The national government’s budget deficit narrowed to P200.3 billion in May as revenues posted a significant increase from its year ago level, data released by the Bureau of the Treasury (BTr) showed.
According to a BTr statement yesterday, the budget shortfall marginally narrowed from the P202.1 billion incurred in May last year.
Revenues surged by 69.26 percent, while expenditures posted a growth of 29.15 percent.
To recall, tight quarantine measures were still in place in May last year.
Year-to-date, the government registered a deficit of P566.2 billion, 0.72 percent up from the P562.2 billion recorded in January to May 2020, as revenues rose by 12.92 percent while expenditures went up by 8.8 percent.
The BTr said revenue collection for May rose to P256.4 billion, substantially increasing by 69.26 percent from the P151.5 billion generated in the same time last year.
Michael Ricafort, Rizal Commercial Banking Corp. chief economist, said in an emailed statement yesterday the significant hike for the month could be due to the low base effects, as tax payments and filings a year ago were deferred by about two months to June 2020 amid the implementation of hard lockdowns.
The year-to-date collection of P1.24 trillion likewise improved by 12.92 percent from the previous year’s outturn of P1.1 trillion.
The Bureau of Internal Revenue notched double digit growth of 60.54 percent as it collected P183.7 billion for the month compared to the P114.4 billion posted a year ago.
This pushed the agency’s cumulative uptake to P872.4 billion for the five-month period, 29.49 percent better than collections made in January to May 2020 of P673.7 billion
The Bureau of Customs (BOC) raised P48.6 billion for the month, reflecting a 58.05 percent increase over the same period of last year’s P30.8 billion, which the BTr said was attributed to continued agency efforts on improving valuation and collection.
Cumulatively, BOC collections also managed to grow 18.57 percent from last year’s P210.5 billion to P249.6 billion as of end-May 2021.
The BTr meanwhile generated P12.4 billion in revenue for May to exceed last year’s actual income of P2.4 billion.
The surge for the month was largely driven by higher remittances of dividends on shares of stocks and income from bond sinking fund investment, the BTr said.
“However, BTr cumulative income of P60.8 billion for the five-month period represents a normalization compared to last year’s P171.9 billion collections which was generated due to the provisions of Republic Act 11469 or the Bayanihan to Heal As One Act,” the BTr said.
Other offices, which include privatization proceeds and fees and charges, collected P9.7 billion in May, nearly thrice the level recorded for the same month last year of P3.6 billion.
“The improvement is due to low base effect from the limited operations of government collecting offices caused by the strict quarantine protocols last May 2020,” the BTr said.
Total revenue of other offices as of end-May stood at P51.6 billion, also higher than the previous year’s outturn of P39.3 billion by 31.39 percent.
Last month’s expenditures rose to P456.7 billion, surpassing last year’s P353.6 billion by 29.15 percent.
“The sizeable increase is attributed mainly to the disbursements for the capital outlay projects of the Department of Public Works and Highways, banner education and health programs of the Department of Education and the Department of Health, respectively, and releases to the PhilHealth for the health insurance premiums of senior citizens, and to local government units for the Barangay Development Program,” the BTr said.
Cumulative expenditures from January to May of P1.81 trillion also increased by 8.8 percent from the P1.66 trillion disbursed in the same period last year.
Meanwhile, Ricafort said the budget deficit in May is the widest in five months, amid the increase in government spending, partly due to the recent tighter quarantine restrictions since the latter part of March 2021 that increased spending for various coronavirus disease 2019 (COVID-19) programs.
“The tighter quarantine restrictions since late March 2021… could have fundamentally reduced business/economic activities, as well as tax revenue collections, thereby leading to wider budget deficits recently. Thus, wider budget deficits could lead to more government borrowings and higher outstanding debt,” Ricafort said.
For the coming months, he said increased spending on various government projects and infrastructure projects around the country could continue especially up to shortly before the May 2022 elections.
“Increased government spending for COVID-19 vaccines, which could be recurring in nature in the coming years, as well as on related preparations/logistics including for testing, quarantine facilities, among others would also lead to wider budget deficits and higher government borrowings/debt, going forward,” Ricafort said.
“Further measures to re-open the economy…would allow greater capacity for many businesses in terms of higher production, sales, net income, jobs, and other business opportunities, thereby increasing the government’s tax revenue collections and help in reducing the country’s budget deficit,” he added.
Ricafort said the increased COVID-19 vaccine arrivals and deployment would help meaningfully reduce local cases and justify further reopening the economy “that helps improve economic recovery prospects as well as higher government tax revenue collections and less need for government spending on various COVID-19 programs, thereby would fundamentally help narrow the budget deficit, going forward.”
“This would also help make the country’s budget deficit, debt stock, and overall fiscal performance more manageable and sustainable in the coming years, especially if the economy recovers further,” he said.
