Government slashed fiscal deficit by 40% in July
The Marcos administration’s budget deficit in July narrowed by nearly 40 percent as a double-digit growth in revenue collection outpaced the modest increase in state spending.
The government incurred a fiscal deficit of P28.8 billion in July, down from the P47.8 billion shortfall last year, data released on Wednesday by the Bureau of the Treasury (BTr) showed.
For the first seven months, the deficit increased by 7.21 percent to P642.8 billion from the level a year ago. Total revenues in July increased by 11.09 percent to P457.4 billion, while state expenditures grew by 5.8 percent to P486.2 billion.
“If double-digit revenue collections growth continues, I think the budget deficit may continue to narrow,” said Ruben Carlo Asuncion, chief economist at Union Bank of the Philippines.Asuncion said that this would allow the government to spend more on essential services and projects than just pay interest on its debt.
Additionally, if the Bangko Sentral ng Pilipinas (BSP) lowers interest rates, it could improve the spending situation by making borrowing costs cheaper, which is beneficial as the economy recovers from high interest rates and high inflation, he said. Revenues from the Bureau of Internal Revenue, which historically accounts for 80 percent of state revenues, grew by 17.09 percent to P319.8 billion in July. This boosted its year-to-date collection by 12.7 percent to P1.68 trillion, about 55 percent of target for the full year.
“The year-on-year 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 Law,” the report said. The Bureau of Customs (BOC) collected P80.4 billion in July, up 9.99 percent. For the first seven months, its collections rose by 5.8 percent to P535.9 billion, reaching about 56 percent of its target for the year. The growth in BOC revenue was attributed to greater collections from VAT, import duties and excise taxes. This favorable performance was further bolstered by the depreciation of the peso as well as the increased value and volume of imports and higher international crude oil prices.
Meanwhile, collection by the BTr declined by 60.82 percent to P19.9 billion in July, primarily due to lower remittance from the BSP and its managed funds. BTr’s income since the start of the year reached P183.8 billion, up by 27.81 percent, buoyed by higher dividend remittances, interest on advances from state-owned corporations and the national government’s share in the income of Philippine Amusement and Gaming Corp. INQ
