THE national government’s budget balance swung to a deficit in April from a year-ago amid weak tax collections and a surge in state spending for emergency subsidy programs for Filipinos affected by the lockdown, the Bureau of the Treasury (BTr) reported on Wednesday. Read the full story.
By Beatrice M. Laforga
Reporter
THE national government’s budget balance swung to a deficit in April from a year-ago amid weak tax collections and a surge in state spending for emergency subsidy programs for Filipinos affected by the lockdown, the Bureau of the Treasury (BTr) reported on Wednesday.
The BTr’s cash operations report showed the budget deficit stood at P273.9 billion in April, a turnaround from P86.9-billion surplus recorded in the same month last year and bigger than the P59.5-billion gap in March.
Government spending more than doubled to P461.7 billion last month, from P221.8 billion spent in April 2019.
The Treasury attributed the increase to the release of the first tranche of the P200-billion Social Amelioration Program and the P50-billion wage subsidy program, rehabilitation measures, as well as the disbursement of the P36-billion “Bayanihan Grant” to provinces, cities and municipalities affected by the coronavirus pandemic
Primary expenditures or spending net of interest payments stood at P439.8 billion in April, rising 121.81% from P198.3 billion a year ago.
Interest payments (IP) declined by 7% to P21.9 billion in April from P23.5 billion “due to high base effect from April 2019 IP and maturities.”
At the same time, government revenues fell by 39.17% to P187.8 billion in April from P308.7 billion in the same month in 2019, as tax collection plunged due to the postponement of filing and payment deadlines amid the lockdown.
Tax collections, which accounted for 67% of the total, slumped 56.74% to P124.9 billion in April, while non-tax revenues rose 215% to P62.8 billion.
Collections of the Bureau of Internal Revenue (BIR) dropped 61.56% to P90.5 billion in April from P235.5 billion a year ago on deferment of deadlines for income tax payment and filing of other returns.
Finance Undersecretary and Chief Economist Gil S. Beltran in a briefing said excise taxes collected from alcohol and tobacco products plummeted by 99.1% to P200 million in April from P18.1 billion collected in the same month last year.
Only P100 million in excise taxes were collected from tobacco products, while P20 million in taxes were collected from alcoholic drink products, as the lockdown and liquor ban hurt consumer demand.
On the other hand, Bureau of Customs (BoC) collections slid 33.38% to P34.4 billion last month on weak collections and a drastic drop in oil prices. Other revenue-generating offices did not collect any taxes in April, against the P1.7 billion a year ago.
For the non-tax revenues, BTr generated P52.8 billion, 405% higher year on year as state-owned firms remitted their dividends and other income. Income of other offices inched up 6.61% to P10.1 billion.
DEFICIT WIDENS
In January to April, the government’s budget deficit ballooned to P347.9 billion compared with the P3.4-billion gap recorded in the same four-month period last year.
April’s spending surge pushed overall expenditures to reach P1.311 trillion in January-April, up 31.12% from the roughly P1 trillion spent the year prior.
Of which, primary spending increased 34.62% to hit P1.17 trillion in the four-month period, while interest payments went up by eight percent to P141.8 billion.
State revenues were still down by 3.36% to P963 billion for the January to April period, with tax revenues slipping 18% year on year to P745.8 billion while non-tax soared by 137% to P217.2 billion
Collections of BIR slumped year to date by 20.52% to P559 billion, while Customs’ revenues slid 7.13% to P179.7 billion. Sin tax collections also dropped 57.1% to P30.6 billion.
Treasury’s revenues tripled to P164 billion in January-April, while revenues from other offices reached P53.2 billion, up 5.78% year on year.
Alvin P. Ang, an economics professor at Ateneo de Manila University, said the budget deficit in April “is expected” due to higher spending and lower tax haul.
ING Bank N.V. Manila Senior Economist Nicholas Antonio T. Mapa said collections by the country’s two largest revenue-generating bodies were “all but nonexistent,” while spending continued to surge as the government sought to contain the fallout from the pandemic.
“Cash outlays, subsidies and expenditures related to healthcare needs pushed spending to bloat and we hope the government continues to throw a lifeline to the now anemic economy until it can get back on its feet,” Mr. Mapa said in a note published Wednesday.
Moving forward, Mr. Ang said the budget deficit will continue to balloon in the coming months, with the economic team projecting it could reach 8.1% of gross domestic product by yearend.
Mr. Mapa said the government should resist going into “austerity mode to ensure that the economic hardship is minimized so that we can get the economy back in form at the soonest.”
“Substantial and targeted spending can also translate to a faster pickup in GDP, which would help limit the widening of the budget deficit-to-GDP ratio as growth outpaces the increase in spending,” he said.
HSBC Economist Noelan Arbis said the country has been “exemplary in keeping a sound fiscal position” but the coronavirus pandemic might push it “into a different direction” in the coming years, with fiscal deficit expected to only decline to six percent of GDP in 2021.
“By our estimates, the Philippines’ fiscal deficit is also unlikely to decline back to its pre-pandemic levels (i.e. 3.2% of GDP), even after the current administration’s term in office ends in 2022,” Mr. Arbis said in a note yesterday.
THE COUNTRY’S dollar reserves are expected to rise to a record $94 billion by the end of the year as the country grapples with the coronavirus pandemic, according to Bangko Sentral ng Pilipinas (BSP) Governor Benjamin E. Diokno.
