THE NATIONAL GOVERNMENT (NG) budget deficit rose to P273.3 billion in September, while revenues and expenditures recorded double-digit growth, the Bureau of the Treasury (BTr) said Thursday.
The latest data from the Ministry of Finance shows that the budget deficit in September increased by 8.9% from the deficit of $250.9 billion in the same month a year ago, “while the increase in the nominal value of the expenditure was greater than the increase in revenue.”
Month over month, the budget gap increased by 404% from the P54.21 billion DEFIT in August.
Revenue receipts rose 17.32% to P299.7 billion in September from P255.4 billion last year.
Tax revenues rose 8.53% to P253.5 billion in September, driven by Bureau of Internal Revenue (BIR) collections, which rose 14.79% to P174.7 billion.
The Department of Finance attributed the increase in BIR collection to “higher personal income tax, especially on payroll deductions due to the release of salary differentials of civilian government employees,” and the increased collection of documentary stamp tax.
However, Bureau of Customs (BoC) revenues fell 3.31% year-on-year to $76.3 billion in September, while tariffs fell by double digits. An executive order went into effect on July 5 to reduce import tariffs on rice and other commodities.
“Also, the decline (in collection by the BoC) is due to an alarming increase in smuggling activities within the year as the current amount of goods seized from the BoC has already surpassed the total amount in 2023,” the ministry said of Finance.
On the other hand, non-tax revenues rose 111.16% to P46.2 billion in September from P21.9 billion a year ago, “mainly due to the one-time windfall from the Public-Private Partnership (PPP) concession deal .”
Treasury revenues rose 24.86% year-on-year to P9.9 billion in September “driven by higher NG share from PAGCOR (Philippine Amusement and Gaming Corp.) revenues, interest income from NG deposits and the collection of warranty fees.”
Non-tax revenues from other offices rose 160.39% annually to P36.3 billion.
Meanwhile, government expenditures rose 13.15% to P572.9 billion in September from P506.3 billion in the same month in 2023.
“The notable increase was mainly attributed to non-interest expenses, mainly due to the implementation of capital projects of the Ministry of Public Works and Highways,” the Finance Ministry said.
Spending rose when the government implemented the first tranche of salary adjustments for civilian government employees in August. The government has also increased payments for emergency benefit claims for health workers, BTR added.
Primary expenditures – which refer to total expenditures minus interest payments – rose 14.75% to P499.1 billion in September.
Interest payments rose 3.36% year-on-year to P73.9 billion, thanks to new loans from the International Bank for Reconstruction and Development and the impact of exchange rate fluctuations.
Michael L. Ricafort, chief economist of Rizal Commercial Banking Corp., said the increase in revenues was offset by “higher debt/interest costs that increased government spending.”
“Now that fiscal consolidation has been implemented, revenue generation may be limited, preventing it from growing as much as it could,” John Paolo R. Rivera, Senior Research Fellow of the Philippine Institute for Development Studies, said in a statement Viber message.
NINE MONTHS SHORT
During the first nine months of 2024, the budget deficit fell by 1.35% to 970.2 billion euros, compared to 983.5 billion euros a year ago.
“The total deficit for the first three quarters was 9.08% less than the P1.1 trillion program for the nine-month period and amounts to 65.36% of the revised full-year program of P1.5 trillion ”, said the Ministry of Finance.
Revenues for the January to September period rose 16.04% to P3.29 trillion, compared to P2.84 trillion in the same period in 2023. They also exceeded the target of P3.15 trillion for the period by 4, 53%.
Tax revenues, which accounted for 85.39% of total tax collections, rose 10.62% to P2.81 trillion at the end of September. However, this was 0.79% lower than the target of P2.83 trillion for the nine-month period.
BIR collections also rose 12.73% to P2.09 trillion in the nine-month period, but fell 0.98% short of the P2.12 trillion target. This was also 73.52% of the revised 2024 target of P2.8 trillion.
“The double-digit year-on-year growth is underlined by higher VAT (value added tax) collections, followed by income taxes, other domestic taxes and percentage taxes,” the finance ministry said.
BTR attributed the increase in VAT collections to changes in the payment schedule under the Tax Reform for Acceleration and Inclusion Act, which allowed taxpayers to file their VAT returns quarterly.
Customs revenue rose 4.59% to P690.7 billion in the nine-month period “due to higher VAT and import duties despite negative performance in September,” BTR said.
However, customs collection fell 0.46% short of the target of P693.9 billion. The figures at the end of September accounted for 73.5% of the revised annual program of P939.7 billion.
Non-tax revenues rose 62.54% to P481.1 billion at the end of September, while collections from other offIce charges nearly doubled to P270.9 billion and government bond revenues rose 33.02% to P210.2 billion.
“The higher result for the period was attributed to the transfer of P30 billion from the Manila International Airport Authority (MIAA), which represented the advance payment for the MIAA-Ninoy Aquino International Airport PPP project,” the BTr said.
By the end of September, non-tax revenues had already exceeded the government’s full-year target of P449.6 billion by 7%.
Meanwhile, government expenditures rose 11.56% to P4.26 trillion in the first nine months, compared to P3.82 trillion in the same period in 2023.
State expenditures for the period exceeded the nine-month program target of P4.22 trillion by 1.09%. To date, the NG has already disbursed 74.09% of the revised P5.8 trillion annual program.
Primary expenditure rose 9.48% year-on-year to 3.7 trillion euros at the end of September, while interest payments rose 26.77% to 583.3 billion euros.
“The deficit could likely widen further due to increased spending due to infrastructure spending, interest charges and the impact of calamities,” said Jonathan L. Ravelas, senior advisor at professional services firm Reyes Tacandong & Co., via Viber.
Mr Ricafort said a broader budget theFicits “would still lead to more NG loans and total debt, requiring more taxes and other things Fiscal reform measures.”
The recently imposed VAT on digital service providers and the 1% withholding tax on online sellers would help increase revenues and reduce budgets.FIT, he said. — BMDcruz