THE NATIONAL Government’s (NG) budget deficit widened to P273.3 billion in September, as revenues and expenditures posted double-digit growth, the Bureau of the Treasury (BTr) said on Thursday.
Latest data from the Treasury showed the fiscal gap rose by 8.9% in September from P250.9-billion deficit in the identical month a 12 months ago, “as the rise of nominal value of expenditures outpaced the rise in revenues.”
Month on month, the budget gap ballooned by 404% from the P54.21-billion deficit in August.
Revenue collections jumped by 17.32% to P299.7 billion in September from P255.4 billion last 12 months.
Tax revenues rose by 8.53% to P253.5 billion in September, driven by the Bureau of Internal Revenue (BIR) collection which climbed by 14.79% to P174.7 billion.
The Treasury attributed the rise in BIR collection to “higher personal income tax particularly on withholding on wages as a result of the discharge of salary differentials of civilian government personnel,” and increased documentary stamp tax collection.
Nevertheless, revenues from the Bureau of Customs (BoC) fell by an annual 3.31% to P76.3 billion in September amid a double-digit decline in import duties. An executive order reducing import tariffs on rice and other commodities took effect on July 5.
“Also, the decline (in BoC collection) is as a result of an alarming increase in smuggling activities throughout the 12 months, as the present amount of the BoC’s seized goods has already surpassed their total haul in 2023,” the Treasury said.
Then again, nontax revenues surged by 111.16% to P46.2 billion in September from P21.9 billion a 12 months ago “primarily as a result of the one-off windfall from the Public-Private Partnership (PPP) concession agreement.”
Treasury income jumped by 24.86% 12 months on 12 months to P9.9 billion in September “driven by higher NG share from PAGCOR (Philippine Amusement and Gaming Corp.) income, interest income from NG deposits, and guarantee fee collection.”
Nontax revenues collected from other offices surged by an annual 160.39% to P36.3 billion.
Meanwhile, government spending jumped by 13.15% to P572.9 billion in September from P506.3 billion in the identical month in 2023.
“The notable increase was mainly attributed to non-interest expenses, particularly as a result of the implementation of capital outlay projects of the Department of Public Works and Highways,” in keeping with the Treasury.
Expenditures rose as the federal government implemented the primary tranche of salary adjustments of civilian government employees in August. The federal government also increased payments for healthcare employees’ health emergency allowance claims, BTr added.
Primary spending — which refers to total expenditures minus interest payments — increased by 14.75% to P499.1 billion in September.
Interest payments picked up by 3.36% 12 months on 12 months to P73.9 billion, because the NG serviced latest loans from the International Bank for Reconstruction and Development, and the impact of foreign exchange fluctuations.
Rizal Industrial Banking Corp. Chief Economist Michael L. Ricafort said the uptick in revenues was offset by “increased debt servicing/interest costs that increased government expenditure.”
“With fiscal consolidation in place, it could be that revenue generation has been constrained, not allowing it to grow as much as it may possibly,” Philippine Institute for Development Studies Senior Research Fellow John Paolo R. Rivera said in a Viber message.
NINE-MONTH DEFICIT
For the primary nine months of 2024, the budget deficit narrowed by 1.35% to P970.2 billion from P983.5 billion a 12 months ago.
“The whole deficit for the primary three quarters was 9.08% wanting the P1.1 trillion program for the 9-month period and is at 65.36% of the P1.5-trillion revised full-year program,” the Treasury said.
Revenues within the January-to-September period rose by 16.04% to P3.29 trillion from P2.84 trillion in the identical period in 2023. It also exceeded the P3.15-trillion goal for the period by 4.53%.
Tax revenues, which comprised 85.39% of total collections, grew by 10.62% to P2.81 trillion as of end-September. Nevertheless, this was 0.79% lower than the P2.83-trillion goal for the nine-month period.
BIR collections also climbed by 12.73% to P2.09 trillion within the nine-month period, but fell wanting the P2.12-trillion goal by 0.98%. This was also 73.52% of the P2.8-trillion revised goal for 2024.
“The double-digit year-on-year growth is underscored by higher collection on VAT (value-added tax), followed by income taxes, other domestic taxes, and percentage taxes,” the Treasury said.
BTr attributed the uptick in VAT collections to changes within the payment schedule under the Tax Reform for Acceleration and Inclusion law, which allowed taxpayers to file their VAT returns quarterly.
Customs revenues increased by 4.59% to P690.7 billion within the nine-month period “as a result of higher VAT and import duties despite the negative performance in September,” BTr said.
Nevertheless, Customs collection was 0.46% wanting the P693.9-billion goal. The tally as of end-September accounted for 73.5% of the P939.7-billion revised full-year program.
Nontax revenues as of end-September jumped by 62.54% to P481.1 billion, as collections from other offices nearly doubled to P270.9 billion and Treasury income surged by 33.02% to P210.2 billion.
“The upper outturn for the period was attributed to the P30-billion remittance from the Manila International Airport Authority (MIAA), representing the upfront payment for the MIAA-Ninoy Aquino International Airport PPP Project,” the BTr said.
As of end-September, nontax revenue collections already exceeded the federal government’s P449.6-billion full-year goal by 7%.
Meanwhile, government spending jumped by 11.56% to P4.26 trillion in the primary nine months from P3.82 trillion in the identical period in 2023.
State expenditure for the period breached the P4.22-trillion nine-month program by 1.09%. Thus far, the NG has already disbursed 74.09% of the P5.8-trillion revised full-year program.
Primary spending grew by 9.48% 12 months on 12 months to P3.7 trillion as of end-September while interest payments jumped by 26.77% to P583.3 billion.
“Likely, the deficit could still widen further on more expenditures as a result of infrastructure spending, rate of interest expense and the impact of calamities,” Jonathan L. Ravelas, senior adviser at skilled service firm Reyes Tacandong & Co., said via Viber.
Mr. Ricafort said wider budget deficits “would still result in more NG borrowings and overall debt, thereby requiring more tax and other fiscal reform measures.”
The recently imposed VAT on digital service providers and the 1% withholding tax on online sellers would help increase revenue take and narrow the budget deficit, he said. — B.M.D.Cruz
