Nat’l gov’t fiscal balance swings to deficit of P149.9B in June

The national government’s fiscal balance swung back to a deficit in June from a surplus in the same month in 2020 due to lower tax collection compared to last year, when the government extended income tax collection in light of strict quarantine measures due to COVID-19.

Data released by the Bureau of the Treasury (BTr) showed the national government posted a budget deficit of P149.9 billion, a reversal from a P1.8-billion surplus recorded in June 2020.

The Treasury attributed June’s fiscal deficit to “the 30.3% decline in revenue collection as the payment of income taxes was maintained on its original schedule.”

To recall, the deadline for payment of income tax return remained on April 15, 2021, whereas in 2020, it was extended to June in light of the implementation of strict quarantine protocols amid the COVID-19 pandemic.

The year-to-date fiscal balance stood at a budget gap of P716.1 billion, wider by 27.78% from January to June 2020’s level of P560.4 billion but 29.66% behind the first half 2021 program of P1.018 trillion.

Revenues

The government’s total collections in June dipped by 30.03% to P245.6 billion from P351 billion in the same period last year.

The January to June revenue performance, however, grew by 2.55% to P1.49 trillion on account of higher year-to-date tax collections.

The government’s revenue is made up of 90% taxes and 10% of non-tax collections.

The country’s main tax collection agency, the Bureau of Internal Revenue (BIR), saw a 43.62% drop in its collections in June to P159.4 billion “due to the high base effect of extending income tax payment to June last year in light of the implementation of strict quarantine measures.”

Despite the collection drop last month, the BIR’s first six months collection grew by 7.88% to P1.03 trillion from P956.4 billion and surpassed its P1.017-trillion goal by 1.39%.

The Bureau of Customs (BOC), meanwhile, posted a net collection of P52.2 billion during the month, up 22.48% from P42.6 billion year-on-year.

This is the fourth straight month that the Customs posted a double-digit growth on the back of improving importation volume and agency collection efforts.

The January to June BOC collections amounted to P301.7 billion, up 19.22% year-on-year and 3.40% higher from the P291.8-billion program.

Income generated by the BTr, likewise, rose by 84.19% to P20.8 billion from P11.3 billion posted in June 2020.

The Treasury said the P12.2 billion year-on-year increase in dividend remittances as well as higher remittance share of national government share from PAGCOR profit drove the growth for the month.

The BTr’s January to June collection, however, narrowed by 55.45% to P81.6 billion “due to higher income and dividend remittances last year in line with the implementation of RA. No. 11469 of the Bayanihan to Heal as One Act.”

“However, the outturn still exceeded its target for the period by 56.48% and the full year program of P74.7 billion by 9.29% or P6.9 billion on account of higher dividend remittances, income from Bond Sinking Fund investment and government deposits, as well as interest income on advances to GOCCs (government owned and controlled corporations),” the Treasury said.

Collections from other offices amounted to P11.3 billion, which include other non-tax revenues such as privatization proceeds, fees, and charges, down 14.04% year-on-year.

Year-to-date collections from other offices totaled P65.3 billion, up 24.54% and 31.78% higher than the programmed level for the period at P49.5 billion.

Expenditure

The national government’s expenditure for June amounted to P395.4 billion, up 13.24% year-on-year “attributed largely to the disbursements for infrastructure programs of the Department of Public Works and Highways (DPWH) and capital outlay projects under the Armed Forces of the Philippines (AFP) Modernization Program, Emergency Repatriation Program of the Department of Labor and Employment-Overseas Workers Welfare Administration (DOLE-OWWA), Smart Campuses Program of the Commission on Higher Education (CHED), expenditures for the preparatory activities of the Commission on Elections for the 2022 national elections.

Total expenditures as of end-June 2021 stood at P2.206 trillion, outpacing the same period last year’s P2.013 trillion by 9.57% but falling short of the P2.439-trillion program by 9.56%.

“This is mainly due to the timing of subsidy releases awaiting requests from the concerned GOCCs, the pending enactment of the GUIDE bill, outstanding checks as of end-June which are yet to be encashed by contractor or suppliers of line agencies, as well as interest savings,” the BTr said,

The Treasury said 92% or P365.5 billion of total expenditures for the month of June went to primary spending which grew by 13.63%.

Primary expenditures, net of interest payment, from January to June saw a 9.41% growth year-on-year to P1.997 trillion, but fell short of the P2.181-trillion target by 8.43%.

Interest payments in June grew by 8.58% to P29.9 billion “resulting mainly from the coupon payment for Retail Treasury Bonds issued in March 2021.”

Year-to-date interest payments of P208.5 billion was also 11.11% higher year-on-year, but still 19.14% lower than the program of P257.9 billion, generating savings of P49.4 billion.

As a percentage of expenditures, interest payments for the first half of 2021 accounted for 9.45%, up from 9.32% in the same period last year.

Likewise, interest payments as a percentage of total revenues increased from 12.91% to 13.99%, according to the Treasury.—AOL, GMA News