THE national government’s budget balance reverted to a P55 billion surplus in April, reversing a deficit in March on stronger revenue collections, data released by the Department of Finance (DOF) showed on Wednesday.
This is not surprising, according to an analyst, since April was the deadline for the filing of income taxes in the Bureau of Internal Revenue.
The budget balance in March stood at a deficit of P74.38 billion. Year-on-year, the April surplus was marginally wider than the year ago surplus of P52.6 billion.
Revenues of P246.6 billion surpassed disbursements of P191.6 billion during the month, the DOF said.
In primary terms, which exclude interest payments on foreign and domestic debt, the government posted a surplus of P69.8 billion in April, higher than P68.3 billion a year-ago surplus.
The Finance department noted that April revenues were up 18 percent from a year earlier, resulting in a year-to-date increase of 7 percent to P725.6 billion.
The Bureau of Internal Revenue (BIR) collected P177.7 billion, 10 percent higher than in April 2015 and taking its four-month tally to P507.8 billion, a 9-percent increase from the same period a year ago.
The Bureau of Customs, meanwhile, collected P32.7 billion, up 16 percent from last year, taking its January to April tally to P123.2 billion.
“[A]s collections on oil for the first four months of 2016 continued to shrink by 14 percent on the back of lower oil prices, the Bureau of Customs more than made up for it in robust non-oil collections growth of 5.7 percent for the 4-month period and 21.6 percent just for the month of April,” the DOF said.
The Bureau of the Treasury contributed P28 billion in April, taking its year-to-date total to P52.9 billion, a 7 percent increase. Collections by other offices eased 4 percent to P8.3 billion in April.
April government spending was up 22 percent from a year earlier, resulting in a year-to-date increase of 19 percent to P783.1 billion.
Interest payments fell 6 percent to P14.8 billion, growing by a meager 1 percent in the year-to-date at P117.4 billion.
Other expenditures rose 26 percent to P176.8 billion, taking the four-month tally to P665.7 billion.
4-month gap narrows
The April budget performance brought the January to April deficit to P57.5 billion, a reversal of the P19.1 billion surplus in the first four months last year.
Total January to April 2016 disbursements hit P783.1 billion while revenues totaled P725.6 billion.
The primary surplus of P59.9 billion in the four-month period was lower than the P135.4 billion surplus a year ago.
May deficit seen
Emilio Neri Jr., Bank of the Philippine Islands lead economist and Vice President, said there are no surprises to an April surplus as most taxes payments for 2015 fell were due during the month.
“We would not be surprised if this reverts to a deficit in May to bring a noticeable widening of the P5 million 2016 deficit versus the prior cumulative five-month prints,” he explained.
Earlier, Neri said the incoming administration’s plan to raise the government’s budget deficit target to 3 percent of gross domestic product (GDP) could provide spending space to potentially push the Philippines to above 8-percent annual growth, but could lead to short-term pressure in the form of higher interest rates.
“The Aquino administration’s budget deficit averaged 1.5 percent, which would be doubled by the next administration,” he explained noting that the key would be for the spending to be directed to value-added areas such as infrastructure.
Going forward, Neri said failure of the new administration to focus on these capacity-building projects immediately would entail bigger financing requirements for the government that could create pressure for higher interest rates.
“When spending is not able to benefit the government, that would imply that government cannot tax immediately. They will not be able to recover immediately what they spend today in the form of new taxes in the future,” he said.
“In between that period when they spend and they are not able to get it back from taxes, the financing requirement of the government will be quite significant and assuming that all things are equal, that could pressure interest rates to go up,” Neri explained.
“I am pleased to report a strong finish on both the revenue and expenditure sides of the Republic’s balance sheet. Consistently solid fiscal performance has put the nation on its firmest fiscal footing in history,” outgoing Finance Secretary Cesar Purisima said in a statement.
He said: “the aggressive expansion of fiscal space in a span of six years has also funded the most intensive amount of investment the country has seen—fuel for Asia’s bright star to keep burning bright in these challenging times.”
Purisima also expressed his high confidence that the next administration’s economic team has what it takes to improve and build the economic gains moving forward.
“In a volatile world flirting with crisis after crisis, I believe the Philippines has worked and earned the right to be defiantly optimistic,” he added.