THE national government’s budget deficit narrowed in the first quarter, as expenditures fell below target amid delays in project implementation due to the enhanced community quarantine (ECQ), while the early remittance of dividends from government-owned and -controlled corporations (GOCCs) to boost the coronavirus disease 2019 (COVID-19) response supported the increase in total revenues.
The Bureau of the Treasury (BTr) yesterday reported the budget deficit in the first quarter amounted to P74 billion.
This figure is 17.97 percent below last year’s budget shortfall of P90.2 billion, and 77.76 percent lower than the program of P332.9 billion for the quarter.
For March alone, the deficit figure stood at P59.5 billion, 1.83 percent up from the P58.4 billion posted in the same month last year, amid a larger nominal increase in government spending compared to revenue growth.
In the first quarter, government revenues totaled to P775.2 billion, 12.72 percent higher than the year ago level of P687.7 billion, and 17.43 percent up versus the program of P660.1 billion.
Government revenues for March alone amounted to P273.7 billion, up 19.58 percent from the P228.9 billion generated in the same period last year.
The BTr said non-tax revenues more than doubled in the first quarter from last year due to the early remittance of dividends from GOCCs in line with the implementation of the Bayanihan to Heal as One Act.
Specifically, non-tax revenues totaled to P154.4 billion in January to March, 115.27 percent up versus the year ago level and 209.82 percent higher versus program. In March alone, it also jumped 215.41 percent year-on-year.
Under the Bayanihan To Heal As One Act, the President is authorized “to allocate cash, funds, investments, including unutilized or unreleased subsidies and transfers, held by any GOCC or any national government agency in order to the address the COVID-19 emergency.”
Carlos Dominguez, Department of Finance secretary, was asked in a Viber group with reporters if the government can further rely on GOCC funds during the pandemic, amid the weak tax collections during the ECQ.
“The GOCC dividends were meant to partially cover the additional cash required to respond to the COVID-19 induced crisis, not to substitute for the shortfall in tax collections due to the postponement of the due date for paying income taxes,” Dominguez said.
Dominguez earlier said the collection in some taxes are only postponed in the meantime as the Bureau of Internal Revenue (BIR) has repeatedly moved the deadlines for the filing and payment of the 2019 annual income tax returns, amid the implementation of the ECQ.
These taxes are expected to be eventually collected as these refer to income generated in the previous year.
Thus, the BTr reported that BIR collection in March slowed down to P131.7 billion, reflecting a 10.67 percent contraction from the prior year’s outcome of P147.4 billion.
The downturn for the period was attributed to the imposition of the Luzon-wide ECQ in response to the COVID-19 pandemic.
BIR’s first quarter collection of P468.8 billion also narrowly improved from the P468.2 billion collected in the first quarter of 2019 by 0.12 percent, but was still higher by 3.26 percent compared to its P454 billion target.
Collections by the Bureau of Customs (BOC) similarly dropped by 9.43 percent year-on-year in March to P44.6 billion from P49.3 billion, still due to slower economic activity caused by the pandemic and ECQ measures.
Nevertheless, BOC was still able to achieve a modest increase of 2.43 percent in its cumulative revenue for the quarter to P145.3 billion from the year ago level of P141.9 billion, although still behind the P150.1 billion target by 3.16 percent.
Meanwhile, the cumulative expenditures as of end-March reached P849.5 billion, achieving a 9.16 percent increase from last year’s P778 billion, but still short of the P993 billion program by 14.48 percent.
The BTr said this is also mainly attributed to the delays in program implementation with the ECQ, and lower-than-programmed interest payments and net lending.
“The shortfall in expenditures due to the ECQ will be made up for by the acceleration of Build, Build, Build project implementation upon easing of the ECQ,” Dominguez said.
In March alone, disbursements still posted a growth of 15.97 percent to reach P333.2 billion, versus the P287.3 billion a year ago.
The BTr cited higher personnel services expenditures with the implementation of the first tranche of the Salary Standardization Law V, maintenance expenses of various agencies, and release of the block grant to the Bangsamoro Autonomous Region for the month of March.
Relative to the gross domestic product (GDP), the BTr said the first quarter 2020 deficit stood at 1.65 percent, declining from last year’s revised 2.04 percent deficit-to-GDP ratio.
The revenue effort improved to 17.33 percent from 15.55 percent, even as tax effort dipped to 13.88 percent from 13.93 percent over the same period.
Similarly, national government expenditures as a percentage of GDP improved to 18.98 percent, compared to 17.59 percent in the same period in 2019.
