Philippines’ budget deficit shrinks 18.17% in H1

The Philippine government’s fiscal balance stood at a slimmer deficit as of the first half of 2023 as state collections surpassed tepid spending during the period, data released by the Bureau of the Treasury (BTr) on Friday showed.

The government’s budget shortfall in the January to June 2023 period totaled P551.7 billion, 18.17% lower than the P674.2-billion fiscal gap in the same period last year.

The Treasury attributed the narrower budget deficit in the first six months of the year to a "higher revenue outturn for the period."

The first semester shortfall was also 28.49% below the P771.5 billion mid-year deficit ceiling.

In an emailed commentary, Rizal Commercial Banking Corporation chief economist Michael Ricafort said the lower budget gap was a result of improved tax revenue collections as the economy reopened further toward greater normalcy and measures to further intensify tax collections, among other factors. 

Revenues

The government collected P1.86 trillion in the first semester of the year, up 7.68% from P1.73 trillion year-on-year.

The January to June collection also surpassed the target of P1.81 trillion by 2.72%.

The Treasury said 89% of the year-to-date revenues were generated from taxes at P1.65 trillion, while the remaining 11% were from non-tax collections at P203.1 billion.

Broken down, the Bureau of Internal Revenue (BIR) collected P1.22 trillion, up 7,65% from P1.132 trillion in the same period last year.

The Bureau of Customs (BOC) raked in P433.4 billion during the period, up 9.26% from P396.7 billion a year earlier.

Income collected and generated by the BTr slipped by 10.68% to P93 billion from P104.1 billion year-on-year.

Collections from other offices or other non-tax revenues, including privatization proceeds and fees and charges, stood at P110.2 billion, up 34.26% from P82 billion recorded in the January to June 2022 period.

Expenditure

Government spending saw a 0.42% reduction to P2.41 trillion from P2.40 trillion last year.

"The lower-than- programmed Interest payments (IP); ongoing implementation of some social protection programs, particularly the registration and validation of beneficiaries; as well as billing concerns from suppliers/creditors, such as late submissions of billing statements and compliance with documentary requirements, have affected the spending outturn for the period," the BTr said.

Interest payments amounted to P282.5 billion, up 9.81% from P257.2 billion and 6.72% lower than the P302.8-billion program.

Net of IP, government primary spending totaled P2.13 trillion, down 0.70% from P2.14 trillion in the same period in 2022.

"The administration's priority on fiscal discipline and no more large lockdowns so far since 2022 also reduced the government’s expenditures on ayuda/financial assistance and other COVID programs since large lockdowns in the past have proven to be costly for the government that led to wider budget deficits that, in turn, led to large government borrowings, or a total of P4 trillion from 2020 to 2021 (or an average of about P2 trillion per year) and P1.690 trillion in 2022, which ballooned the country’s debt to more than double to P14.096 trillion as of end-May 2023, from P6 trillion in 2016," Ricafort said.

"More tax revenue collections due to improved business and economic activities as the economy reopened further towards greater normalcy, especially with no more large lockdowns… would help sustain favorable fiscal performance, with a bigger tax base that would also help reduce the country’s debt-to-GDP ratio," he said. — VBL, GMA Integrated News