Philippines: Budget gap trimmed to PHP200.3bn in May 21

• The government trimmed its fiscal deficit in May 21 to a little over PHP200bn as collecting agencies improved their tax take to push overall revenues by more than 69%.
• Based on data from the Bureau of the Treasury (BTr), the budget deficit in May 21 narrowed by less than 1% y/y to PHP200.3bn.
• For the month, tax and non-tax revenues rose by over 69% y/y as collections made by the Bureau of Internal Revenue (BIR) and Bureau of Customs (BOC) ballooned by double digits.
• But the readings were mainly distorted by so-called base effects. On a sequential basis, revenues were actually down 12.2% m/m in May 21, data showed.
• The BIR’s tax collection grew by more than 60% in May 21, bringing its five-month total to PHP872.4bn as of end-May 21, higher than the PHP673.7bn tax take a year ago.
• The BOC, meanwhile, posted a 58% increase in tax revenues.
• The BTr also boosted its income by over five-fold to P12.4bn, driven by the remittances of dividends on shares of stocks and income from bond sinking fund investments. However, BTr’s income from Jan to May 21 declined by roughly two-thirds y/y.
• In May 21, the government’s expenditures inflated by more than 29% to PHP456.7bn on spending made on public works and human development infrastructure.
• The BTr attributed the increase in state spending to disbursements for capital outlay projects rolled out by the Department of Public Works and Highways, as well as for banner programs executed by the Departments of Education and Health.
• Likewise, the BTr said releases were made to PhilHealth for the health insurance premiums of senior citizens and to local governments for the barangay development programs headed by the controversial National Task Force to End Local Communist Armed Conflict.
• In all, primary spending rose by roughly 28% y/y and interest payments grew by over 50% y/y. For the Jan to May 21 period, government expenditures went up by about 9% y/y.
• Further, the budget deficit as of end-May 21 steadied at PHP566.2bn from PHP562.2bn a year ago. Economic managers expect the country’s spending to bloat in 2021 as the government imports vaccines to achieve herd immunity by Dec 21.
• The Cabinet-level Development Budget Coordination Committee (DBCC) in May 21 raised its fiscal deficit projections to 9.4% of GDP in 2021, before settling at 7.7% in 2022, 6.4% in 2023 and 5.4% in 2022.
• The DBCC anticipates revenues to reach PHP2.88tr and expenditures to total PHP4.74tr in 2021.

External Link : https://www.philstar.com/business/2021/06/23/2107381/budget-gap-trimmed-p2003-billion-may

External Link : https://www.philstar.com/business/2021/06/22/2107324/unconvincing-revenue-growth-narrows-budget-deficit-may