PH budget deficit hits three-month high in March 2024

The Philippine government’s budget deficit widened further to the biggest in three months in March but still narrower than that recorded in the same month last year, data released by the Bureau of the Treasury (BTr) on Wednesday showed.

The budget deficit stood at P195.9 billion, 6.82% narrower than the P210.3 billion in March 2023, but the widest since December 2023.

Government revenues for the month stood at P287.9 billion, with tax revenues accounting for P223.9 billion as the Bureau of Internal Revenue (BIR) shared P145.3 billion, and the Bureau of Customs (BOC) shared P74.9 billion.

Non-tax revenues accounted for P64.1 billion, reflecting an 86.94% increase from P34.3 billion the previous year, as BTr's share increased by 229.89% to P49.1 billion.

“The significant increase for the month was primarily driven by higher dividend remittances, interest on advances from GOCCs, specifically from the National Irrigation Administration and the NG share from PAGCOR income,” the BTr said.

Expenditures for the month, meanwhile, increased by 3.18% to P483.8 billion, including P70.9 billion worth of interest payments.

“While higher disbursements were recorded in departments/agencies, the growth of spending in March was weighed down by the lower subsidies to government corporations and transfers to local government units,” the BTr said.

The BTr cited lower subsidies to corporations such as Power Sector Assets and Liabilities Management Corp. (PSALM), and the transfer of the P15-billion Coco Levy Funds to the Coconut Farmers and Industry Fund which is expected in April, versus the release in 2023 made in March.

The latest figures brought the year-to-date budget deficit to P272.6 billion, wider than the P270.6 billion recorded in the same period last year.

In a separate commentary, Rizal Commercial Banking Corp. (RCBC) said the wider deficit could be due to a 10.7% growth in government expenditures as higher global interest rates increased debt servicing costs.

“For the coming months, further pick up in business and other economic activities would still lead to higher government tax revenue collections amid intensified tax collection efforts, as well as other priority tax/fiscal reform measures,” he said.

A report released by Fitch Group unit BMI earlier this month said it expects the Philippine budget deficit to hit 5.5% of the country’s gross domestic product (GDP) this year, lower than the 6.2% recorded in 2023.

“This narrowing would mark the third consecutive year the budget shortfall shrinks, a reflection of the current administration's push for fiscal consolidation,” it said in a report.—LDF, GMA Integrated News