of revenue mobilization.”
“For the Philippines case, what is being pointed out here is that deficits are good but only for a period of time,” he explained.
“It means that, sooner or later, further revenue mobilization should be improved or risk higher costs of borrowing money for subsequent infrastructure developments crucial to the Philippines.” — E. J. C. Tubayan