“We have revised our end of the year forecast for the GIR (gross international reserves). It would be something like $94 billion, highest ever,” Mr. Diokno said in an online roundtable on Wednesday.
This new forecast is higher than the $86 billion projected by the BSP in November 2019.
Latest data from the central bank showed GIR stood at a record $88.99 billion at end-March, also higher by 0.91% from the $88.187 billion logged as of end-February.
At the end-March level, the country’s dollar reserves can cover 7.9 months’ worth of imports of goods and services and payments of primary income, according to the BSP.
The GIR serves to shield the country from possible liquidity shocks, including the current pandemic.
“As the country anticipates contractions in exports and remittances, the BSP may use part of the reserves to manage excessive volatility of the peso,” Security Bank Corp. Chief Economist Robert Dan J. Roces said in an e-mail.
Despite market volatility caused by worries over the virus, the peso has been among the most resilient emerging Asia currencies partly due to the country’s strong macroeconomic fundamentals.
Mr. Roces noted that the country’s strength prior to the pandemic has been its ample dollar reserves which have been beyond “the rule of thumb to cover at least three months worth of goods and services imports.”
“Adequate levels boost market confidence in our ability to meet external obligations, and more importantly to absorb any unforeseen external shocks such as those we could see in this pandemic,” he said.
Amid continued external weakness due to the global pandemic, the country’s dollar reserves may remain robust and even grow in the coming months due to inflows as well as proposed legislation that seeks to boost foreign investments, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said.
“GIR could still fundamentally grow as the country’s structural US dollar inflows continue especially [through] OFW remittances, BPO (business process outsourcing) revenues…and foreign investments inflows that could be supported by the CREATE (Corporate Recovery and Tax Incentives for Enterprises Act) Bill,” Mr. Ricafort said in an e-mail.
The CREATE Bill is an enhanced version of the Corporate Income Tax and Incentives Reform Act or CITIRA, which looks to progressively lower corporate income tax. Under the CREATE Bill, the proposal is to bring down corporate tax to 25% from the current 30% by as early as July. — Luz Wendy T. Noble
A PLAYWRIGHT who is participating in the Cultural Center of the Philippines’ Virgin Labfest (VLF) theater festival for the first time, is presenting a play that portrays women involved in war.
In Daryl Pasion’s Papaano Turuan ang Babae Humawak ng Baril, a man returns home to his pregnant wife after an encounter with the New People’s Army. The sweet homecoming turns sour when the wife is confronted with her husband’s impossible request.
Directed by Erika Estacio, the play is set in a fictional village and presents the experiences of farmers who live near army detachment areas. After the couple — played by Lhorvie Nuevo and Eshei Mesina — reunite, the conversation escalates into an argument between the couple about their current situation.
“Ang kwento ay tungkol sa dinaranas ng mga magsasaka na nakatira sa isang maliit na baryo kung saan may nagkakampo na mga militar at kung paano sila naiipit sa mga bakbakan ng mga rebelde at mga militar (The story is about the experiences of farmers who live in a small village near military camps, and how they get caught up in the attacks between the rebels and military),” Mr. Pasion said in a Zoom interview with BusinessWorld on May 25.
Mr. Pasion said that he decided to write about the issue out of frustration.
The New People’s Army, better known as the NPA, is the military wing of the Communist Party of the Philippines. Established in 1969, it operates in rural areas around the country, often clashing with the military. In 2017, President Rodrigo Duterte signed Proclamation No. 374, declaring the NPA as a terrorist organization.
“Makikita natin sa mga balita na mababaw ‘yung nagiging diskursyo pagdating sa bakbakan ng mga rebelde at militar (We can see in the news that the discourse is shallow regarding the attacks between rebels and the military),” said the playwright, adding that news reports often focused only on the number of deaths and where the attacks happen.
In writing his first play, Mr. Pasion referred to studies of locations with a military presence and news articles. He also interviewed his mother about their relatives who worked as farmers in Nueva Ecija.
Afterwards, he had it read by female friends, including a journalist from Davao who covers stories on farmer’s experiences, to gain a woman’s perspective since the story center’s on a woman’s point of view.
“Napaka-defamiliarizing noong image [of women in war]. Gaano kasahol ‘yung lipunang ginagalawan ng babae para magawa siyang itulak patungo sa karahasan? (The image of women in war is defamiliarizing. How worse is a society where women are forced into violence?).”
Thanks to the ongoing COVID-19 pandemic, the Virgin Labfest, which focuses on new, unstaged one-act plays, is going online this year, with live streamed performances and readings, among others.
Papaano Turuan ang Babae Humawak ng Baril will stream live on June 13, 3 p.m. and June 24, 8 p.m.
Aside from the plays and staged readings, viewers can also catch the VLF Playwright’s Fair online with this year’s playwrights talking about their work on June 11-14, 17-20, 25-27 at 8 p.m. Meanwhile, the Virgin Labfest 2020 Writing Fellowship Program will culminate in an online staged reading of the fellows’ works on June 28 at 2 and 5 p.m.
For more details and show schedules, visit https://www.facebook.com/culturalcenterofthephilippines/ and https://www.facebook.com/thevirginlabfest/, or join https://www.facebook.com/groups/VLFTambayan/. — Michelle Anne P. Soliman
