THE national government’s budget deficit in May slightly narrowed to P200.3 billion from P202.1 billion in the same month last year as state revenues surged along with expenditures.
Government revenues in May jumped by 69.26 percent year-on-year while expenditures climbed by 29.15 percent, data from the Bureau of the Treasury showed.
While revenues and expenditures both posted double-digit growth, the level of expenditures still exceeded state revenues, resulting in the P200.3-billion budget shortfall for the month.
However, this was only a 0.91-percent dip from the fiscal gap in May last year.
Revenues in the same month soared to P256.4 billion from last year’s P151.5 billion on the back of higher tax collections.
The Bureau of Internal Revenue (BIR) notched a double-digit growth of 60.54 percent, leading to a net collection of P183.7 billion in May this year. This is higher than last year’s P114.4 billion.
For its part, the Bureau of Customs raised P48.6 billion, a 58.05-percent growth from P30.8 billion a year ago.
Non-tax revenues from the Bureau of the Treasury surged to P12.4 billion, a five-fold increase from only P2.4 billion in 2020 due to higher dividend remittances on shares of stocks and income from Bond Sinking Fund investment.
Other offices also contributed P9.7 billion in May, nearly thrice the P3.6 billion recorded in the same month last year. The Treasury traced the improvement to the low base effect from limited operations of government collecting offices caused by strict quarantine protocols last year.
On the other hand, state expenditures in May this year rose to P456.7 billion compared to P353.6 billion a year ago.
The Treasury attributed the increase to disbursements for the capital outlay projects of the Department of Public Works and Highways; banner education and health programs of the Department of Education and the Department of Health, respectively, and releases to the PhilHealth for the health insurance premiums of senior citizens, and to Local Government Units for the Barangay Development Program.
Meanwhile, primary spending (net of interest payments) during the month swelled to P427.8 billion, improving by 27.59 percent from P335.3 billion in May 2020.
Interest payments in the same period also leaped by 57.64 percent year-on-year to P28.9 billion from P18.4 billion.
From January to May this year, the national government’s cumulative budget shortfall has hit P566.2 billion, slightly up from P562.2 billion in the same five-month period in 2020.
Year-to-date government revenues also grew 12.92 percent to P1.24 trillion from last year’s P1.1 trillion.
Likewise, expenditures from January to May this year increased by 8.8 percent year-on-year to P1.81 trillion from P1.66 trillion.
The Cabinet-level Development Budget Coordination Committee recently raised its projection for the country’s budget deficit-to-GDP ratio this year to 9.3 percent or P1.86 trillion, from 8.9 percent or P1.78 trillion previously.
Rizal Commercial Banking Corporation (RCBC) Chief Economist Michael Ricafort told the BusinessMirror that the budget deficit in May was the widest in five months amid the increase in government spending partly due to recent lockdowns.
“The tighter quarantine restrictions/lockdowns since late March, with the 2-week ECQ followed by 1-month MECQ, could have fundamentally reduced business/economic activities, as well as tax revenue collections, thereby leading to wider budget deficits recently,” Ricafort said.
“Thus, wider budget deficits could lead to more government borrowings and higher outstanding debt,” he said.
In the coming months, Ricafort sees the ramp-up in government spending for various projects and infrastructure to continue, especially up until the period before the May 2022 elections.
“Increased government spending for Covid-19 vaccines, which could be recurring in nature, as well as on related preparations/logistics including for testing, quarantine facilities, among others would also lead to wider budget deficits and higher government borrowings/debt, going forward,” he said.
UnionBank Chief Economist Ruben Carlo Asuncion said it is interesting that revenue acceleration kept pace with spending levels in May.
Moving forward, Asuncion sees continued improvement in revenues as well as expenditures amid the prolonged pandemic.
“Revenue collection is seen to improve further in the coming months as the economy is unshackled from the recent restrictions. On the expenditure side, government is expected to aggressively continue the fiscal spending to help support 2021 economic growth,” he said.
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