DBS Bank sees Philippines sustaining high tax collections

MANILA, Philippines—The government is expected to maintain a trend of higher revenue collection and lower spending following a P61-million budget surplus posted in the first four months of 2011, according to DBS Bank.

The Singapore-based bank said in a new research note that based on the positive numbers so far, the Philippine government could reach its goal of reducing its budget deficit to 3.1 percent of gross domestic product or to P290 billion or less.

DBS made the comment ahead of the release of the country’s latest fiscal data later this week.

“Consolidation will be the main theme for the Philippine budget for 2011,” DBS said. “Indeed, in the first four months of this year, revenues were up by 13.2 percent year-on-year while expenditures were down by 13.4 percent year-on-year.

The bank noted that the Philippine government had “a fair record in managing its fiscal accounts over the last decade,” with the budget balance registering an average deficit of 2.9 percent of GDP.

In 2010, Malacañang reported a deficit of 3.5 percent of GDP or P314 billion.

Earlier, Budget Secretary Florencio B. Abad said the Aquino administration had kept the deficit within target for 2010 because of improved revenue collection in the latter part of the year, coupled with the exercise of prudence in management expenses.

Abad said that with this, the government could achieve the immediate goals of reducing the ratio of deficit to GDP to this year’s target through 2.6 percent in 2012 and 2 percent in 2013.

Last week, the Bureau of Internal Revenue said it collected P88.16 billion in May, rising 11.5 percent from the P79.05 billion posted in the same month in 2010.