DOF touts fiscal discipline, warns vs ‘revenue-eroding measures’
The budget balance returned to a deficit in September on the back of increased state expenditure amid revenue growth, but the government remains well behind its spending target with only three months left to the year.
The Finance department, which touted the latest deficit data as a sign of continued fiscal discipline, also took the occasion to warn of a threat from “piecemeal revenue-eroding measures”.
The Budget department, meanwhile, said it was optimistic that spending would accelerate in the last quarter of 2015, claiming that bottlenecks had been addressed and also noting an impetus to complete programmed projects.
Sept sees P22.14-B gap
The government posted a September budget gap of P22.14 billion, a reversal from August’s P15.04-billion surplus and wider than the P5.2-billion deficit recorded a year earlier. Expenditures amounted to P186.25 billion against revenues of P164.11 billion.
In the year-to-date, the deficit rose to P25.55 billion, well below the P229.47 billion target for the period and the full-year goal of P283.7 billion. Total revenues for January-September hit P1.604 trillion versus disbursements of P1.63 trillion.
In primary terms, which exclude interest payments on foreign and domestic debt, the government posted a surplus of P7.95 billion in September, down from the year-ago surplus of P23.63 billion. Year-to-date, the primary balance stood at a surplus of P230.2 billion, up from P226.32 billion a year earlier.
The Finance department noted that September revenues of P164.11 were up 6 percent from a year earlier, and that year-to-date the growth was a faster 13 percent.
The Bureau of Internal Revenue (BIR) collected P112.3 billion, 6 percent higher compared to September 2014 and taking its nine-month tally to P1.07 trillion – an 8 percent increase from the same period last year.
The Bureau of Customs, meanwhile, raised P32.7 billion, down 1% from last year and taking the January-September result to P268.2 billion.
“Even as oil weighted average values of imported oil continue to sag with a 38 percent year-on-year decline in September, total customs collections for January to September still beat year-ago figures by 1 percent, propelled by the 11 percent improvement in collections from non-oil commodities for the month,” the Finance department said.
The Bureau of the Treasury contributed P8.0 billion in September, taking the year-to-date total to P91.9 billion, a 13 percent increase. Other offices saw collections rise by 8 percent to P11.24 billion.
Double-digit spending growth
Disbursements by the national government for September expanded by 17 percent to P186.2 billion from a year ago. Interest payments increased by 4 percent to P30.09 billion, while other expenditures rose 19 percent to P156.16 billion.
For the January-September period, expenditures were up 12 percent from year-ago levels. Year-to-date, interest payments amounted to P255.8 billion, P27.7 billion lower than programmed.
“Interest payments for January-September 2015 accounted for 16 percent of expenditures, improving on the 18 percent share recorded last year,” the Finance department noted.
‘Long road ahead of us’
Commenting on the latest deficit data, Finance Secretary Cesar Purisima said: “While we continue to maintain our fiscal performance, piecemeal revenue-eroding measures are fiscally unsustainable in the long run. Today, Filipinos live in a country hailed as one of the world’s brightest and safest in these uncertain times. But there is still a long road ahead of us.”
“The country is still at a tax to GDP (gross domestic product) level of 13.6% in 2014, far from our target of achieving at least a 16% tax to GDP ratio in 2016 to fund social commitments and other demands for public goods in the future.
We agree with the need to reform our tax system– but since the problems with it are structural in nature, we urge fiscal responsibility in considering tax reform in a comprehensive and holistic manner,” he added.
Purisima’s comments appeared directed at moves in Congress to lower income taxes, which the government has rejected.
“We are encouraged by the close collaboration we have between the executive and legislative branches in safeguarding our fiscal future. We have come too far; we cannot mistake our gains for having reached the finish line,” he said.
“While there have been significant improvements in our budget allocation for social services for example, we still lag behind most of our Asean neighbors in investments in health and education,” Purisima added.
He noted that domestic infrastructure spending had gone up to 4.3 percent of GDP this year from 1.8 percent in 2010, and that the social services, basic education and health budgets also saw growths of 471 percent, 79 percent and 211 percent over the same period.
The Philippines, however, was said to still ranked low in terms of the available fiscal space allotted for education and health at 7th. Vietnam was said to be leading the way at an average education spend of 6.6 percent of GDP compared to the Philippines’ 2.7 percent, among others.
“Sustaining our momentum requires balanced and responsible policies from courageous leaders who consider the entire picture, no matter which political season is in bloom,” Purisima declared.
Spending to continue
Budget Secretary Florencio Abad, meanwhile, told reporters that he was optimistic that spending would continue to increase in the last three months of the year.
“Normally toward the end of the year — because it’s Christmas — there’s greater urgency to get projects done,” Abad said at the sidelines of a briefing on the Typhoon Yolanda rehabilitation effort.
“We’ve also dealt with many of the bottlenecks, both implementation and policy bottlenecks. So those three things combined will further boost spending in the last quarter,” he added.
“It improves as we go along, so the last quarter will be better than the third, that’s why I am optimistic.”