Fiscal gap pierces cap as spending sustains rise

By Elijah Joseph C. Tubayan
Reporter

THE COUNTRY’s fiscal deficit widened to breach its programmed ceiling in June and last semester, as state spending sustained its double-digit pace of increase and revenues narrowly missed targets, according to data the Treasury bureau released yesterday.

The government recorded a P90.9-billion deficit in June that was five times that month’s P16.7-billion program and double the year-ago P45.2 billion.

Total expenditures grew 23% annually to P270.7 billion — sustaining a May’s double-digit pace of 20% — and by 24% to P251.4- billion net of interest payments. June spending exceeded a P210.9-billion program by 28%.

Revenues edged up two percent annually to P179.8 billion in June, though that fell seven percent short of a P194.2-billion goal.

The Bureau of Internal Revenue (BIR) grew collections by six percent to P131.2 billion but missed its P141.7-bilion target by seven percent, while the Bureau of Customs’ (BoC) take steadied at P35.4 billion but fell nine percent short of a P39-billion goal.

June took the six-month fiscal balance to a P154.5-billion deficit that was seven percent more than a P143.8-billion program and 28% bigger than the year-ago P120.3 billion.

Revenues increased by seven percent annually to P1.176 trillion last semester but missed a P1.193-trillion goal for those six months.

BIR collections rose eight percent to P848 billion but missed an P881.7-billion target by four percent, while BoC’s take fell three percent short of a P217.7-billion goal even as it increased by 10% year-on-year to P210.3 billion.

Expenditures grew nine percent to P1.331 trillion, generally hitting a P1.337-trillion program.

Sought for comment, Budget Secretary Benjamin E. Diokno said that the expanded deficit was “more… a result of P16.6-b[illion] undercollection in tax revenues.”

“The higher-than-program deficit should not be a cause for concern,” Mr. Diokno told reporters in a mobile phone message.

“Expenditures are on the dot. Underspending — the plague of the previous administration — appears to be a thing of the past.”

Finance Secretary Carlos G. Dominguez III said he expects revenue collectors to make up for their shortfalls starting this quarter.

“BIR & BoC will certainly make up the deficit in H1 tax collections by Q3,” he said in a text message.

“We are expecting P30B from Mighty (Corp.), which will wipe out the 16.6B undercollection. This also proves that we need the tax reform so we can collect more taxes,” he added, referring to up to five packages that will have to hurdle Congress and whose first tranche now awaits Senate approval.

Despite a sustained pickup in state spending, private sector economists turned their attention to tax collections.

“I think this was a reflection of government’s efforts in minimizing underspending as well as the challenges facing tax collection efforts,” Security Bank Corp. economist Angelo B. Taningco said in an e-mail.

“Although expenditures grew more this June year-on-year, the semestral figures describes a softer budget picture. But it seems that June 2017 signals the Duterte administrations push and planned spending in the coming years,” said Carlo O. Asuncion, chief economist at Union Bank of the Philippines, Inc., adding that marginal increments in tax collection was “something worth looking into.”

Sought for the outlook for the rest of the year, Mr. Taningco noted “[t]here is still room for the government to attain its fiscal deficit target of 3.0% of GDP for the current year.”

“Right now, we estimate the first-half fiscal deficit at 2.1% of projected GDP,” Mr. Taningco said.

“I believe the government will continue its efforts to efficiently utilize its budgetary allocation in order to accelerate its expenditures. For the month of July, I expect the government to record another fiscal deficit.”

For Mr. Asuncion: “Generally, it is expected that the budget deficit will be larger than the previous administration under (former president Benigno S.C.) Aquino (III) because the present government would want to spend more.”