The budget of the national government (NG) deFThe ICIT fell 7.24% year-on-year in June as revenues grew faster than expenditures, the Bureau of the Treasury (BTr) said on Wednesday.
Data from the Ministry of Finance show that the budget gap shrank to 209.1 billion euros in June, compared to 225.4 billion euros a year ago.
Month-on-month, the budget deficit increased by 19.54%, compared to P174.9 billion in May.
In June alone, revenue receipts rose 10.93% to P296.5 billion from P267.3 billion in the same month last year.
Tax revenues rose 3.37% to P249.3 billion in June, mainly due to the 4.71% increase in collections by the Bureau of Internal Revenue (BIR) to P172.5 billion, after deducting a tax refund of P4.3 billion.
Collections from the Bureau of Customs (BoC) rose 0.67% to P74.6 billion, while those from other offices fell 5.54% to P2.2 billion.
Non-tax revenues rose 80.6% to P47.2 billion in June, driven by the 158.57% increase in revenues from other offdrops to P39.8 billion. Treasury Department revenues fell 31% to P7.4 billion in June, “due to lower dividend payments and income from BTR-managed funds.”
On the other hand, state expenditure increased by 2.62% year-on-year to 505.6 billion euros in June.
“The increase was largely attributed to the implementation of capital investment projects of the Ministry of Public Works and Highways and the Department of National Defense under its revised AFP Modernization Program, the Preparatory Activities of the Electoral Commission for the 2025 National and Local Elections. and the higher National Tax Allotment shares of local government units (LGUs),” the Department of Finance said.
However, this was tempered by lower subsidy releases and loans to state-owned enterprises (GOCCs).
Primary expenditures (net of interest payments) rose 2.3% to P450 billion in June. Interest payments rose 5.22% to P55.6 billion.
The gap is widening
For the FIn the first six months, the budget gap widened by 11.2% to 613.9 billion euros, compared to 551.7 billion euros a year ago.
The six-month deficit was 7.24% below the program’s P661.8 billion for the period, as revenues were better than expected.
For the January to June period, revenue receipts rose 15.56% to P2.15 trillion from P1.86 trillion last year. It exceeded the P2.08 trillion target for the first half by 3.49%.
Tax revenues, which accounted for 85% of total revenues, rose 10.05% to P1.84 trillion at the end of June. This was 1.43% lower than the government’s first half target of £1.86 trillion.
BIR collections rose 11.72% to P1.36 trillion, but missed the P1.4 trillion target by 2.92%.
Customs revenues increased by 5.1% to 455 billion euros and also exceeded the target of 442.6 billion euros by 2.91%.
Non-tax revenues rose 63.3% to P314.2 billion in the first six months, compared to P192.4 billion last year. This was 46.10% higher than the target of P215.1 billion.
Treasury income rose 76% to P163.9 billion “due to higher dividend payments, interest on advances from GOCCs and NG shares from PAGCOR (Philippine Amusement and Gaming Corp.”) income.
The Ministry of Finance exceeded the revised half-year program by 26.91% and remains only 23.1 billion euros short of the 187 billion euros target for the full year.
Meanwhile, spending for the January-June period rose 14.6% to P2.76 trillion from P2.41 trillion a year ago. It was 0.9% higher than the target of P2.74 trillion for the six-month period.
Primary expenditures rose 12.06% to P2.39 trillion in the first half, compared to P2.13 trillion a year earlier.
In the first six months, interest payments rose 33.55% to P377.2 billion from P282.5 billion last year.
“While June showed an improvement in deficit reduction, the deficit widened year on year in the first half. However, the government’s ability to exceed revenue targets and keep the deficit below the mid-year target indicates some degree of fiscal discipline,” said Robert Dan J. Roces, chief economist at Security Bank Corp. in a Viber message.
Mr Roces said the challenge for the government is to maintain a balance between revenue growth and expenditure to secure the budgetFIT is under control.
Jonathan L. Ravelas, a senior advisor at professional services firm Reyes Tacandong & Co., said the government still needs additional funding for the priority programs that President Ferdinand R. Marcos Jr. identifies.Fin his third State of the Nation Address (SONA).
“(Programs for) agriculture, infrastructure and disaster preparedness need funding, so where will it come from? The DoF said no new taxes. Probably due to higher loans,” he said in a Viber message.
The NG’s borrowing program this year is set at €2.57 trillion, of which 75% will come from domestic sources and the rest from foreign sources.
Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said the collection of withholding taxes from online sellers, which began July 15, is expected to boost tax revenues for the rest of the year.
“(The withholding tax collection) will help increase the country’s recurring tax revenue and shrink the budgetFicit, and generally improve Fiscal achievement,” he said.
For this year, the government has set the deficit ceiling at 5.6% of gross domestic product, equivalent to 1.48 trillion euros.
At the end of 2023, the budget deficit stood at P1.51 trillion, exceeding the P1.499 trillion ceiling. — Beatriz Marie D. Cruz