By CHINO S. LEYCO
The Philippines’ budget deficit soared last month as tax revenues fall while the government continues to spend on its coronavirus response, data from the Bureau of the Treasury showed yesterday.
The fiscal deficit, which occurs when government expenses exceed revenue, reached P202.1 billion last May, a reversal of the P2.6 billion budget surplus registered in the same month in 2019.
According to the Treasury, the huge spike in budget deficit, equivalent to 7,983 percent, was expected “as government disbursements continued to gain traction vis-à-vis diminished revenue collection caused by the ongoing COVID-19 outbreak.”
In May, expenditures increased by 12 percent to P353.6 billion from P314.7 billion in the same month last year.
“The acceleration was propelled by the releases for the second tranche of the Small Business Wage Subsidy (SBWS) under the SSS [Social Security System] in line with the implementation of Republic Act. No. 11469,” the Treasury said, referring to the “Bayanihan to Heal as One” law.
The national government allocated at least P25.5 billion budget for the payout of SBWS’ second tranche, which will be distributed in the form of cash grants to an estimated 3.05 million employees of small enterprises affected by the quarantine measures.
Meanwhile, primary spending, which excludes the government’s interest payment, jumped 13 percent last month to P335.3 billion from P295 billion a year ago, the Treasury document showed.
On the other hand, interest payments for the month reached P18.4 billion, down by seven percent from P19.7 billion in the previous year due to lower maturing debt obligations in the domestic market.
Revenue, meanwhile, decelerated by 52 percent in May, forcing the national government to rely heavily on borrowings to support its spending requirements for the month.
The national government’s total income reached P145.2 billion last month, lower compared with P317.2 billion last year. Both tax and non-tax revenues were down by 45 percent and 88 percent, respectively.
Tax haul of the Bureau of Internal Revenue, the agency responsible for more than 70 percent of government’s income, also contracted by 44 percent to P114.4 billion from P204.8 billion in May 2019.
“The agency’s weak performance was still due to the effect of the prolonged enhanced community quarantine which prompted the bureau to further extend its deadline for tax filing and payments to June 14, 2020,” the Treasury said.
Collections of the Bureau of Customs, meanwhile, reached P30.8 billion in May, also lower by 47 percent from P58.2 billion in the same month last year.
The Treasury said the weak Customs collection was “similarly due to the economic restrictions brought about by the COVID-19 pandemic.”
The May budget deficit brought the national government’s fiscal gap to P562.2 billion in the first five-months, up by 69,390 percent compared with only P800 million in the same period last year.
At end-May, revenues totalled P1.102 trillion, while expenditures reached P1.664 trillion.
Earlier, Finance Secretary Carlos G. Dominguez III said that the national government’s budget deficit, which is being funded by borrowings, would hit around P1 trillion this year as spending for coronavirus response continue piling up.