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The budget deficit will narrow in March

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The budget deficit will narrow in March

By means of Luisa Maria Jacinta C. Jocson, News reporter

The National Government’s (NG) budget gap narrowed in March due to a dip in tax collections and subdued spending, the Bureau of the Treasury (BTr) said on Wednesday.

BTR data shows that the Philippines’ budget deficit shrank 6.82% to P195.9 billion in March from P210.3 billion in the same month a year ago.

Month after month, the budget gap widened from February’s P164.7 billion deficit.

“The NG budget deficit for March narrowed thanks to an 11.32% year-on-year revenue growth against a 3.18% increase in government expenditure,” the BTr said in a press release.

In March, revenues rose 11.32% to P287.9 ​​billion from P258.7 billion last year.

Tax revenues fell 0.23% year-on-year to 223.9 billion euros, due to a decline in collections by the Bureau of Customs.

Customs revenues fell 6.78% year-on-year to 74.9 billion euros in March, which the BTR attributed to fewer working days. The Holy Week break fell in the last week of March.

On the other hand, the Bureau of Internal Revenue (BIR) collected P145.3 billion in March, up 3.11% from P141 billion a year ago. Revenue from other offices rose 17.82% to P3.6 billion.

Non-tax revenues rose 86.94% year-on-year to P64.1 billion in March, while state revenues more than tripled to P49.1 billion.

“The significant increase for the month was mainly driven by higher dividend payments, interest on advances from Government Owned and Controlled Corporations (GOCCs), especially from the National Irrigation Administration, and NG shares from the revenues of Philippine Amusement and Gaming Corp . said Btr.

Other offices saw a 22.71% decline in non-tax revenue to P15 billion, “due to last year’s one-time P5.7 billion proceeds in unused unconditional cash transfer program (UCT) funds, as well as lower Malampaya revenues for the period.” said the Btr.

Meanwhile, spending in March amounted to 483.8 billion euros, up 3.18% from 468.9 billion euros a year ago.

“Although higher disbursements were recorded in departments/agencies, expenditure growth in March was depressed by lower subsidies to government-owned enterprises and transfers to local government units (LGUs), especially the special shares of LGUs in national tax revenues” , according to the Btr.

“The transfer of the P15 billion Coco Levy Funds to the Coconut Farmers and Industry Trust Fund for this year is still expected in April; while last year’s release took place in March,” it added.

Primary expenditures – which refer to total expenditures minus interest payments – rose 1.2% to P412.9 billion in March.

Interest payments rose 16.5% to P70.9 billion, mainly due to “coupon payments for domestic securities and the downward adjustments in last year’s interest payments due to premiums on reissued bonds.”

Robert Dan J. Roces, chief economist at Security Bank Corp., said the smaller budget deficit in March signals a “positive development in fiscal management.”

“This decline can be attributed to several factors, such as higher government revenues from higher tax collections and improved economic activity, and/or reduced government spending,” he said in a Viber message.

Ruben Carlo O. Asuncion, chief economist at Union Bank of the Philippines, Inc., said the revenue growth “bodes well” for the government’s fiscal consolidation plan.

“If revenue inflows continue to rise this year due to better economic performance, then it would come as no surprise that this year’s fiscal consolidation plan is on track,” he said in a Viber message.

BIGGER DEFICIENCY IN Q1

Meanwhile, the budget gap increased by 0.65% to 272.6 billion euros in the first quarter, compared to 270.9 billion euros in the same period a year ago.

BTR data shows that revenues rose 14.05% to P933.7 billion from January to March from P818.7 billion a year ago.

Tax revenues in the three-month period amounted to P820.3 billion, up 12.83% from P727.1 billion.

BIR revenues rose 17.15% to P591.8 billion, while customs collections rose 2.35% to P218.9 billion.

Non-tax revenue rose 23.78% year-on-year to P113.4 billion, while BTR revenue rose 85.26% to P72.3 billion. Revenue from other offices fell 21.83% to P41.1 billion.

Meanwhile, government expenditures rose 10.72% to P1.206 trillion in the first three months, compared to P1.09 trillion in the same period in 2023.

In the first quarter, primary expenditures rose 6.94% to P1.013 trillion, while interest payments rose 35.93% to P193 billion.

“The slight increase in the first quarter deficit by 0.65% to P272.6 billion (from P270.9 billion) indicates that although there has been a month of fiscal tightening, the deficit in the entire quarter is still showed marginal increase in the deficit,” he said. Roces said.

He also noted that the slightly larger deficit in the first quarter does not mean that the country’s fiscal consolidation is off track.

“Fiscal consolidation is a gradual process, and the government’s ability to control expenditure and increase revenues in the coming quarters will be critical to stay aligned with consolidation targets,” he added.

This year, the government has set a ceiling for the budget deficit of 1.48 trillion euros, equivalent to 5.6% of gross domestic product (GDP). The aim is to reduce the deficit ratio to 3.7% of GDP by 2028.