Govt fiscal position reverts to deficit

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IN a reversal of significant surpluses recorded in preceding months, the national government’s fiscal performance reversed to a budget deficit in June amid the government’s efforts to speed up spending during the period.

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The government posted a primary budget deficit of P42.9 billion for June compared to the P9.97-billion primary surplus a year earlier, according to data released on Monday by the Bureau of the Treasury and the Department of Finance (DOF).

The primary budget deficit figure, however, excludes interest payments on foreign and domestic debt issues recorded during the month.

Including interest payments, the actual deficit for June stood at P62.5 billion, growing more than 600 percent from the P8.5 billion deficit registered in the same period last year.

Revenue collections in June rose 6 percent year-on-year to P138.6 billion, while expenditures also accelerated by 44 percent to P201.1 billion.

The Finance agency said the budget deficit for the month of June is a result of higher collections of the revenue-generating agencies of the government as well as efforts to speed up spending in the second quarter of the year.

The Bureau of Internal Revenue (BIR) collected P94.1 billion in June, increasing its take by 6 percent over comparable figures last year, while Bureau of Customs (BOC) maintained its double-digit performance growth as collections reached P27.3 billion in June.

However, revenue increases were tempered as total Treasury bureau income declined 21 percent year-on-year, registering just P7 billion in June due to lower remittances of dividends from government-owned shares of stocks.

Interest payments (IP) were higher at P19.6 billion, up 7 percent year-on-year, as growth in domestic IP outweighed the 4 percent reduction in external payments, the DOF data showed.

As of end-June, total interest payments for the year amounted to P159.7 billion, inching up by 2 percent or P2.6 billion over the same period in 2013.

“In the first semester of 2009, a year before the Aquino Administration, interest payments took up 20.7 percent of the government’s total expenditures. We have since vastly improved our ability to service debt—in the first semester of this year, interest payments as a share of our expenditures has dropped to 16.2 percent,” Finance Secretary Cesar Purisima said, discounting the increase in the total interest paid.

On a year-to-date basis, the June turnout resulted in a cumulative P54-billion budget shortfall, 5 percent wider than the P51.3-billion deficit posted in the first semester of 2013.

Year-to-date collections amounted to P933.7 billion, up 11 percent over the comparable period last year, while expenditures reached P987.7 billion, rising 11 percent.

“The government’s efforts to boost revenue collections have allowed us to ramp up spending by 10.9 percent in the first half of 2014 and yet stay within our deficit target. As a result of prudent liability management more of these disbursements have been allocated to productive investments instead of our debt obligations,” Purisima said.

For this year, the government has set a cap on the budget deficit at 2 percent of GDP, or P266 billion, leaving a wide margin for increased spending in the remaining five months of the year.

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