First-half budget deficit swelled as COVID-19 dole outs hiked gov’t spending
MANILA, Philippines — The national government’s budget deficit swelled by 1,214 percent to P560.4 billion during the first half as COVID-19-related expenditures jacked up public spending, and even as the fiscal gap swung to a surplus for the first time in 12 years during the month of June due to the extended tax-payment deadline.
The Bureau of the Treasury’s cash operations report for June released on Wednesday showed that the end-June budget deficit jumped from only P42.6 billion a year ago, although 25.4-percent short of the programmed P751.1-billion deficit for the six-month period.
First-half expenditures climbed 26.6 percent to P2.01 trillion from a year ago’s P1.59 trillion, while tax and non-tax revenues declined by 6.1 percent to P1.453 trillion from P1.55 trillion during the first six months of last year.
Despite the year-on-year jump in disbursements, the government still underspent on public goods and services as the January to June total was 8.6-percent lower than the P2.2-trillion program.
Primary expenditures net of interest payments, or so-called productive spending, rose 29.5 percent year-on-year to P1.83 trillion during the first half, but fell 8.5-percent below the P1.99-trillion program as the Treasury blamed the delayed implementation of the social amelioration program’s (SAP) second tranche.
On the other hand, even as end-June revenues dropped year-on-year, the six-month take was 0.12-percent higher than the downscaled P1.452-trillion target.
To recall, the Cabinet-level Development Budget Coordination Committee (DBCC) last May slashed the 2020 revenue goal to P2.61 trillion, down 16.7 percent from actual revenues of P3.14 trillion last year amid a COVID-19-induced recession.
The Bureau of Internal Revenue’s (BIR) first-half tax take declined 10.3 percent year-on-year to P956.4 billion, although 2.5-percent higher than the downgraded P933.5-billion program.
The Bureau of Customs’ (BOC) collection of import duties and other taxes also slid 16.5 percent year-on-year to P253.1 billion as end-June, also 0.5-percent below its revised P254.2-billion goal.
But during the month of June alone, the revenue collections amounting to P351 billion slightly exceeded the expenditures worth P349.2 billion, resulting in a P1.8-billion fiscal surplus which reversed the P41.8-billion deficit during the same month last year.
Prior to this year, the last time that a budget surplus was posted for June was in 2008.
Tax and non-tax revenues in June rose 50.1 percent from P233.9 billion a year ago as the BIR collected 282.7 billion, up 79.1 percent from a year ago’s P157.8 billion.
“Of the total, 93 percent or P325.4 billion came from taxes which accelerated by 54.6 percent, while the remaining 7 percent or P25.6 billion, were sourced from non-tax revenues,” the Treasury noted.
The Treasury attributed the recovery in the BIR’s take last June—which cut short three-straight months of year-on-year declines—to the “collection of the 2019 income tax dues during the month as well as the resumption of economic activities due to the easing of some quarantine restrictions.”
The BIR had moved to June 15 the cut-off to file and pay last year’s income tax returns (ITRs) in consideration of taxpayers who cannot meet the mandatory April 15 deadline to do so at the height of the lockdown imposed since mid-March to contain the spread of COVID-19.
The BOC’s June collections of P42.6 billion dropped 16.9 percent from P51.3 billion a year ago “due to the adverse impact of the COVID- 19 outbreak” on external goods trade, the Treasury said.
Disbursements in June grew 26.7 percent from P275.7 billion last year mainly due to “subsidies to the Philippine Health Insurance Corp. (PhilHealth) and National Housing Authority (NHA),” the Treasury said.
Primary spending last June rose 30.4 percent year-on-year to P321.7 billion.
Excluding the planned stimulus spending to fight COVID-19, the DBCC had already projected this year’s budget deficit to balloon to P1.6 trillion or 8.4 percent of gross domestic product (GDP).
President Duterte’s economic managers had been firm that they can only allow a budget deficit as much as 9 percent of GDP in 2020—the median of fiscal deficits in Asean and emerging markets.
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