Govt July deficit shrinks, spending dips from June

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The Philippine government announced it sustained a budget deficit for the second consecutive month in July, although data showed the gap narrowed from June as infrastructure spending dropped month-on-month.
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On Monday, the Department of Finance (DoF) released figures that showed the budget deficit for July contracted to P32.2 billion from a P72.7-billion gap in June.

Disbursements stood at P210 billion, against total revenues of P178 billion.

The narrowing of the budget deficit from June can be traced to the 10 percent month-on-month decline in July expenditures, as shown by the DoF data. Spending during the month stood at P210 billion, down from the P236 billion recorded in June.

The incumbent Administration is often blamed for slow public spending on infrastructure, which has discouraged investment and impeded growth as measured in gross domestic product (GDP) terms.

The government itself had admitted that infrastructure spending had been a recurrent problem, blaming “institutional weakness” in its agencies for the slow disbursements.

Recently it had to revise downward the rate of growth it previously reported for gross domestic product (GDP) in the first quarter from 5.2 percent to a slower 5.0 percent, before it announced that growth accelerated to 5.6 percent in the second quarter.

Year-on-year better
For the July budget deficit report, the DoF focused on year-on-year comparisons where growth looks better with improved spending.

The budget deficit in July widened from a P1.8-billion gap a year earlier.

The DoF data also showed a double-digit rise in disbursements from the year-ago level, accelerating to 25 percent, the fastest growth pace so far for 2015.

“The pace of expenditure growth we are seeing has a clear positive trend since we adopted a whole-of-government approach to addressing underspending. Expenditures are on track to drive our growth for the third quarter,” Finance Secretary Cesar Purisima said in a statement released on Monday.

Interest payments during the month expanded by 10 percent to a total P53 billion from P48 billion a year earlier.

“It is encouraging to note that we are starting the quarter with a better footing on the public expenditure side. We are committed to making the trend lines hold and sustain this uptick. We have enough fiscal firepower to keep bright what they have been calling the region’s bright star,” Purisima said.

Total revenues for the month rose 7 percent year-on-year to P178 billion from P166 billion.

Collections by the Bureau of Internal Revenue (BIR) reached P118.2 billion in July, marking a slight year-on-year contraction of 1 percent, while the Bureau of Customs (BoC) collected P30 billion for the month, also down by 1 percent from a year ago.

Income from the Bureau of Treasury (BTR) grew 89 percent to P14 billion from P7 billion in July 2014 due to higher income from Bond Sinking Fund (BSF)/Securities Stabilization Fund (SSF) investments and higher dividends on shares of stocks held by the government.

Collections from other offices were also higher in July, contributing P16.1 billion, with the bulk of improvement attributed to a P5.46-billion concession fee earned by the government from the Cavite-Laguna Expressway Project, the DOF figures showed.

Going along with the DOF’s year-on-year view, an equities analyst with Accord Capital Equities Corp. said the fiscal performance of the government in July, particularly the expenditure figures, could be taken as a good sign.

“It jives with and is consistent with an earlier commitment from the budget department to accelerate public spending this year. As you know, underspending has been the bane of the Aquino Administration since its first year in office,” Accord Capital analyst Justino Calaycay Jr. said in an e-mail to The Manila Times.

Calaycay stressed that increased public spending should provide a boost to the tepid GDP numbers that have fallen way below targets and expectations.

For the first half of 2015, the rise in the country’s GDP slowed to 5.3 percent from 6.2 percent a year earlier, and far short of the 7 percent to 8 percent growth target of the government for this year.

“We are hoping that this accelerated disbursement… should augur well for the overall economy in the succeeding quarters,” Calaycay added.

7-month gap narrows on-yr
For the first seven months of 2015, the budget gap narrowed by 67 percent to P18 billion from P55 billion a year ago, according to the DOF data.

Total revenue for the seven-month period rose 15 percent year-on-year to P1.264 trillion.
Expenditure stood at P1.282 trillion, reflecting an annual increase of 11 percent.
Interest payments grew 1 percent to P209 billion.

Primary, excluding debts
In primary terms, which exclude interest payments on foreign and domestic debt issues, the government recorded a surplus of P20.9 billion for July, shrinking by 55 percent from a P46.5-billion surplus registered a year earlier, the DOF data showed.

For the year-to-date, the primary budget balance stood at a surplus of P190.7 billion, higher by 25 percent than the P152.2 billion posted a year earlier.

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