As Philippine growth gains momentum, August budget deficit shrank 40%

The national government’s budget deficit shrank by 40 percent to P72 billion in August 2022 from P121 billion in August 2021 as growth of the domestic economy built up momentum thanks to continued reopening from pandemic-prompted restrictions.

For the eight months from January to July, the government’s spending beyond its earnings narrowed by 13 percent to P833 billion this year from P958 billion in the same period last year.

Preliminary data from the Bureau of the Treasury (BTr) show that in August, expenses grew by 6.5 percent year-over-year to P404.5 billion from P380.2 billion.

The growth in expenses was mainly due to higher national tax allotment transfers and interest payments, the BTr said in a statement.

Overall, the national government spent P3.2 trillion from January to August, 8 percent higher than the P2.96 trillion spent in the yearago period.

At P237.5 billion, the increase in eight-month spending was just about two-thirds of the planned P5-billion rise in expenses for the full year.

In August alone, the growth in spending was significantly outpaced by growth in revenues, which clocked at 28.3 percent to P332.4 billion from P259.3 billion.

More revenues

Similarly, for the eight months to August, revenues amounting to P2.4 trillion revved up by 18 percent from P2 trillion last year. Also, the amount was already 72 percent of the full-year goal of collecting P3.3 trillion.

The biggest earner, the Bureau of Internal Revenue, turned in P228.9 billion in August or 23 percent higher than P186.1 billion previously.

January-August contribution from the BIR increased by 12.2 percent from P1.39 trillion to P1.66 trillion—also 65 percent of the agency’s full-year target.

The Bureau of Customs (BOC) chipped in P78.9 billion in August, surging by 48 percent from P53.4 billion.

For the eight months, BOC’s uptake revved up by 36 percent from P412.3 billion to P559.2 billion. Already, this was 78 percent of the agency’s full-year target of P721.5 billion.

These results turned out as the economy re-opened further toward greater normalcy that fundamentally boosted tax revenue collections, and also reduced the government’s COVID-related expenditures since there are no more large-scale lockdowns so far this year compared to pockets of hard lockdowns in 2021, according to Michael Ricafort, chief economist at Rizal Commercial Banking Corp.

In their latest monthly report, First Metro UA&P Capital Markets Research said that as early as July, revenue gains and a smaller budget deficit implied a strong start for the second semester.

First Metro and UA&P said the government had a P900-billion space spending above revenues from August to December, considering the decrease in the budget deficit earlier this year.