Higher revenue cuts Govt deficit to P316.8B

THE national government’s budget deficit in the first quarter of this year shrank to P316.8 billion as revenues grew along with government expenditures.

The budget shortfall from January to March slightly contracted by 1.44 percent from P321.5 billion in the same period a year ago, the latest data from the Bureau of the Treasury showed.

A budget deficit occurs when expenditures exceed revenues.

Revenues for the three-month period posted a double-digit growth of 12.62 percent year-on-year to P784.4 billion from P696.5 billion.

The bulk of the revenues came from the Bureau of Internal Revenue (BIR), which collected P502.8 billion, a 7.05-percent jump from P469.7 billion a year ago.

Meanwhile, the Bureau of Customs contributed P188.6 billion, soaring by 26.39 percent from the previous year’s P149.2 billion.

On the other hand, government expenditures in the first quarter of the year reached P1.1 trillion, up by 8.18 percent from last year’s P1.018 trillion.

For March alone, the budget gap also narrowed to P187.7 billion, lower by 1.97 percent year-on-year from P191.4 billion as both revenues and expenditures rose during the period.

Rizal Commercial Banking Corp. (RCBC) Chief Economist Michael Ricafort said measures to further reopen the economy would further help the government increase its tax revenue collections and curb the growth in government spending, especially on its pandemic response in the coming months.

This includes resumption of in-person schooling and further boosting local and foreign tourism.

“Thus, all of these measures to further reopen the economy towards greater normalcy would help narrow the country’s budget deficit and help also temper the growth in the government’s debt stock,” Ricafort said.

However, he also warned that increased fuel subsidies for the transport and agricultural sectors, lower tariffs on imported agricultural products, and other non-monetary interventions to mitigate inflation impact may lead to a wider budget deficit and more borrowings for the government.

Last year, the national government’s budget deficit soared to a new record high of P1.67 trillion as it continued to spend more on its fight against the Covid-19 pandemic.

The budget deficit as a share of the Philippine economy last year also soared to an unprecedented level of 8.61 percent.

While these levels are below the government’s deficit ceiling for the year pegged at P1.86 trillion or 9.5 percent of GDP, the figures have eclipsed the previous record-high deficit of P1.37 trillion, or 7.6 percent of GDP, in 2020.

For this year, the government expects the budget deficit to settle at P1.65 trillion or 7.7 percent of GDP.

Source link