Budget deficit narrows in July

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Growth in revenues outpaces rise in expenditures; year-to-date target missed

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The government’s budget deficit narrowed in July from a year earlier and the previous month with revenue growth outpacing a rise in expenditures.

The P50.5-billion shortfall for the month was marginally lower from the P50.7 billion posted in July last year, based on data released by the Bureau of the Treasury on Wednesday.

The gap markedly contracted from June when a P90.9-billion deficit was recorded.

Government revenues rose 14 percent to P194.6 billion in July from P170.3 billion a year earlier, while expenditures grew by 11 percent to P245.1 billion from P220.9 billion.

The Bureau of Internal Revenue accounted for the bulk of collections at P138.1 billion, 18 percent higher compared to July 2016’s P117.4 billion.

The Bureau of Customs netted P35 billion — a 13-percent gain from last year’s P31 billion — while other offices contributed P1.5 billion, bringing total tax revenues for the month to P174.6 billion.

Non-tax earnings, meanwhile, totalled P20.1 billion, with the Treasury bureau contributing P8.5 billion – down 7 percent and attributed to lower income from Bond Sinking Fund/Securities Stabilization Fund, national government deposits with the Bangko Sentral ng Pilipinas and income from other government services.

Other offices contributed P11.6, up 4 percent from last year’s level.

Expenditures, on the other hand, rose 11 percent to P245.1 billion in July from P220.9 billion a year earlier, with the bulk — P200 billion – classified as “others.”

Interest payments totalling P44.6 billion, up 12 percent year on year, accounted for the rest of the government’s expenditures for the month.

Year-to-date

July’s results led to a cumulative shortfall of P205 billion for the first seven months of the year, wider than the P171-billion gap recorded last year.

The government missed its P291.53-billion deficit target for the period.

January to July revenues grew 8 percent year-on-year to P1.37 trillion from P1.27 trillion, while year-to-date expenditures registered growth of 9 percent to P1.57 trillion from P1.44 trillion.

“Other” expenditures rose 11 percent to P1.38 trillion, while interest payments fell 1 percent to P196.2 billion.
Netting out interest payments, the government recorded a P5.9-billion primary deficit in July, down 45 percent from last year. Year to date the primary balance hit a deficit of P8.8 billion, a reversal from last year’s P22.7-billion surplus.

Moving closer to target

Despite missing the year-to-date goal, Finance Undersecretary Gil Beltran said the government was still moving closer to achieve its 2017 deficit-to-gross domestic product (GDP) ceiling.

This year’s deficit target is P482.1 billion, equivalent to 3 percent of GDP.

“The deficit-to-GDP is at 2.4 percent as of end-July. It is moving closer. We started in March it was 2.3 percent then in June it was 2.1 percent,” he said.

Beltran also said the Finance department remained optimistic that the full-year target would be met.

However, Land Bank of the Philippines market analyst Guian Angelo Dumalagan said this could be a tall order.

“Expenditures need to increase significantly in the coming months in order to achieve the desired goal.
Considering that the infrastructure projects of the government are not yet in full swing, a drastic hike in public spending might be unlikely in the near term,” he said.

“However, we can never underestimate the current administration given its strong resolve to push through with its ambitious economic agenda,” he added.

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