Gov’t may reduce borrowings once tax collections improve

GOVERNMENT BORROWINGS may be less than initially estimated this year, after the main revenue-generating agencies beat their lowered targets two months in a row, Finance Secretary Carlos G. Dominguez III said.

The Bureau of Internal Revenue (BIR) and Bureau of Customs (BoC) had surpassed their revised collection goals in July and August, as economic activity picked up with the easing of lockdown restrictions.

For the first eight months of the year, the combined collections of the BIR and BoC reached P1.6 trillion, exceeding the downward revised P1.527-trillion target. However, the amount was still down by 12% compared with the same period last year.

“We are still short of what we would like ideally, however, the revenue agencies have shown that they are still very active and that they are taking their job very seriously and have, in fact, exceeded the revised targets. But, again, I like to emphasize we are still 12% below last year,” Mr. Dominguez said in a press conference Tuesday.

“So our borrowing program will be informed by these new developments. And these new developments are positive and we may not need to borrow as much as we did. But again we are waiting to see how the rest of the year goes by,” he added.

National Treasurer Rosalia V. de Leon said the government continues to assess its borrowing plan based on the inflows from revenues generated and on how fast state agencies will use the budget.

“Our borrowing is calibrated on revenue collections and pace of spending to ensure a healthy cash buffer for emerging requirements,” Ms. De Leon said in a Viber message Wednesday.

The economic team has set a P3-trillion borrowing program this year to plug a budget deficit seen to balloon to 9.6% of gross domestic product (GDP) as revenues fall and spending rises on pandemic expenses.

The government had already raised P1.857 trillion in the seven months to July, already exceeding the P1.02 trillion borrowed for the entire 2020.

The BIR’s target for the year was lowered by 3% to P1.686 trillion in May, while the BoC is now tasked to collect P506.15 billion, down 6.6% from the previous goal.

Mr. Dominguez said the reduced collection targets were the economic team’s “realistic” projections as weak consumer demand pulled down collections of value-added and excise taxes.

The National Government’s debt stock is expected to reach P10.16 trillion by year’s end amid increased borrowings. So far, its outstanding debt rose 18.5% to P9.16 trillion as of end July from the P7.73-trillion level recorded at the start of the year.

The outstanding debt stock is projected to reach 53.9% of GDP by year’s end, 58.1% next year and 59.9% by 2022.

For next year, the government is set to borrow another P3 trillion as revenues are expected to remain sluggish while the national budget was increased to P4.5 trillion to support economic recovery. — Beatrice M. Laforga