2014 budget deficit narrows to P73.1B

MANILA, Philippines–A double-digit jump in revenue collections coupled with slower spending on public goods and services narrowed last year’s budget deficit to P73.1 billion, equivalent to about a fourth of the 2014 program.

The fiscal gap posted last year was 55 percent less than the P164.1 billion posted in 2013, and also smaller by 73 percent than the P266.2-billion deficit programmed for 2014.

Anemic government spending last year, mainly due to the “chilling effect” of a Supreme Court decision declaring the Disbursement Acceleration Program unconstitutional, brought total expenditure to P1.982 trillion, or 13 percent below the P2.284 trillion programmed for the year. This means the government did not spend as it should in order to support the investments required to sustain economic growth.

Interest payments on the government’s outstanding debt dropped by 1 percent to P321.2 billion last year, according to the 2014 cash operations report of the Department of Finance (DOF).

The share of interest payments to total expenditures slid by 1 percentage point year-on-year to 16.2 percent in 2014, with interest payment savings reaching P31.5 billion.

“Interest payments declined to 16.8 percent of total revenue from 18.8 percent in 2013, indicating the improved debt service capacity of the government,” the DOF added.

On the revenue generation side, collections in 2014 increased by 11 percent year-on-year to P1.909 trillion. The full-year take, however, was 5 percent lower than the target of P2.018 trillion.

The tax collections of the Bureau of Internal Revenue rose by 10 percent year-on-year to P1.335 trillion last year, although 8 percent lower than its target of P1.456 trillion.

The Bureau of Customs grew its collections of duties and taxes by 21 percent to P369.3 billion, although smaller than its 2014 goal of P408.1 billion.

Revenues of the Bureau of the Treasury last year jumped by 15 percent to P93.4 billion, also higher by 66 percent than programmed.

With higher collections, the share of taxes collected to the economy went up to 13.6 percent in 2014 from 13.3 percent a year-ago.

The budget deficit to gross domestic product ratio, meanwhile, went down to 0.6 percent or below both the 2014 program of 2.1 percent as well as the 1.4 percent registered in 2013.

For 2015, the government had programmed a deficit of P266.2 billion.