go through Luisa Maria Jacinta C. Josen, Senior Reporter
The Ministry of Finance (BTR) said the budget deficit of the national government (NG) was lost in March, and state spending jumped before the election ban.
BTR data shows that the fiscal gap in March rose 91.78% to pesos 375.7 billion from the same period a year ago.
In March, government spending soared to 6.55 billion from Phillipino pesos 483.8 billion a year ago.
Primary expenditure (referring to total expenditure minus interest payments) soared from p412.9 billion to P412.9 billion to P566.9 million.
Interest payments jumped 24.21% from P700 billion in the previous year to 888.1 billion.
In March, revenue from revenue fell 3.01% year-on-year to pesos 27.3 billion, with Fenax revenue down 69.36% to pesos 19.6 billion.
BTR's revenue fell 83.32% to pesos 8.7 billionfICES fell 26.9% to P10.9 billion.
On the other hand, tax revenue increased by 15.97% from Pes 22.9 billion a year ago to Pes 25.9 billion.
The Bureau of Internal Revenue (BIR) Collection Bureau jumped 20.86% to Pes 175.7 billion, while the Bureau of Customs (BOC) revenue rose 7.3% to Pes 80.4 billion.
“The sharp expansion of budget deficits in March and the first quarter was mainly due to greater government spending, especially in infrastructure and social programs, and a moderately driven by revenue growth,” said John Paolo R. Rivera, a senior fellow at the Philippine Development Institute.
He added: “There may be an increase in spending ahead of the election-related spending ban, and while revenues continue to grow, collections in some tax components may be headwind by slower collections.”
The 45-day election ban initiated public funding projects to start on March 28. This is done to prevent incumbent officials from using the funds during the election to take advantage of their strengths.
First quarter
The budget deficit between January and March widened to pesos 47.8 billion, 75.62% higher than the P27.26 billion gap in the same period in 2024.
However, the Treasury Department said that this is still in line with its P15,000 million full-year deficit plan.
From the same period a year ago, starting from the end of March, expenditure jumped to P1.477 trillion P1.477 trillion.
The Treasury Department said government spending in the first quarter already accounted for 23.89% of the full-year spending plan for P62,000 million.
Primary spending rose 21.96% to P1.24 trillion, and interest payments jumped 24.88% to Pesos 24.1 billion.
“Strong expenditure performance can be attributed to higher expenditures recorded by the Department of Public Works and Highways (DPWH) in its Road Infrastructure Programs and Conventional Operations Requirements and various conservation service programs of the Department of Social Welfare and Development (DSWD).
It also cites the National Tax Allocation (NTA) transfer of shares, annual block grants to the Bangsamoro Autonomous Region and the release of local government support funds.
“Similarly, PPE 32.8 billion (including accrued interest) was transferred to coconut farmers and industry trust funds under a mandatory capitalization schedule.”
Meanwhile, state revenues rose 6.9% in the first quarter to reach Peso 998.2 million, from Peso 933.7 billion in the same period last year. This year, the government is expected to collect P4.64 trillion in revenues.
Tax revenues rose 13.55% to 931.5 billion from PPE 820.4 billion last year.
BTR said its overall collection rate remains on track due to the “strong” performance of BIR and customs.
“The continued growth of revenue agencies for the third consecutive month is driven by their ongoing revenue-raising measures, especially the intensified campaign against the use of fake income, exacerbated the crackdown on illicit trade, digitalization, digitalization and improvements in tax payment promotions, among other initiatives,” it said.
BIR income climbed to 16.67% to pesos 690.4 million due to the collection of “personal income tax (PIT), corporate income tax (CIT), percentage tax, value-added tax (VAT), excise tax, document stamp tax and percentage tax.
Customs collections rose 5.72% to Rs 23,140 crore, driven by “higher VAT collected from non-oil imports and consumption taxes from oil and non-oil imports”.
On the other hand, as of the end of March, Fennex's revenue year fell 41.21% to Pesos 66.7 billion.
BTR revenue fell 55.3% to pesos 32.3 billion, while collections from other offices fell 16.5% to pesos 34.3 billion.
“Basically due to the time being 18 government-owned and controlled companies (GOCCs), the early dividend of 28.23 billion p28.23 billion was withdrawn from the early dividend of the first quarter of 2024, compared with only three P0.027 billion POCCS this year, compared with the early dividend of P0.027 billion shares this year,” BTR said.
“Nevertheless, non-Nex revenue is expected to improve in the coming months, with GOCC dividends remitted to the national Treasury starting in May 2025.”
BTR said NG is still exploring its deficit target this year.
“As dividend remittances and other non-tax revenues expected to be realized in the subsequent quarter, and as spending continues to track full-year plans in a more balanced manner, the fiscal deficit for 2025 is expected to remain within the P1.5 trillion target range.”
According to the latest Development Budget Coordination Committee (DBCC), NG has limited its deficit cap to 5.3% of GDP this year.
Mr Rivera said the budget gap in NG reflects the need to “balance fiscal support for development priorities with disciplinary revenue mobilization to avoid long-term fiscal pressure”. ”
Michael L., chief economist at Rizal Commercial Banking Corp.
“The accelerated growth in government spending also reflects an increase in debt, as debt has increased sharply since 19 (Coronavirus 2019), which began about five years ago,” he said.
On the other hand, Mr Riccaford said the budget balance could recover to surplus from April’s surplus as tax collections increased seasonally as the deadline for BIR submissions was April 15.
Mr Ricafort said more fiscal reform measures may be needed to “reduce government expenses such as government rights and tax reforms to further increase collections to narrow the budget deficit and curb additional demand for borrowing.”
He added: “Extra tax revenue based on existing tax laws or even higher tax rates will be needed, especially if inflation becomes more benign and better controlled, as higher taxes may increase inflationary pressures.”
The Finance Department said it does not plan to introduce new tax measures in the near future, but focuses on improving tax management and EFfintelligent.
