Budget surplus dips to P68 billion in January

MANILA, Philippines —  The Marcos administration returned to a surplus in January, but the budget excess is lower at P68 billion as state spending growth outpaced revenue expansion, according to the Bureau of the Treasury.

Latest data from the BTr showed that the government recorded a lower budget surplus of P68.4 billion in January, down 22 percent from the record P88 billion excess posted in the same period last year.

A budget surplus still means the government earned more than what it spent during a given period, although at a lower level this time around. 

The extra money can either be used to pay off debts or be invested in other programs.

Michael Ricafort, chief economist at Rizal Commercial Banking Corp., said the government running a budget surplus is seasonal every January following huge deficits every December. 

Unfortunately, the surplus will likely be short-lived as deficits will follow in the months ahead, except during the tax season in April. 

Ricafort said the administration would have to boost tax revenue collections based on existing tax laws or through new tax reform measures if it wants to sustain the budget surplus.

“There is a need for more fiscal reform measures to reduce government expenses and tax reform measures to further increase structural tax revenue collections to curb additional need for borrowings and debt,” Ricafort said.

Data showed that total revenue collection in January rose by nearly 11 percent to P467.1 billion as against the P421.8 billion in the same period last year, with the Bureau of Customs (BOC) and Bureau of Internal Revenue (BIR) both posting increases.

The bulk or 94 percent of the revenues came from tax collections at P437.5 billion, up  by 13.6 percent.

BIR’s haul grew by 15 percent to P355.1 billion while Customs saw its collection inch up by eight percent to P79.3 billion from P73.4 billion year-on-year.

The Treasury said BIR’s revenue performance was driven by value-added tax (VAT) collections, gains in income taxes and percentage taxes. 

It added that growth was pushed further due to BIR’s intensified collection efforts, aggressive illicit trade campaigns and digital transformation projects.

On the other hand, BOC’s modernization program and VAT and excise collections contributed to its higher tax take, counterbalancing the reduction in duty collections due to lower tariffs on rice imports. 

Non-tax collections, however, declined by almost 20 percent to P29.6 billion in January, largely due to the base effect of one-time gains recorded the year prior.

Income generated by the Treasury went down 5.9 percent to P15.7 billion while collection from other offices including privatization proceeds and fees and charges for the month also slipped 30 percent to P13.9 billion. 

Further, government spending in January rose at a faster rate of almost 20 percent to P398.8 billion from P333.9 billion in 2023. 

Primary expenditures at P294.4 billion accounted for 74 percent of the total spending, rising by 13.3 percent.
The Treasury said this was mainly from the disbursements attributed to progress billings of completed infrastructure and other capital outlay projects of the Department of Public Works and Highways. 

Also covered are the implementation of various health and social protection programs, as well as expenses of the Commission on Elections for preparatory activities in line with the midterm polls in May.

The higher national tax allotment releases and subsidies to government corporations also contributed to the significant growth of disbursements in January.

The government, likewise, jacked up its interest payments by 41 percent to P104.4 billion from P74.2 billion a year ago, reflecting a shift in coupon payment timing due to the strategy of multiple re-offerings of T-bonds originally issued in January last year to improve secondary market trading activity.