Wide budget gap still manageable
Share of taxes to economy hits 20-year high
Even as the government slightly breached last year’s budget deficit cap, the head of the Duterte administration’s economic team on Friday said the gap between revenues and expenditures remained “manageable.”
For 2019, Finance Secretary Carlos G. Dominguez III told reporters that economic managers were “confident of keeping [the budget deficit] within the target” of 3.2 percent earlier set by the Cabinet-level, interagency Development Budget Coordination Committee (DBCC), wider than last year’s 3-percent ceiling.
But Dominguez said that the government would have to play catch up in spending as a result of the impasse on the P3.757trillion 2019 national budget.
“The delay in the approval of the budget is regrettable (P46billion less expenditures in the first quarter) but we will strive to catch up during the rest of the year,” Dominguez said.
In a report Friday, the Bureau of the Treasury said the 2018 budget deficit of P558.3 billion was equivalent to 3.2 percent of gross domestic product (GDP), bigger than the program of 3 percent or P523.7 billion.
Total expenditures or the amount spent by the government on public goods and services last year amounted to P3.41 trillion, exceeding the programmed P3.37 trillion by 1 percent as well as more than a fifth larger than the P2.82 trillion in disbursements in 2017.
TheTreasury attributed the increase in expenditures to “ramped-up spending in public infrastructure, social protection and higher personnel services due to the pay increase for both the civilian, and military and uniformed personnel, as well as the improved fill up rates for teaching positions in the Department of Education.”
Interest payments reached P349.2 billion last year, accounting for only a tenth of total disbursements.
Net of interest payments, primary expenditures rose 22 percent to P3.06 trillion, also 1percent bigger than the P3.02- trillion program.
As government spending shot up, the share of expenditures to GDP or “the participation of government in domestic output” jumped to 19.6 percent in 2018 from 17.9 percent in 2017, the Treasury said.
In a separate statement, Budget Secretary Benjamin E. Diokno said the share of infrastructure spending to GDP was estimated to average 6.3 percent in 2017 and 2018, the first two full years of the Duterte administration.
“This means that the country’s borrowings are financing worthwhile infrastructure investments that the Filipino people can look forward to enjoying. The fiscal numbers reflect our seriousness in closing the country’s infrastructure gap,” Diokno said.
“Filipinos may really look forward to better roads, comfortable mass transport systems like trains and modern public utility vehicles, among other infrastructure initiatives. The data support the eye test, with so many construction projects going on around the country,” the budget chief added.
Meanwhile, total tax and nontax revenues inched up to P2.85 trillion in 2018, surpassing the P2.84-trillion target as well as up 15 percent from P2.47 trillion in 2017.
Tax revenues climbed 14 percent to P2.57 trillion, but were 4-percent below the P2.68trillion goal.
The Treasury blamed the shortfall in the tax take of the Bureau of Internal Revenue (BIR) last year to “non-implementation of fuel marking and the slowdown in consumption amid high inflation and peso depreciation.”
Last year, headline inflation or the rate of increase in prices of basic commodities hit a 10year high of 5.2 percent while the peso slid to 12-year lows.
The Bureau of Customs (BOC), on the other hand, exceeded its 2018 target on the back of “revenue enhancement measures coupled with proper valuation and tariff classification of goods, as well as a strengthened campaign against illegal trade and the windfall from peso depreciation,” the Treasury said.
The share of taxes to the economy or the tax effort nonetheless increased to a 20year high of 14.7 percent in 2018, up from 14.2 percent in 2017 but below the target of 15.4 percent.
Non-tax revenues rose 28 percent to P284.3 billion, also 68-percent above theP168.8-billion target, boosted by the Treasury’s “overperformance” thanks to higher dividends from the national government’s shares of stocks as well as bigger share from the income of state-run Philippine Amusement and Gaming Corp. (Pagcor).
As such, the total revenue effort improved to 16.4 percent from 15.6 percent in 2017, and slightly better than the government goal of 16.3 percent.
The delay in the approval of the budget is regrettable but we will strive to catch up during the rest of the year Carlos G. Dominguez III