Gov’t budget deficit expanded by 75% in January

MANILA, Philippines—Reconstruction efforts in areas affected by Super Typhoon Yolanda pushed the state’s budget shortfall up in January even as collections rose for the month, according to data released yesterday.

In a statement, the Department of Finance (DOF) said the higher spending in January reflected a restoration of “normalcy,” with higher spending instead of weak revenues driving the deficit and, by extension, economic growth.

“Through even more aggressive and prudent efforts in stamping out corruption, widening our tax base, and managing our liabilities, I believe this newfound confidence in the Philippines’ fiscal performance is something that we can sustain,” Finance Secretary Cesar Purisima said.

The government’s fiscal deficit for the first month of 2014 is recorded at P34.2 billion—an indication of the government’s increased spending for reconstruction and rehabilitation in the wake of recent natural disasters.

This deficit is 75 percent, or P14.7 billion, higher than the deficit posted in January 2013. Netting out interest payments, the government reversed this deficit and posted a primary surplus of P22.2 billion in January 2013.

“The Philippines’ fiscal performance figures in recent years are a manifestation of restored normalcy in meeting the expectations of the Development Budget Coordination Committee,” Purisima said.

The Bureau of Internal Revenue (BIR) and the Bureau of Customs (BOC) likewise saw double-digit growth rates in January. BIR collections expanded by 10 percent to breach the P100-billion mark in the first month of the year, contributing P104.2 billion in revenue compared to the P94.7 billion collected in the same month last year. Meanwhile, the BOC collected P29.8 billion, 21 percent up year on year.

Disbursements for January reached P183 billion for January—a 16-percent increase year on year. The share of interest payments in total expenditures dropped to 31 percent of spending from 35 percent recorded in January 2013, “reflecting the national government’s more prudent management of interest expenditures,” Purisima said.

The official noted that in 2009, just before President Aquino assumed office, the government missed its revenue target by 9.4 percent. But over the last four years, the government has gotten closer to achieving its annual revenue targets. In 2013, revenues were just 1.7 percent shy of the program.

Since 2010, budget deficits were well within the assumptions of the DBCC. Last year, the government budget shortfall was the equivalent of 1.4 percent of gross domestic product, lower than the 2 percent ceiling set by President Aquino. This was an improvement from the 3.9 percent of GDP fiscal gap incurred in 2009.

Purisima likewise noted the government’s progress in reducing the state’s debt stock. The government’s debt dropped to just 49.2 percent of GDP in 2013 from the 50- to 70-percent range seen during previous administrations.

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