Deficit-to-GDP ratio narrows further

MANILA, Philippines — The share of the national government’s fiscal deficit to gross domestic product (GDP) narrowed to 0.48 percent in the first semester due to the delay in the passage of the 2019 budget, according to the Department of Finance (DOF).

In his latest economic bulletin, Finance Undersecretary and chief economist Gil Beltran said the national government’s deficit-to-GDP ratio in the first half declined to 0.48 percent from 2.43 percent in the same period last year.

Beltran attributed the drop in deficit-to-GDP ratio to slower public spending, which was a result of the four-and-a-half months delay in the passage of the 2019 General Appropriations Act.

“The moderated growth in expenditures led to a lower NG deficit, which settled at 0.48 percent of GDP,” Beltran said.

Economic managers have capped the government’s deficit ceiling at 3.2 percent of GDP for full year 2019.

According to data from the Bureau of the Treasury (BTr), the national government incurred a fiscal deficit of P42.6 billion from January to June, 77.91 percent lower than the P193 billion recorded in the same period in 2018.

Economic growth, meanwhile, slowed down to 5.6 percent and 5.5 percent in the first two quarters.

Government expenditures in the first six months also declined slightly by 0.8 percent to P1.59 trillion compared to P1.603 trillion in the same period last year.

Beltran said this is the first drop in expenditures experienced during the first semester since 2011.

He said government underspending also reached P178 billion in the first half, equivalent to two percent of the nominal GDP during the same period.

As a result, Beltran said expenditure effort in the first half declined to 18 percent from the 19.42 percent recorded in the first semester of 2018.

On the other hand, Beltran said the national government’s revenues from January to June rose by 9.7 percent, outpacing the nominal GDP growth of seven percent during the same period.

Tax revenues climbed by 10.1 percent, with the Bureau of Internal Revenue collections rising by 10.6 percent and Bureau of Customs collections increasing by 8.5 percent, he said.

“This is due to second phase of TRAIN (Tax Reform for Acceleration and Inclusion) Law and continued tax administration reforms,” Beltran said.

He said non-tax revenues likewise grew by 6.9 percent due to higher collections of dividends on national government shares of stocks, guarantee fees and share in the profits of the Philippine Amusement and Gaming Corp.