The national government’s budget balance swung to a deficit of P120.3 billion at the end of the first half as the previous Aquino administration ramped up spending before turning over the reins of government to President Duterte.
Department of Finance (DOF) documents released Wednesday showed that the first-half deficit was a reversal of the P13.7-billion surplus a year ago.
As of end-June, government expenditures on public goods and services rose 13.9 percent year-on-year to P1.2 trillion, outpacing the P1.1 trillion in tax and other revenues collected during the first six months, which grew a mere 1 percent from last year’s collections.
Tax revenues jumped by almost a tenth to P982 billion while non-tax revenues dropped by 38.3 percent year-on-year to P118.9 billion.
Between January and June, the tax take of the Bureau of Internal Revenue—the country’s biggest tax-collection agency—increased by nearly 11 percent year-on-year to P783.4 billion. The duties and other taxes collected by the Bureau of Customs, meanwhile, climbed by 6.7 percent to P190.5 billion during the six-month period as the cheap oil environment persisted.
The DOF, however, did not provide the first-half targets for both expenditures and revenues, explaining that “the previous Cabinet-level Development Budget Coordination Committee (DBCC) was not able to sign-off on the 2016 quarterly fiscal program.”
“The updated budget target is expected to be finalized by the [new] DBCC [comprised of President Duterte’s economic managers] in its next meeting,” the DOF said.
At the first DBCC meeting under the Duterte administration last July 5, Finance Secretary Carlos G. Dominguez III said they reduced the 2016 revenue goal to P2.57 trillion from P2.7 trillion previously, citing below-target collections so far.
But the Duterte administration kept the expenditures target for this year to about P3 trillion, Dominguez said, as Budget Secretary Benjamin E. Diokno cited the need to sustain government spending.
“To redress persistent underspending despite healthy revenue growth seen in the previous administration, the new economic managers under the Duterte administration vowed to accelerate public spending by fast-tracking infrastructure development necessary to sustain the rapid modernization of the Philippine economy. Under the new administration, government infrastructure spending is targeted to be equivalent to 6 percent of GDP [gross domestic product], exceeding the previous administration’s 5-percent goal,” the DOF said.
Diokno had said that the infrastructure spending-to-GDP ratio could hit as much as 7 percent before the end of the Duterte administration in 2022 on the back of a “golden age of construction” planned to fast-track projects.
The government plans to spend about P890 billion, a record-high amount, on hard infrastructure next year.
“The national government also plans to ramp up infrastructure spending outside Metro Manila to create more jobs and ensure growth is felt in the other regions and rural areas,” according to the DOF.