Narrows 37.8% year-on-year
THE national government’s budget deficit in June ballooned 156 percent from the previous month, reaching P45.19 billion due largely to a drop in revenue, data from the Department of Finance (DOF) showed on Wednesday.
The deficit in June grew from a gap of only P17.65 billion in May, though compared with a year earlier it showed a narrowing by 37.8 percent from a deficit of P72.67 billion.
The present DOF management, however, provided no explanation for the year-on-year narrowing of the budget deficit.
Cumulative deficit in the first half of 2016 stood at P120 billion, a reversal of the P13.74 billion surplus in the first half of 2015.
“It’s largely [due to a]revenue shortfall from sources, BIR and the Treasury,” Budget Secretary Benjamin Diokno said, referring to collections in June by the Bureau of Internal Revenue and the Bureau of the Treasury.
BIR collections in June totaled P124.01 billion, down 18.1 percent from P151.57 in May. Treasury collections fell 11.1 percent to P5.08 billion from P5.72 billion.
Collections by the Bureau of Customs and other offices increased but not sharply—at the Customs, up by 9.9 percent month-on-month at P35.26 billion, and at other offices, up by P10 billion or 12.6 percent.
June spending was up by a meager 1.5 percent from P217.41 billion in May and eased 7 percent from P236.24 billion a year earlier.
Disbursements this June totaled P220.77 billion while revenue amounted to only P175.58 billion, resulting in the P45.19 billion deficit.
However, in primary terms, which exclude interest payments on foreign and domestic debt, the government posted a deficit of P27.52 billion in June, reversing the P1-billion surplus in May but lower than P53.46 billion a year-ago deficit.
Interest payments dropped 5.3 percent to P17.66 billion from P18.65 billion in May, also falling 8 percent from P19.2 billion in 2015.
Other expenditures rose 2.1 percent to P203.11 billion from P198.75 billion in May but 6 percent lower from P217.04 billion in June 2015.
Gap seen widening further
Looking ahead, the deficit is expected to spike in the coming months, as the Duterte administration, which took over the government only this month, is committed to increasing spending for infrastructure building, healthcare and other programs and reducing both corporate and personal income taxes.
“Under the new administration, government infrastructure spending is targeted to be equivalent to 6 percent of GDP, exceeding the previous administration’s 5 percent goal,” the DOF said adding that the national government also plans to ramp up infrastructure spending outside Metro Manila to create more jobs and ensure growth is felt in the other regions and rural areas.
Hinges on absorptive capacity
The Duterte administration’s stance of distancing itself from the previous government’s policy of underspending and, instead, planning to fast-track spending, is very laudable, University of Asia and the Pacific economist Victor Abola said.
“The government officials running the operations, besides, are quite careful about complying with legal requirements because the COA [Commission on Audit] is on top of everyone, which is a good thing,” he explained.
“I think President Duterte will make COA reduce its over-aggressiveness, and to be more reasonable so as not to delay projects,” Abola added.