MANILA, Philippines — The country’s budget shortfall narrowed in 2023, with its share to the overall economy also shrinking, but both surpassed government targets after state spending slightly exceeded the program, according to the Bureau of the Treasury (BTr).
BTr data showed that the budget deficit in 2023 shrank by 6.32 percent to P1.51 trillion from the 2022 level of P1.61 trillion as the growth in revenues managed to outpace overall state spending.
In turn, the budget deficit, when measured against the gross domestic product (GDP), eased to 6.2 percent last year from the record 7.3 percent in 2022. This developed after the economy expanded by 5.6 percent.
The latest budget deficit figure is 1.2 percent higher than the government expectation of a P1.49-trillion shortfall penciled in December last year.
Similarly, the deficit-to-GDP ratio is also above the 6.1 percent target of the Cabinet-level Development Budget Coordination Committee.
The narrower deficit means the government is still spending beyond what it earned from revenue collections, although at a much softer pace.
This year, the economic team aims to record a lower budget deficit of P1.39 trillion and cut the deficit-to-GDP ratio to 5.1 percent.
Meanwhile, data showed that total revenue collection last year improved by 7.86 percent to P3.82 trillion as against the P3.55 trillion in 2022, with the Bureau of Customs (BOC) and Bureau of Internal Revenue (BIR) both posting increases.
However, this is 0.6 percent below the revised full-year program of P3.846 trillion.
The bulk or 90 percent of the revenues were from tax collections at P3.43 trillion, up 6.49 percent. Non-tax collections also improved by 21 percent to P394.8 billion in 2023.
BIR’s haul grew by 7.76 percent to P2.52 trillion while Customs saw its collection rise by 2.41 percent to P883.2 billion.
However, BIR fell short by 4.63 percent from its P2.64 trillion programmed collection largely due to the shift in the schedule of the value-added tax returns remittance implemented at the start of 2023.
The BOC slightly exceeded its target collection by just a percentage, driven by the agency’s enhanced revenue collection efforts, intensified anti-smuggling measures as well as digitalization projects for trade facilitation.
Further, income generated by the Treasury went up by 47 percent to P227.6 billion on the back of higher remittances of dividends from state run corporations, income from investments and interest on national government deposits.
Collection from other offices including privatization proceeds and fees and charges, however, slid by two percent to P167.2 billion.
On the other hand, government spending in 2023 went up 3.42 percent to P5.34 trillion from P5.16 trillion a year before. This is likewise two percent higher than the programmed P5.23 trillion supposed expenditures last year.
This was due to other productive expenditures, particularly infrastructure and other capital outlays, as well as personnel services expenses that helped buoy government disbursements in 2023.
Primary expenditures at P4.71 trillion accounted for 88 percent of the total spending while interest payments reached P628.3 billion, up 25 percent, caused by the tightening of global funding conditions and the impact of higher borrowing to provide stimulusduring the pandemic.