Fiscal deficit reaches 5-month high in May

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Metro Manila (CNN Philippines, June 22) — The country's budget deficit reached ₱200.3 billion in May, slightly narrower than last year's tally but the widest since December, data from the Treasury Bureau published Tuesday revealed.

The latest figure is 0.91% lower than the ₱202.1 billion logged in May 2020. However, it is the largest recorded since December, where the fiscal deficit ballooned to ₱302.6 billion.

The Treasury noted the deficit's recent marginal narrowing comes as "growth in expenditure levels kept pace with the acceleration in revenue collection."

The government raked in ₱256.4 billion in May, a 69.26% jump driven by higher tax collections.

The Bureau of Internal Revenue raked in ₱183.7 billion during the month, growing by 60.54%. The Bureau of Customs, meanwhile, collected ₱48.6 billion -- a 58.05% increase -- owing to efforts on improving valuation and collection.

The Treasury itself reported ₱12.4 billion in revenues this May, higher than ₱2.4 billion last year. Higher dividend remittances on stock shares and Bond Sinking Fund investment income mainly led the surge.

Other offices, which include privatization proceeds and fees and charges, rose to ₱9.7 billion in May from ₱3.6 billion. The Treasury attributed this to a low base effect from limited operations last year amid strict quarantine rules.

On the other hand, the government spent ₱456.7 billion in May. This represents a 29.15% expansion from the ₱103.1 billion tally during the same month in 2020.

The Treasury points to disbursements for the Public Works and Highways Department's capital outlay projects, and banner education and health programs of the Education and Health Departments for the increase.

Also contributing to the growth in expenditures are releases to state insurer PhilHealth for the premiums of elderlies, and to local governments for the Barangay Development Program.

In a note to reporters, ING Bank senior economist Nicholas Mapa said the Philippines is expected to incur more budget shortfalls for the rest of the year.

This, as state earnings "fall short due to lackadaisical economic activity and the fallout from CREATE, with the government curtailing spending likely to limit the hit on the overall debt to GDP ratio."

Mapa noted that the latest figure brings year-to-date fiscal deficit to ₱566.2 billion, which is "on track" for the economic team's target 9.4% ratio or ₱1.86 trillion. This is wider than ₱1.37 trillion deficit in 2020, as the state continues to ramp up spending in response to the COVID-19 pandemic.