The National Government’s (NG) budget deficit widened to 213 billion euros in November as revenues fell and expenditures accelerated, finance ministry data showed.
Data from the Bureau of the Treasury (BTr) shows that the budget deficit more than doubled to €213 billion in November, compared to €93.3 billion in the same month last year.
Month after month, this was a reversal from October’s P6.3 billion surplus.
In November, revenue collected fell 0.61% to P338.3 billion from P340.4 billion a year ago, reflecting the 70.7% decline in non-tax revenue.
Non-tax revenues fell to P15.9 billion in November from P54.3 billion a year ago, including a one-time remittance of P23.8 billion in additional dividends from the Bangko Sentral ng Pilipinas (BSP).
The Treasury’s revenues fell 80.86% year-on-year to P7.9 billion, while those of other offices fell 37.83% to P8 billion.
On the other hand, tax revenues rose 12.7% to P322.4 billion in November from P286.1 billion in the same month a year ago.
Collections by the Bureau of Internal Revenue (BIR) rose 17.77% annually in November to P247.6 billion.
“The positive year-on-year growth in BIR collections for November 2024 can be attributed to the double-digit increase in collections of income taxes, value added tax (VAT), excise duties and stamp duty (DST). The increase in income tax can be attributed to the influx of taxpayers filing their third quarterly income tax returns on or before November 15 of the current tax year,” the BTR said.
Collections by the Bureau of Customs (BoC) fell 1.69% year-on-year to €72.4 billion in November, “driven by lower annual import and excise collections, but this was offset by higher VAT collections.” ”
Meanwhile, NG expenditures rose 27.13% to P551.3 billion in November from P433.6 billion a year ago.
“The remarkable expansion can be attributed to higher capital expenditure on road and defense infrastructure projects, social protection and education-related programs, as well as human resource services needs,” the BTR said.
The faster spending in November was also attributed to the higher National Tax Allotment shares of the local government units (LGU), as well as the release of special shares in national tax revenues.
Primary expenditure – which refers to total expenditure minus interest payments – rose by 25.85% in November to 484.6 billion euros on an annual basis.
Interest payments rose 37.29% to P66.7 billion in November from P48.5 billion in the same month in 2023.
BIGGER SHORTAGE
Meanwhile, the budget deficit ballooned to P1.18 trillion in the January-November period from a deficit of P1.11 billion last year. This represents 79.29% of the P1.5 trillion deficit ceiling for the entire year.
For the eleven-month period, revenue collection rose 15.16% to P4.11 trillion from P3.56 trillion a year ago.
“Nevertheless, the year-to-date collection of P4.11 trillion, representing 96.12% of the revised full-year program of P4.3 trillion, outperformed the previous year’s 11-month total by 15.16%,” according to the BTr.
Tax collections rose 11.51% to P3.55 trillion at the end of November. BIR revenues rose 13.88% to P2.67 trillion, already accounting for 93.64% of the revised P2.8 trillion program.
The BoC’s collections rose 4.68% to P850 billion during the January-November period. This corresponds to 90.46% of the full year target of 939.7 billion euros.
“The positive growth since the beginning of the year can mainly be attributed to higher year-on-year collections of import duties, VAT and excise duties due to higher value of imports of non-oil products (excluding rice), PHP/ USD exchange rate, and the value and volume of, among other things, oil imports,” BTR said.
On the other hand, non-tax revenues rose 45.6% to P555.3 billion at the end of November.
Treasury Department revenue rose 7.57% to P232.7 billion due to “higher interest on advances from GOCCs (government owned and controlled corporations), guarantee fees and NG share from the revenue from PAGCOR (Philippine Amusement and Gaming Corp.). ”
“In addition, BTR’s revenues have already exceeded the revised annual program of $187 billion for 2024 by 24.43%,” the report said.
Revenue from other offices rose 95.46% to P322.6 billion in the eleven-month period, surpassing the revised annual program of P262.6 billion by 22.84%.
For the January to November period, government expenditures rose 12.96% to P5.28 trillion, accounting for 91.78% of the revised full-year expenditure program of P5.8 trillion.
Primary expenditures rose 11.4% to P4.6 trillion, while interest payments rose 24.25% to P705.3 billion.
Michael L. Ricafort, chief economist of Rizal Commercial Banking Corp., said November’s budget deficit mainly reflected accelerated government spending.
“This also reflected increased debt servicing/interest costs amid the increased debt incurred since the COVID-19 (coronavirus disease 2019) pandemic… and also amid still relatively higher interest rates locally and globally… and still a relatively weaker peso exchange rate that caused the peso equivalent to rise. of interest on foreign debt and principal repayments,” he said.
Mr. Ricafort also pointed out that the year-on-year decline in customs revenues in November was “partly due to the reduced tariff on imported rice, which partially reduced government revenues.”
President Ferdinand R. Marcos Jr. ordered rice tariffs to be reduced to 15% from the previous 35% until 2028.
Customs Commissioner Bienvenido Y. Rubio previously estimated a revenue loss of about P16.34 billion in the second half due to lower rice tariffs.
“One measure that would help reduce the NG’s fiscal deficit and also reduce the NG’s excess borrowing/overall debt would be the increased remittance of dividends and surpluses by some GOCCs,” Mr Ricafort said.
Mr Ricafort said further interest rate cuts by the BSP and the US Federal Reserve would help ease debt burdens and reduce the budget deficit.
“However, continued fiscal deficits in recent months would still lead to increased national government borrowing and overall debt burden, and would therefore require more tax and other fiscal reform measures in an effort to further reduce the NG debt ratio below international standards. threshold of 60%,” he added.
Filomeno S. Sta. Ana III, coordinator of Action for Economic Reforms, said despite the BIR’s “aggressive” efforts against smuggling, tax efforts must be increased.
“Still, tax efforts need to be increased, but the government is loathe to increase taxes, even though some taxes are efficient and politically acceptable to the public, such as the ‘health taxes’, taxes on alcohol, soft drinks and ultra-processed foods, vaping and heated tobacco. products, cigarettes,” Mr. Stand. Ana said. — Aubrey Rose A. Inosante