The budget deficit reached P200.3 billion in May and P566.2 billion in the first five months as the government raised funds to support economic recovery efforts and the vaccination program.
Data from the Bureau of the Treasury showed Tuesday the budget shortfall in May was slightly lower than the P202.1-billion deficit registered in the same month last year. Expenditures rose 29.15 percent while revenue collections jumped 69.26 percent in May.
The Treasury said the May 2021 fiscal performance resulted in a cumulative budget deficit of P566.2 billion, higher than the P562.2-billion budget gap recorded a year ago.
ING Bank Manila senior economist Nicholas Mapa said in a report the country was on track to post a full-year budget deficit to GDP ratio of 9.4 percent.
“We can expect the Philippines to continue to post budget shortfalls for the balance of the year as revenues fall short due to lackadaisical economic activity and the fallout from CREATE [Corporate Recovery and Tax Incentives for Enterprises Act], with the government curtailing spending likely to limit the hit on the overall debt-to-GDP ratio,” Mapa said.
Mapa said with the country’s debt-to-GDP ratio close to 60 percent (the supposed threshold of ratings agencies) and debt continuing to pile up at a time that growth remains anemic, “we could begin to see ratings agencies question whether the Philippine economy is truly its old self or merely a shade of its once promising potential.”
Mapa said it appeared for now that the Philippines remained in the good graces for the ratings agencies. “The Big 3 [S&P, Moody’s and Fitch] have cited above-average growth and still healthy fiscal metrics as their reasons to like the Philippines and for the time being the trio appear open to letting a year or two of lackluster growth slide.”
Revenue collection in May jumped 69.26 percent to P256.4 billion from a weak base a year ago, driven by the 60.99-percent growth in tax collections. This brought the five-month revenue haul to P1.244 trillion, up by 12.92 percent from the previous year’s outturn.
Tax collections, which grew by 27.07 percent year on year, contributed 91 percent to total revenue while 9 percent came from non-tax sources.
Collections by the Bureau of Internal Revenue surged 60.54 percent to P183.7 billion in May from P114.4 billion a year earlier. This brought the agency’s cumulative uptake to P872.4 billion for the five-month period, 29.49 percent or P198.7 billion better than P673.7 billion in the same period in 2020.
The Bureau of Customs raised P48.6 billion for the month, 58.05 percent higher than P30.8 billion in the same period last year on improve valuation and collection. BOC collections grew 18.57 percent in the five-month period to P249.6 billion from P210.5 billion a year earlier.
The Bureau of the Treasury generated P12.4 billion in May, exceeding last year’s actual income of P2.4 billion. “The surge for the month was largely driven by higher remittances of dividends on shares of stocks and income from Bond Sinking Fund investment,” it said.
“However, the Treasury’s cumulative income of P60.8 billion for the five-month period represents a normalization compared to last year’s P171.9-billion collections which was generated due to the provisions of Republic Act 11469 or the ‘Bayanihan to Heal As One Act,’” the Treasury said.
Meanwhile, expenditures in May 2021 rose 29.15 percent to P456.7 billion from P353.6 billion on higher disbursements for the capital outlay projects of the Public Works Department, banner education and health programs of the Education Department and Health Department, and releases to PhilHealth for the health insurance premiums of senior citizens and to local government units for the Barangay Development Program.
Cumulative expenditures from January to May reached P1.811 trillion, up 8.8 percent from P1.664 trillion a year ago.