MANILA, Philippines — The government recorded a lower budget deficit of P122.2 billion in May as revenue collections increased and expenditures barely moved amid the slow spending rate of state agencies.
Data from the Bureau of the Treasury showed that the Marcos administration reverted back to a budget shortfall of P122.2 billion last month after a quick surplus of P66.8 billion in April due to the tax season.
The May fiscal turnout is 16.73 percent lower than the P146.8 billion deficit in the same period last year.
A lower budget deficit means that the government is spending beyond what it earned from revenue collections, but at a slower pace.
For the five-month period, the budget deficit shrank by 29 percent to P326.3 billion from P458.7 billion a year ago as revenues picked up while spending was almost flat.
Data showed that total revenue collection in May improved by 9.35 percent to P333.4 billion as against the P304.9 billion in the same period last year, as both tax and non-tax revenues increased.
The bulk or 87 percent of the revenues were from tax collections at P291.7 billion, inching up by 2.43 percent. Non-tax collections, on the other hand, more than doubled to P41.7 billion in May.
The Bureau of Internal Revenue’s haul slightly went down by 1.54 percent to P213.3 billion but the Bureau of Customs managed to post an 18 percent increase in collection to P77.9 billion.
Further, income generated by the Treasury surged by almost 180 percent to P24.9 billion on the back of higher investment income, remittance of shares in the Philippine Amusement and Gaming Corp. profit and interest on national government deposits.
Collection from other offices including privatization proceeds and fees and charges for the month also rose by 50 percent to P16.8 billion.
Year-to-date, cumulative revenue collections picked up by 11 percent to reach P1.59 trillion.
On the other hand, government spending in May barely moved to P455.7 billion.
Primary expenditures at P414.3 billion accounted for 91 percent of the total spending, also down by almost one percent.
The Treasury explained that spending for the month was dampened by the decline of the national tax allotment (NTA) shares of local government units due to lower national tax collections in 2020, which was the base year for the determination of the 2023 shares.
The lower net lending assistance to government corporations also weighed down the growth of disbursements during the month.
Sans the NTA, expenditures would have expanded by six percent on higher spending for road and transport infrastructure, as well as the larger personnel services expense with the release of the mid-year bonus of qualified government employees.
Apart from primary expenditures, the government increased its interest payments by 22 percent to P41.3 billion from P33.8 billion a year ago.
For the five-month period, disbursements only inched up by 1.22 percent to P1.92 trillion.
No less than Finance Secretary Benjamin Diokno said slow budget spending of state agencies is a concern for the government.
“We are collecting more revenues but some agencies are underspending. We are trying to pick up because of the pandemic,” Diokno said.
“We still have time to adjust and I already brought this up to the Cabinet. It’s not the lack of money, it’s the ability to spend,” he said.
As of end-May, government agencies recorded a lower utilization rate of 91 percent from 93 percent in the five-month period in 2022 despite the increase in the releases of cash allocations.
On the other hand, Rizal Commercial Banking Corp. chief economist Michael Ricafort said the still elevated inflation could increase the government expenditures while higher interest rates could add to the state’s financing costs and overall debt servicing bill.
“This could lead to wider budget deficits, unless offset by improvements in the government’s tax revenue collections as the economy reopens further, alongside intensified tax collections,” Ricafort said.