The NG budget deficit narrows in March – newsdubai

By Tobias Jared Tomas

The NATIONAL Government’s (NG) budget gap narrowed March, as revenue collection and expenditure grew in double digits, the Ministry of Finance (BTr) has reported Wednesday.

Data from BTr showed that the Philippines’ budget deficit fell by 1.97% to P187.7 billion in March, from P191.4 billion in the same month in 2021.

Month after month fiscale gap widened from P105.8-billion deficit i february.

Government spending accelerated by 18.14% year-on-year to P481.55 billion in March due to higher national tax allocations and budget support for state-owned and controlled enterprises.

As of this year, local government entities will have a larger share of national tax collection, alongside the transfer of basic services due to the Mandanas ruling.

BTr said spending also increased as the Department of Education and the Commission on Higher Education released funds for scholarship programs, while the Department of Public Works and Highways and the Department of National Defense implemented capital outlay projects.

Primary expenses, or expenses less interest payments, increased by 18.35% to P426 billion in March.

Interest payments increased by 16.54% to P55.5 billion.

Meanwhile, government revenue rose 35.96% to P293.9 billion year-on-year in March as the economy gradually reopened after pandemic restrictions eased.

During the month, tax revenue increased by 28.69% to P244.1 billion and non-tax revenue increased by 88% to P49.8 billion.

Metro Manila and other areas were downgraded to the most lenient alert level since March, when coronavirus infections plunged.

The Bureau of Internal Revenue (BIR) collected P170.4 billion, an increase of 27.76% year-on-year, while the Bureau of Customs (BoC) collected P70.8 billion, an increase of 29.33%.

The Treasury reported revenue of P33.4 billion in March, up 107% from a year ago, due to higher dividend transfers, revenue from investments in bond-lowering funds and the national government’s stake in Philippine Amusement and Gaming Corp.’s income.

1st quarter DEFICIT
For fi1st quarter, they budgetficit fell by 1.44% to P316.8 billion from P321.5 billion in the same period in 2021.

Year to date, revenue increased by 12.62% to P784.4 billion, while expenditure increased by 8.18% to P1.10 trillion.

Tax collections increased by 11.73% to P697.2 billion. in the period January to March, thanks to the 7% increase in collections from BOD to P502.8 billion. BoC’s collections increased 26.39% to P188.6 billion over the three-month period.

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said the reopening of the economy allowed the government to increase tax collection in the first quarter. He noted that government spending on the pandemic response may have fallen after the implementation of granular shutdowns.

“Measures to further reopen the economy towards greater normality, such as the proposed nationwide alert level 1, will further help improve government tax revenues,” he added. Ricafort.

Senior economist Nicholas Antonio T. Mapa of ING Bank NV Manila said the increase in spending was due to “last minute” spending before the ban on infrastructure projects began on March 25 last year.

“Revenue growth may be tied to 107% increase in borrowing (BTr) linked to a retail issuance of government bonds and 70.8% jump in BoC due to more expensive fuel,” said Mr. Map.

Sir. Ricafort said maintaining fiscal policy improvements would depend on the next administration’s ability to assemble a “credible and competent” economic team, intensified tax collection and good governance.

These measures will be necessary to pay for the debt that has arisen since the pandemic started, he added.

The country has borrowed P1.31 trillion and received grants worth P2.7 billion for its COVID-19 response from 2020 to 14 January 2022.

“In the coming months, and with the shift in leadership, the new administration must appear to be following the very thin line of fiscal prudence at a time when the economy may need support. The future president will inherit a significant pile of debt, which will affect his or her ability to hit the ground, ”said Mr. Mapa.

The government has set a budget deficit ceiling of P1.65 trillion for 2022 corresponding to 7.7% of gross domestic product.

ASIA-Pacific
Meanwhile, Fitch Ratings said it expects the government deficit in many Asia-Pacific economies, including the Philippines, to narrow this year, although still significantly higher than pre-pandemic levels.

“Muted economic recovery in much of Asia is a key cause of persistently high deficits, as the emergence of pandemic-related headwinds has been slower than in other regions. Political tolerance for higher deficits may also be greater, for example in Australia and Korea, which had robust economic recovery, “Fitch said in a note on Wednesday.

It noted that the sharp rise in commodity prices could pose an “increasing risk” to fiscal consolidation.

“Some governments have raised implicit or explicit subsidies to mitigate the impact on households … Revenue growth may also be more subdued to the extent that commodity prices dampen economic performance,” Fitch said.

The Asia-Pacific region will also have to deal with rising interest payments as borrowing costs rise under monetary tightening from major central banks like the US Federal Reserve, it added.

Fitch said limited debt reduction in Asia-Pacific will be likely as many economies return to high growth in the next few years. However, this may not be enough to sharply reduce the debt incurred during the pandemic.

“Debt uncertainty drives our negative outlook in India. It is also a factor in the Philippines, combined with potential medium-term growth challenges,” it said.

The government has drawn up a fiscal consolidation plan to manage the national debt.

The country’s outstanding debt was P11.73 trillion at the end of 2021. This pushed the debt relative to gross domestic product to the highest level in 16 years at 60.5%, slightly above the 60% threshold considered manageable by multilateral developing economy lenders.

The debt observer in February maintained its negative outlook for investment rate “BBB” in the Philippines. This means that a credit downgrade is still an option within the next 12 to 18 months. – with LWTN