Public spending continued to lag behind government revenues in May, widening the surplus by 472 percent to P67.3 billion from P11.8 billion a year earlier, data from the Department of Finance (DoF) showed on Monday.
Government expenditure stood at P175.2 billion in May, against total revenues of P242.5 billion.
The DoF stressed, however: “This also marks the first time that the government realized a huge surplus for the period owing to the transfer of proceeds from the Coco Levy funds.”
The finance department is referring to the controversial tax imposed on coconut farmers during the Marcos regime, alleged to have been used, instead, by his cronies for personal gain. It was recently cited in a ruling by the Supreme Court that the fund is “owned by the government to be used only for the benefit of all coconut farmers and for the development of the coconut industry.”
Analysts said the fiscal performance in May looks contradictory to the government’s statements that it would ramp up spending during the rest of the year after gross domestic gross product (GDP) slackened to 5.2 percent in the first quarter.
“The numbers seem to contradict the avowals of Malacanang and the Budget department that [they]will kick up utilization [of the allocations]this year. It still has half a year to show just that,” Justino Calaycay Jr., analyst at Accord Capital Equities Corp., said.
Calaycay views the huge surplus as an indication that the government puts too high a premium on fiscal discipline.
“While that is laudable, it has shown through the years how underspending tempers growth. Others will argue that even absent aggressive government spending, the economy has given a ‘world class’ performance—save maybe for the first quarter of this year,” he said.
“We can argue along the same breath but from a different perspective—imagine what growth pace we would’ve registered if public spending went as programmed,” the analyst added.
Patrick Ella, economist at Security Bank Corp., said continued government underspending was a disappointment.
“I was expecting a deficit for the month as the government had to catch up on the fiscal side, considering that government spending is [supposed to be]about 10 percent of GDP. If over 90 percent of the budget has been released, then the persistence in underspending is worrying,” Ella said.
The economist sees second-quarter GDP growth likely remaining weak, noting that merchandise exports and manufacturing posted negative growth during the month.
“I expect a weak second quarter since exports [were]weak and industrial production in May was negative,” Ella said.
Merchandise exports fell 17.4 percent year-on-year in May to their lowest level in nearly three-and-a-half years as their value dropped to $4.899 billion from $5.932 billion a year earlier.
Factory output as measured by the volume of production index dropped 3.1 percent year-on-year, from a revised increase of less than 0.1 percent in April and 12.7 percent in May last year.
Collection revenues up 41%
Total revenues in May reached P242.5 billion, up 41 percent from P172.2 billion in May last year.
The Bureau of Internal Revenue (BIR) collected P128.5 billion, steady at the level it was at a year ago.
Collections from the Bureau of Customs (BoC) contracted by 7 percent or P 2.1 billion year-onyear.
Income generated and collected by the Bureau of the Treasury (BTr) surged 167 percent or P6.8 billion to P11 billion.
Accounting for the bulk of revenue growth in May were collections by other offices, which grew sevenfold from the 2014 level, the DoF said. Other offices contributed P76.4 billion, reflecting P60.1 billion in coco levy-related remittance to the special account in the general fund.
“The said funds were proceeds from the sale of San Miguel Corp. Series 1 preferred shares, including interest income, as these were transferred to the BTr in 2012 and held in escrow,” the agency said. The SMC shares were reportedly among the purchases made using the coco levy fund during the Marcos era.
Expenditure in May totaled P175.2 billion, up 9 percent from P160.5 percent in May 2014.
Interest payments dropped 13 percent to P20.6 billion from the year-earlier level of P23.6 billion.
In the five months to May, revenues reached P922.2 billion while expenditures totaled P835.7 billion.
This resulted in a budget surplus of P86.4 billion in the first five months of 2015, widening the P8.5-billion surplus in the same period in 2014.
In terms of the primary budget, which excludes interest payments on foreign and domestic debt issues, the DoF data showed that the government recorded a surplus of P88 billion in May, up 149 percent from a year earlier.
This brought the year-to-date primary surplus to P223.3 billion, up 50 percent from P148.6 billion in the first five months of 2014.
“Various volatile events in the global landscape serve as stark reminders of the importance of the hard work of reform carefully sustained by prudent fiscal management,” Finance Secretary Cesar Purisima said.
Purisima added that the government continues to build ample safeguards protecting the country from shocks that pose risks to the economy’s upward trajectory.
“Protecting our fiscal health over time enables everyday Filipinos to reap the dividends of higher and more durable growth,” he concluded.