Gov’t incurs budget deficit in May despite higher revenue

The national government registered a budget deficit in May despite the higher than expected revenue collections of the Bureau of the Internal Revenue (BIR) and Bureau of Customs, the Department of Finance (DOF) said.

According to Finance Secretary Carlos G. Dominguez III, the national government had a “pretty good” fiscal performance in May, citing both revenues and expenditures posted positive growth during the month.

Earlier, the BIR and the Customs bureau said that they exceeded their collection targets last month by 3.4 percent and 3.9 percent, respectively.

Report by the Bureau of the Treasury, which was distributed by Dominguez, showed the BIR remitted R175.22 billion to state coffers last month, higher by 10 percent from P158.68 billion in the same month last year.

The Customs, on the other hand, generated R52.75 billion, an increase of 33 percent compared with R39.59 million in the previous year.

Asked if the Duterte administration had a fiscal deficit in May, the finance chief answered in the affirmative.

Against fiscal program for the month, Dominguez told the finance reporters that “it’s pretty good.”

In the first five months of the year, the BIR was ahead of its R803 billion collection goal by 3.5 percent to R830.92 billion, while Customs surpassed its target by 2.4 percent to RP229.34 billion against P223.86 billion.

The Treasury is scheduled to release the government’s cash operating report for May next week.

In May 2017, the national government incurred a R33.42 billion budget deficit.

Government revenues amounted to R228.25 billion during the month, while expenditures reached R261.67 billion.

Earlier, Dominguez denied that the national government had underspent this year, citing the below ceiling budget deficit in the first four-months of 2018 was owing to higher revenues from the tax reform law.

Dominguez explained the government recorded an “impressive increase in revenues," particularly on tax collections of the government’s two main tax agencies from January to April.

According to Dominguez, the improved tax collection was “a result of the effective implementation of the Tax Reform for Acceleration and Inclusion (TRAIN) Law.”

This enabled the government to sustain its aggressive spending policy without breaching the programmed budget deficit, Dominguez said.

The Treasury reported last month that the national government registered a R105.9 Billion deficit at endApril, lower by R61.2 billion than the R167.1 billion ceiling.

“The reason we didn’t exceed our target deficit is because we exceeded our total revenues by R58.2 billion as of the first four months of 2018. Tax revenues from January to April was impressively higher than last year’s collections for the same period,” Dominguez said.

“We have to put this in the proper context,” he pointed out.

At end-April, government spending reached R1.033 trillion, shortfall by R3 billion against the programmed R1.036 trillion disbursements.

But Dominguez said the below target spending was due to interest payments.

The government saved R3.4 billion in interest payments in January to April after it programmed R123.8 billion, but actual payment was only R120.3 billion.