A double-digit revenue growth helped swing the government’s budget position back to a surplus in October, keeping the 10-month fiscal deficit below the 2024 ceiling set by the Marcos administration.
The government ran a budget surplus of P6.3 billion in October, a reversal from the P34.4- billion deficit recorded a year ago, figures from the latest cash operations report of the Bureau of the Treasury (BTr) showed.
A budget surplus happens when the growth of government revenues outpaced expenditures during a period, unlike a deficit where the state is spending beyond its means.
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Data showed the October surplus helped narrow the year-to-date fiscal gap to P963.9 billion, accounting for 64.94 percent of the P1.48-trillion deficit limit for 2024 set by the Marcos administration, which is aspiring for an upgrade to “A” credit rating in the coming years.
As a share of the economy, the BTr said the budget shortfall in the first three quarters of the year had stood at a “manageable” level of 5.14 percent, albeit still far from the prepandemic size of 3.38 percent back in 2019.
Leonardo Lanzona, economist at Ateneo De Manila University, believes that the government is willing to accept a lower economic growth just so it can keep the budget deficit below the cap for 2024.
“The point is that they did not have to incur a surplus because substantial expenditures are needed to recover from the typhoons. The fact that they decided to have a surplus shows that they view budget concerns more important than growth,” Lanzona said.
“They can always attribute the low growth to the weather conditions when, in reality, this decline was due to reduced government investments in order to show some semblance of financial discipline,” he added.
Dissecting the Treasury’s report, total expenditures in October went up by 11.08 percent year-on-year to P466.8 billion due to salary adjustments of qualified government workers and the release of performance-based bonuses to employees of the education department.
Spending boost
Spending had also been boosted by the ongoing infrastructure buildup, including the implementation of foreign-assisted rail projects, the BTr said.
This brought the year-to-date disbursements to P4.73 trillion, marking an 11.52-percent increase. However, the figure was still below the P5.75-trillion spending program of the government for this year.
Revenues, meanwhile, amounted to P473.1 billion in October, rising by 22.63 percent.
Broken down, the Bureau of Internal Revenue—which typically accounts for 80 percent of total receipts of the government—saw its collections grow by 18.62 percent to P325.5 billion. The Treasury attributed this to fatter collections of value-added tax and other levies on personal income, documentary stamp and corporate income, as well as excise tax on tobacco products.
The Bureau of Customs reported an 11.5-percent revenue growth to P86.9 billion in October, citing the benefits of “tax administration efforts” like the “rigorous” verification of value of imported goods and “stringent” implementation of fuel marking to combat smuggling.
Data showed that total government revenues in the January to October period had surged by 16.83 percent to P3.8 trillion, albeit still short of the 2024 target of P4.27 trillion.
The Marcos administration had set a P2.57-trillion borrowing plan for this year to bridge its budget deficit.