Philippines’ August budget deficit widens as revenues slip

THE PHILIPPINES’ budget deficit widened in August as revenues fell faster than spending, adding pressure on the government to borrow more and keep within its deficit ceiling.

The gap ballooned 56% to P84.8 billion ($1.5 billion) from a year earlier, according to data released by the Bureau of the Treasury on Wednesday. Compared with July, the shortfall surged more than fourfold from P18.9 billion.

Collections fell 8.8% to P352.5 billion, dragged by a steep decline in nontax revenues, which slid nearly 68% to P21.3 billion. Treasury income dropped 53%, while remittances from other offices tumbled 73%.

Tax revenues, however, inched up 3.4% to P331.2 billion. Bureau of Internal Revenue collections rose 5% to P250.1 billion, offsetting weaker Bureau of Customs receipts, which slipped 1.4% to P77.4 billion.

Government expenditures fell 0.7% to P437.3 billion in August from a year ago, weighed by lower primary spending, which excludes interest payments. Primary outlays dropped 3.5% to P374.2 billion.

Interest payments, by contrast, jumped almost 20% to P63.1 billion. The primary deficit — net of interest costs — widened to P21.7 billion from just P1.4 billion a year earlier.

For January to August, the fiscal gap rose 25% to P869.2 billion from a year earlier. The deficit represents 56% of the P1.56-trillion full-year ceiling, leaving room for additional borrowing in the final four months.

Spending climbed 7.2% to P3.95 trillion, already 65% of the government’s P6.08-trillion expenditure program. Primary spending increased 6% to P3.37 trillion, while interest payments grew almost 15% to P584.1 billion, making up 15% of total disbursements.

Revenue collections rose 3.1% to P3.09 trillion, equivalent to 68% of the P4.52-trillion full-year goal. Tax revenues made up 90% of the haul, rising 8.9% to P2.79 trillion.

The BIR collected P2.14 trillion, up 11%, boosted by higher corporate and personal income taxes, value-added tax, tobacco excise, percentage tax on financial institutions and documentary stamp duties. The robust performance of the BIR allows the deficit to remain manageable, the Treasury said.

Customs collections edged up 1.1% to P621.4 billion, supported by efforts against smuggling and illicit trade.

Nontax revenues, by contrast, fell 31% to P298.3 billion, though this still accounted for 97% of the P306.5-billion annual target.

Treasury income slipped 5.5% to P189.3 billion, surpassing the revised P179.2-billion goal. The bureau cited higher interest earnings on deposits, dividends from state companies and remittances from the Philippine Amusement and Gaming Corp. and Manila International Airport Authority.

The primary deficit surged 52% to P285 billion in the eight-month period, accounting for 85% of the total fiscal gap. The Treasury attributed the increase to the government’s push for priority programs and growth-supportive spending.

The government aims to cap the deficit at P1.56 trillion this year, equivalent to 5.5% of gross domestic product (GDP). Officials plan to gradually narrow the shortfall to P1.55 trillion or 4.3% of GDP by 2028. — Aubrey Rose A. Inosante