PH fiscal balance yields narrower deficit in July

The Philippine government’s fiscal balance saw a narrower deficit in July this year on the back of faster growth in revenue collections during the period, the Bureau of the Treasury (BTr) said Wednesday.

Treasury data showed the national government yielded a budget gap of P28.8 billion, narrower by 39.67% than the P47.8-billion fiscal shortfall seen in the same month last year.

The lower deficit during the period was due to the faster revenue growth of 11.09% compared to a 5.80% increase in expenditures, according to the BTr.

In an emailed commentary, Rizal Commercial Banking Corp. chief economist Michael Ricafort said the narrower budget gap may “have to do with improvement in recurring tax revenue collections by the BIR (Bureau of Internal Revenue).”

July’s fiscal balance brought the year-to-date budget gap to stand at P642.8 billion, up 7.21% year-on-year.

Revenues

State revenue collections in July amounted to P457.4 billion, up 11.09% from P411.7 billion in the same period last year.

Tax collections, which comprised 88.07% of the total, grew by 15.46% year-on-year while non-tax revenues accounting for 11.93%, contracted by 13.20%.

The P2.6 trillion cumulative revenue for 2024 surpassed the P2.3 trillion raised in the same seven-month period in 2023 by 14.75% or P335.1 billion. 

Of the total year-to-date collections, 85.85% or P2.2 trillion came from taxes, which grew by 10.99% year on year. 

On the other hand, the non-tax component contributed P368.8 billion, representing 14.15%, with a significant 44.47% year-on-year increase.

The BIR saw a 17.09% growth in its July collection amounting to P319.8 billion.

For the entire January to July period, the BIR collected P1.7 trillion, up 12.70% from P1.5 trillion year-on-year.

The Treasury said the BIR’s collection growth was due to higher collections of Value- Added Tax (VAT), income taxes, other domestic taxes, and percentage taxes. 

“The growth in VAT collection was partly attributed to base effects as collections last year were lower by around two months' worth of VAT collection with the shift from monthly to quarterly filing of VAT payments as mandated by the Tax Reform for Acceleration and Inclusion (TRAIN) Law,” it said.

The Bureau of Customs (BOC), meanwhile, collected P80.4 billion in July, up 9.99% year-on-year.

The BOC's year-to-date collections for the first seven months of the year hit P535.9 billion, up 5.80% in the same period last year.

“The year-on-year growth in BOC revenue was due to higher collections from VAT, import duties, and excise taxes. The positive revenue performance was also driven by peso depreciation, higher value and volume of imports, and higher international crude oil prices when compared with the same period last year,” the Treasury said.

Moreover, income collected and generated by the BTr contracted to P19.9 billion in July from P50.8 billion a year ago. 

“The decrease was primarily due to the BSP’s one-off remittance of P31.9 billion last year, as well as reduced income from BTr-managed funds and national government deposits,” the Treasury said.

BTr's cumulative 2024 income of P183.8 billion has already surpassed the previous year’s performance for the same period by 27.81%. 

“This strong performance was due to higher dividend remittances, interest on advances from GOCCs, and NG’s share from PAGCOR income,” it said.

“Collections by other offices (other non-tax, including privatization proceeds, fees and charges, and grants) reached P34.6 billion in July, nearly tripling the P12.0 billion recorded in the same period last year,” it further said.

“This resulted in a cumulative collection of P185.0 billion, also higher by 65.96% or P73.5 billion above last year’s comparable figure,” it added.

Expenditures

The Treasury said disbursements in July reached P486.2 billion, up 5.80% year-on-year “partly due to the higher National Tax Allotment (NTA) share of LGUs.”

“The July outturn contributed to a higher year-to-date expenditure of P3.2 trillion, reflecting a 13.17% or P378.3 billion year-on-year increase in disbursements,” the BTr said.

Primary expenditures, net of interest payments, in July reached P406.8 billion, up 2.73% from a year earlier. 

Total primary expenditures for the seven-month period amounted to P2.8 trillion, outperforming the P2.5-trillion primary expenditures seen in the same period a year ago.

Interest payments, on the other hand, reached P79.4 billion in July, up 24.99% from a year earlier.

“This was due to the higher cost of financing and depreciation of the peso observed throughout the year,” the BTr said.

Total interest payments as of January to July was also higher at P456.7 billion, up 31.98% from a year earlier.—AOL, GMA Integrated News