The national government’s budget deficit in 2016 widened from a year earlier but remained short of the government’s programmed deficit-to-gross domestic product (GDP) ratio, the Bureau of Treasury (BTr) reported Thursday.
Data released by the BTr showed the government registered a P353.4 billion fiscal deficit last year, up 190 percent or P231.7 billion from P121.7 billion in 2015.
Relative to the size of the economy, the BTr said the full-year fiscal deficit rose to 2.4 percent of GDP, lower than the revised 2.7 percent program but higher than the 0.9 percent recorded in the previous year.
The BTr said deficit-to-GDP ratio of 2.4 percent was the highest level posted in the last five years.
In nominal terms, the 2016 budget gap was 9 percent short of the P388.9 revised programmed deficit.
In December alone, the deficit was at P118.2 billion, up 57 percent from P75.1 billion a year earlier.
The government’s fiscal performance “reflects strong expenditure growth of 14 percent, a result of the initiatives of the new administration to ramp up public spending for the second semester, outpacing the 4 percent increase in revenue collections.”
In terms of primary budget, data showed the government recorded a P49 billion primary deficit for 2016, exceeding the target of P61.2 billion but a reversal of the P187.7 billion primary surplus in 2015.
Primary budget figures exclude interest payments on foreign and domestic debt as an indicator of the management of expenditures apart from debt service.
Total revenue amounted to P2.195 trillion, growing by 4 percent or P87 billion year-on-year from P2.109 trillion. The full-year collections were 3 percent lower than the 2016 revenue target of P2.256 trillion.
Focusing on the year-on-year growth in revenue collection, the BTr said improved efficiency drove the country’s tax-to-GDP ratio slightly higher at 13.7 percent from 13.6 percent.
“Total revenue collections amounted to 15.2 percent of GDP, just 0.3 percent short of the 15.5 percent revised target and 0.5 percent below the 15.8 percent revenue effort last year,” it said.
According to BTr data, collections by the Bureau of Internal Revenue (BIR) reached P1.567 trillion, up 9 percent from P1.433 trillion.
“BIR collection is net of the P 8.6 billion tax refund paid to various claimants for the year which includes the partial settlement of tax withheld from the PEACE Bonds amounting to P3.3 billion. Inclusion of the tax refund will drive total collection to P1,575.8 billion,” the BTr noted.
Collections by the Bureau of Customs (BOC) rose 8 percent year to P396.4 billion from P367.5 billion.
But the BTr income eased by 8 percent to P101.7 billion from P110 billion. Collections from other offices also declined by 38 percent to P113.8 billion from P183.4 billion.
Despite increasing by 14 percent from 2015, government disbursements fell by 4 percent and were short of the government’s program of P2.645 trillion.
Disbursements by the national government amounted to P2.549 trillion, up from P2.230 trillion, the BTr reported.
Interest payments declined by 2 percent to P304.5 billion from P309.4 billion.
ANZ Research economist Eugenia Victorino said the widening budget deficit was in line with expectation since the government went for a higher the deficit cap in the second half of 2016.
However, she noted the institutional capacity of other government agencies and local governments to spend is still limited.
Nevertheless, Victorino expects the renewed focus on government spending to be positive for GDP growth this year.