Finance Secretary Cesar Purisima. AP FILE PHOTO
Government spending rose by nearly half in June, raising hopes that the Aquino administration could resume boosting economic growth in the remaining months of the year to make up for the weak first quarter.
A 44-percent increase in disbursements in June brought the country back to a budget deficit for the first semester, more than making up for the budget surplus in May that was indicative of the government’s inability to effectively pump-prime the economy.
“The government’s efforts to boost revenue collections have allowed us to ramp up spending,” Finance Secretary Cesar Purisima said in a statement Monday.
For June, the government posted a deficit of P62.5 billion, rising more than six fold from the P8.5-billion shortfall in the same period in 2013. This brought the fiscal position in January to June to a shortfall of P54 billion, up 5 percent year-on-year.
In April and May, the government posted consecutive budget surpluses, which meant it collected more taxes than the money it spent on projects and services. This resulted in doubts over the government’s capability to sustain its support for the Philippine economy through large increases in infrastructure spending and budgets for social services.
For the first semester, collections by the bureaus of internal revenue, customs and the treasury rose by 11 percent. Disbursements for June alone rose 44 percent and, as a result, first-semester spending was up by 11 percent.
“I think [the] data will be positive for growth,” said Barclays regional economist Rahul Bajoria in an interview. Barclays sees the Philippine economy growing by 6.5 percent this year, a forecast more optimistic than the International Monetary Fund’s projection of a 6.2-percent growth.
Last year, the Philippine economy outpaced the rest of Southeast Asia with an expansion of 7.2 percent. Growth slumped in the first quarter of this year to 5.7 percent, the slowest since 2011.