Government posts narrower budget surplus in January

MANILA, Philippines — The country’s budget surplus narrowed to P23 billion in January as the government accelerated its disbursements following the timely passage of the 2020 budget.

Latest data from the Bureau of the Treasury showed that the January fiscal surplus was 48.26 percent lower than the P44.5 billion recorded in the same month last year.

Government disbursements for the month outpaced the 14.76 percent rise in revenue collection,” the BTR said.

A surplus occurs when the government’s revenues exceed the funds it generates.

Revenues rose P37.9 billion or 14.76 percent to P294.6 billion.

Tax collections accounted for 86 percent or P253.9 billion of the total revenues while the remaining 14 percent came from non-tax collections.

 Revenues generated by the Bureau of Internal Revenue (BIR) increased by 5.3 percent to P194.9 billion.

The Bureau of Customs (BOC) also saw a double digit growth in collections, hitting P55.9 billion or 15.51 percent higher than the  previous year.

The total income raised by the BTr  jumped almost three-fold to P28.4 billion.

“The increase was propelled by the P17.3 billion dividend remittance from the Bangko Sentral ng Pilipinas (BSP) and P1.4 billion increase in bond sinking fund (BSF) investment income,” BTR said.

 Revenue from other offices, including proceeds from privatization activities, as well as collection of fees and charges, went up 3.93 percent to P12.4 billion.

Meanwhile, government spending surged by 28 percent to P271.6 billion.

“The acceleration in expenditure for the month was attributed to the timely release of the January 2020 internal revenue allotment (IRA), along with funds for the newly created Bangsamoro Autonomous Region in Muslim Mindanao (BARMM), as well as payments for negotiated checks issued in the latter part of 2019,” the Treasury said.

Primary expenditures (disbursements net of interest payments) for the month amounted to P210.2 billion, up 26.39 percent.

 Interest payments increased by 33.76 percent to P61.4 billion, mainly due to coupon payments for Treasury bonds, discount on Treasury bills, and the timing of payments for global bonds.

Net of interest payments, the government registered a primary surplus of P84.5 billion in January, down by 6.63 percent.

“The budget balance remained in surplus given the continued improvement in revenue collection, while expenditures posted a sterling growth print but more likely due to base effects after the slowdown noted in early 2019 due to the budget delay,” said Nicholas Mapa, senior economist at ING Bank.

 Mapa said expenditures are expected to rise further in the coming months as the government attempts to cushion the impact of the coronavirus disease pandemic.

“Meanwhile revenue collection will be challenged as economic activity slows with the government flagging a possible breach in the 3.2 percent deficit to GDP target,” he said.

“Nonetheless, the government continues to have fiscal space and at this juncture, a breach in deficit target will be the least of our concerns as the need to care for our sick and limit the spread of the virus takes top priority.”

For 2020, the national government has a fiscal deficit ceiling of P677.6 billion, which is equivalent to 3.2 percent of GDP.

However, Finance Secretary Carlos Dominguez said earlier the deficit could reach 3.6 percent of GDP, as the ongoing COVID-19 outbreak may reduce revenues by P91 billion this year.

Nevertheless, Dominguez said the government would not cut down on its expenditures.

He said the resulting higher deficit would not adversely impact the Philippines credit rating, as it can easily be  financed  through additional borrowings.