• PH budget reverts to deficit in May

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    Slides from April surplus; widens gap from yr earlier by 89%

    THE national government’s budget balance reverted to a deficit in May from a surplus in April, although that did not cause the year-to-date gap to swell beyond the deficit from a year earlier.

    The budget balance in May swung to a deficit of P33.4 billion from a P52.8 billion surplus in April, data from the Bureau of Treasury (BTr) showed on Friday.

    Year-on-year, the deficit in May showed a widening of 89 percent from P17.7 billion.

    The government has set a cap on its budget deficit for full-year 2017 at 3 percent of the country’s gross domestic product (GDP). The Treasury does not issue a monthly report for such data.

    Revenue vs expenditure

    Government revenue in May rose 14 percent to P228.3 billion from P199.8 billion a year earlier.

    Collections by the Bureau of Internal Revenue (BIR) grew 5 percent to P158.7 billion from P151.6 billion, while Bureau of Customs (BoC) collections surged 23 percent to P39.6 billion from P32.1 billion.

    The Treasury said the bulk of revenue growth for the month of May could be attributed to non-tax revenues, particularly its own income, which came in at P18.0 billion, 214 percent or P12.2 billion more than the income posted for the same month last year.

    “Remittance of dividends on share/stock holdings of the government from GOCCs [government-owned and -controlled corporations] started to come in,” it said.

    Revenues from other offices rose 4 percent to P9.3 billion.

    Expenditure, on the other hand, increased by 20 percent to P261.7 billion in May from P217.4 billion a year ago, with the bulk going into tax expenses and “other expenditures,” for which the Treasury report showed no details. The Department of Budget and Management (DBM) is scheduled to report such details weeks from now.

    For now, the Treasury report included figures for interest payments, which widened 21 percent year-on-year to P21 billion in May 2016.

    The Treasury said the 12 percent increase in interest payments is “due to the timing of payments for treasury bonds scheduled [for]April but paid in May.”

    Absorptive capacity

    Focusing on growth in government expenditure in May, Bank of the Philippines Islands Vice President and lead economist Emilio Neri Jr. said the much stronger outlays last month could ease some of the concerns that government agencies have limited capacity to absorb funds.

    “It also eases some of the doubts about the ability of the new government to carry out its vision of a ‘Golden Age of Infrastructure’ in the next five years,” he said.

    Under its “Build, Build, Build” program, the incumbent government intends to spend P8.4 trillion on infrastructure until its term ends in 2022.

    “A pick-up in government outlays in the second half of 2017 may also translate to a faster gross domestic product growth print than the somewhat disappointing first-half of 2017 print of 6.4 percent,” he added.

    Economic growth lost steam and grew 6.4 percent in the first quarter of the year on slower government spending. It moderated from 6.9 percent a year earlier and from 6.6 percent in the fourth quarter of 2016.
    In the first quarter of 2017, government spending recorded minimal growth of 4 percent, reaching P615.4 billion.

    Cumulative

    The May deficit brought the cumulative shortfall for the first five months of the year to P63.6 billion, 15 percent narrower than the P75.1 billion during the corresponding five-month period a year ago.

    The bureau said January to May revenues grew 8 percent year-on-year to P996.5 billion from P925.4 billion in 2016.

    Year-to-date expenditures registered slight growth of 6 percent to P1.06 trillion from P1 trillion.

    In terms of interest payments in the year to date, IP dropped by 3 percent to P132.3 billion in the five months to May.

    Primary budget in the five-month period posted a surplus of P68.7 billion, 13 percent wider than the P60.9 billion surplus a year earlier.

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